The top AI hub in Southeast Asia is being fiercely contested among nations in the region.

• AI is increasingly being utilized by Southeast Asian countries to create job opportunities for the lower and middle income populations.
• The AI race is intensifying among the 10 ASEAN member states, as each country has its own national AI strategy.
• The ASEAN region has a "light touch" governance and ethics framework, which allows it to balance influences from both the east and the west.

The competition to become a leading AI hub in Southeast Asia is driving emerging economies to collaborate, while also silently competing against each other.

When compared to Europe or the U.S., the Association of Southeast Asian Nations (ASEAN), comprised of 10 countries with a total population of 672 million people, already possesses certain advantages.

The region's large population of tech-savvy youths, aged 15 to 34, makes it adaptable to future technological advancements. Government support for accelerating AI in the region could result in substantial benefits for local workers.

According to Jun Le Koay, a consultant at Access Partnership and author of the research paper "Advantage Southeast Asia: Emerging AI Leader," AI has the potential to increase productivity across industries, which can result in higher incomes for all workers.

As AI technologies become more prevalent in industries, new jobs are emerging that demand AI skills. This shift presents chances for low-income populations to gain new abilities and move to higher-paying roles, he stated.

Koay stated that the AI industry presents a chance for Southeast Asia to leverage its existing infrastructure. He believes that ASEAN countries have made significant progress in expanding internet access over the past decade, resulting in a population that is digitally native and ready to embrace and innovate with AI.

The adoption of AI is expected to increase rapidly in ASEAN nations, where smartphone ownership ranges from 65% to 90%.

According to Grace Yuehan Wang, CEO at Network Media Consulting and a scholar at the London School for Economics, it is unlikely that any of the ASEAN countries will become leaders in the AI race in the near future.

In recent years, ASEAN has shown a robust GDP growth rate and is likely to remain one of the world's most economically successful regions in the near future, according to her statement to CNBC.

The lack of a developed digital infrastructure, education of high-level technical talents in the technology industry, including AI, world-level universities (both STEM and comprehensive), and successful industrial and research collaborations are still some elements missing in ASEAN's AI ecosystem, she stated.

Wang stated that the AI competition among ASEAN countries is mainly focused on attracting foreign investment and collaborations with top universities globally.

Singapore steals a march

The ASEAN club comprises 10 countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. All of these countries have published their national AI strategies.

In 2019, Singapore was one of the first countries to reveal its vision. The island state updated its plans in December 2023. Its goals include tripling its AI workforce to 15,000 and establishing research and development centers.

The AI Centre of Excellence for the Manufacturing Sector was launched in September, with the objective of integrating AI throughout the supply chain.

The Singapore government has pledged to invest 1 billion Singapore dollars ($741 million) in its AI mission over the next five years.

Wang stated that the country has gained a competitive advantage due to its strong R&D, robust economy, excellent education system, and esteemed international business reputation.

In the 2023 Asia Pacific AI Readiness Index, Singapore ranked first among 12 nations, while other ASEAN member states, including Malaysia, Indonesia, Vietnam, the Philippines, and Thailand, occupied positions eight to twelve.

Localized AI for developing nations

Despite Singapore's strength, its neighbors' aspirations remain unchecked.

Vietnam is focusing on AI advancements and leveraging its strengths in assembly, testing, and packaging to meet global demand for chips. The country aims to become the ASEAN hub for AI research and development by 2030, with a $1 billion investment from South Korean manufacturing extending to 2025.

In 2023, Vingroup's multisector conglomerate subsidiary, VinAI, introduced an open-source language model tailored for Vietnamese users called PhoGPT.

"English-dominant AI models are not suitable for all social and cultural contexts, as demonstrated by the need to address fears of exacerbating existing divides and inequalities among less powerful technology regions and countries," according to Wang.

DeepL, a German artificial intelligence translation startup, is leveraging the "rich linguistic diversity" to promote cultural exchange and strengthen regional identity, according to Chief Revenue Officer David Parry-Jones.

Parry-Jones informed CNBC that the European startup aims to provide ASEAN AI language models to enhance manufacturing, translate legal documents, and support multilingual customer service centers in the region.

He stated that companies and governments are seeking top-notch context-sensitive translation tools to expand rapidly without being hindered by language barriers.

Traditionally labor-intensive industries in developing countries are being eyed for AI harnessing potential.

Cambodia's 60-page report outlines the country's plans to utilize AI for "social good" and agricultural technology, with the goal of enhancing the sector that accounted for 22% of Cambodia's GDP and employed approximately 3 million people in 2018.

The challenges of becoming AI-ready are greater for ASEAN countries that are less digitally developed than Singapore.

Before credibly embarking on AI, several regulatory building blocks must be intact and robust, according to Kristina Fong, lead researcher for economic affairs at ASEAN Studies Centre of ISEAS-Yusof Ishak Institute, as she told CNBC.

She pointed out that the "adverse effects of AI on users could come quickly and unexpectedly without any institutional oversight," and emphasized the need for state-level conversation to "effectively manage these rapid developments with minimal harm to society."

Diverging from Europe

In February, a regional guide to AI governance and ethics was released by ASEAN countries. A year prior, EU officials attempted to convince them to adopt the EU's AI regulations while on tour in Southeast Asia.

ASEAN countries contended that the EU had acted hastily in adopting regulations on AI without fully comprehending the associated risks.

Fong stated that the Asian bloc has diverged from Europe on AI governance and a "light-touch approach seems to be the most apt for the region."

The absence of a central legislative body in ASEAN and the differences in digital capabilities and regulatory capacities among its member states are the main reasons why Southeast Asia's approach framework on AI ethics is more of a practical guide than strict policy, as she explained.

ASEAN's AI ethics framework, according to Wang, is not a conflict between adopting a Western or Chinese approach. Instead, international cooperation is the key.

The main issue that ASEAN countries face is not related to technology, but politics, according to Wang, as the Covid-19 pandemic has prompted them to collaborate more closely on trade and diplomacy.

To ensure the success of their AI plans, it is crucial to retain their youthful and tech-savvy population.

Wang suggested that a complementary national education strategy could be the most effective in conjunction with AI plans.