Opinion: How Southeast Asia can use AI to build its future

Photo credit: Sasin Tipchai.

“Southeast Asia has all the trappings of a modern economy […] but no indigenous, large-scale companies producing world-class products and services,” wrote Joe Studwell in his book Asian Godfathers.

Most of Southeast Asia’s technology is acquired from outside the region. And there are still a few Asian countries that don’t have the culture and economic dynamism to turn brilliant ideas into lucrative businesses.

However, there are a few encouraging signs. The proliferation of artificial intelligence (AI) has enabled many local businesses to develop self-driving cars, virtual personal assistants, natural language algorithms, and analytical machines governed by supercomputers. But it is still faced with real challenges.

No success in imitation

More companies in Southeast Asia are applying AI to their businesses to spur sustainable growth and solve the region’s most intractable social problems.

The recent AI initiatives come with extraordinary commitment from governments and big businesses. Singapore, which generates more high-quality AI research than anyone in the world outside of Switzerland, has invested more than US$100 million in its AI.SG initiative to commercialize its intellectual breakthroughs for the market.

Southeast Asia should focus on developing multiple AI hubs throughout the region, each specializing in different types of AI applications with local relevance.

Singapore-based ride-hailing startup Grab, has spent millions of dollars on AI—both internally and through investments in foreign companies—in an effort to optimize its driver fleet and put self-driving cars on the road.

Nevertheless, most Southeast Asian companies won’t succeed by imitating the cutting-edge technology of the US, Europe, or China. They do not have the resources or expertise that international tech firms possess. But most AI services can instead be produced and deployed by local innovators. McKinsey suggests that Southeast Asia should focus on developing multiple AI hubs throughout the region, each specializing in different types of AI applications with local relevance.

For many companies, AI offers the prospects of bringing remote healthcare, finance, and virtual education directly to underserved customers in Southeast Asia. Here are some examples:

• CompareAsiaGroup, a Hong Kong-based startup, has built a business model that uses machine learning to match local customers with financial, telecom, and utility services across Asia.
• Sero, a Vietnam-based agriculture startup, provides farmers with crop intelligence based on in-field imagery and data.
• Kata, an Indonesian startup, is using natural language processing algorithms to create digital personas that can help businesses converse with their customers.
• Eureka, the analytics unit of the Indonesian telecommunications company Indosat, is leveraging AI technology to improve credit scoring, fraud identification, and customer-level behavioral insights.

Restrained sophistication

Granted, it is not yet clear whether companies will become sophisticated enough to do what its policymakers want with AI. They are constrained by their countries’ underdeveloped technology sectors and poor record of digital adoption.

Multiple industries across the region—from manufacturing to telecommunications and healthcare—are struggling to develop their digital infrastructure and acquire the necessary computing power and deep learning capabilities to extract patterns, predictions, and insights from their data.

The Fletcher School Digital Evolution Index, which measures digital progress across 60 economies, shows huge disparities between different Southeast Asian countries. Singapore, which is at sixth place, leads the region in terms of its digital capabilities and preparedness, but the rest of the region lags far behind. Malaysia ranks only 26th in the index. Thailand, Indonesia, and Vietnam rank below 40. The Philippines languishes at 51st.

Developing capabilities in-house

Learning from neighbors

The engine of Asia’s future success