In Southeast Asia, artificial intelligence (AI) is expected to transform the business landscape and public services across Southeast Asia, with the potential to add nearly US$1 trillion to the region’s gross domestic product (GDP) by 2030, according to a new paper by East Ventures, an Indonesia-based venture capital (VC) firm.
The economic impact of AI
This substantial economic uplift will largely be driven by productivity gains, operational efficiencies, and improved engagement through AI-powered personalization in sectors including banking, retail, and manufacturing, the VC firm says in a new report.
By 2030, East Ventures expects the development and adoption AI across key sectors to boost GDP in Southeast Asia by 13%, equivalent to approximately US$950 billion.
In the retail and consumer sector, AI-powered recommendation engines are expected to increase customer engagement and loyalty, generating an estimated 30% uplift in conversion rates across Southeast Asian retail platforms.
In banking and legal services, AI integration could reduce processing times by around 24% and boost operational efficiency by approximately 18%.
In healthcare, AI-enhanced diagnostic systems are forecast to reduce patient waiting times by 34% across leading Southeast Asian hospitals by expediting treatment decisions.
In manufacturing, AI automation is projected to increase production efficiency by about 22%, and reduce equipment downtime by 17%.
In petrocheminals, AI can reduce operational costs by ~12% while also improving safety metrics through AI-driven predictive maintenance in plants.
Finally, in agriculture, AI-powered precision farming is projected to reduce water usage by around 28% and increase crop yields by 32% across Southeast Asia.
Among Southeast Asian countries, Singapore is set to experience the greatest GDP uplift from AI, with an estimated 18% increase amount to US$110 million by 2030. Malaysia follows with a projected 14% uplift (US$115 billion), along with Thailand (US$117 billion), Indonesia (US%366 billion), the Philippines (US$92 billion), and Vietnam (US$109 billion), each expecting a 12% increase.
GenAI drives efficiency and engagement
In particular, generative AI, a branch of AI that can produce original content like text, images, or code, is poised to deliver significant value by enhancing productivity, and user engagement across various sectors.
In e-commerce and digital marketplaces, genAI is projected to boost user engagement and conversion rates by 25% through hyper-targeted marketing strategies.
In customer support, genAI can reduce response times by 40% and enhance resolution efficiency through automated, personalized customer support solutions.
In edtech, genAI is expected to improve learning outcomes by 90% through personalized, AI-driven content creation and adaptive learning modules.
In financial management and software-as-a-service (SaaS), genAI can reduce manual reconciliation time by 35% through financial insights and analysis.
In data analytics and personalization, genAI is expected to improve conversion rates by 25% through advanced analysis and hyper-personalized recommendations.
Finally, in the workplace, genAI is projected to cut post-meeting follow-up time by 50% through automated note-taking and summarizing tools, significantly boosting productivity and accuracy.
Singapore leads in adoption
Currently, Singapore leads Southeast Asia in AI adoption. According to Senior Minister of State for Digital Development and Information Tan Kiat How, enterprise adoption of AI stood at 46% in 2024, marking a 12 point increase from 34% in 2022.
Close to 3,000 small and medium-sized enterprises (SMEs) adopted AI-enabled solutions from local retailers in 2024 to forecast demand, optimize venues, or reduce wastage, underscoring the rapid adoption of the technology.
Increased adoption of Singapore is partly driven by Singapore’s pioneering role in AI policy and innovation.
It was the first country in the region and among the first globally to launch a model AI governance framework. In May 2024, the government introduced the Green Data Centre to promote digital sustainability and guide the development of AI-supportive, eco-friendly data centers in Singapore.
To support its ambitions, the government has committed SG$1 billion (US$773 million) for the period of 2024-2029. This funding will be used to boost AI activities, secure advanced chips essential to AI development and deployment, and support the setup of AI centers of excellence to spur collaboration and innovation.
These efforts have attracted major global players to establish a presence in Singapore. OpenAI, the company behind the widely popular genAI app ChatGPT, chose Singapore to host its Asia-Pacific (APAC) hub. The establishment will allow OpenAI to work in close collaboration with government partners, such as the Economic Development Board (EDB), to support the country’s local AI ecosystem.
Most recently, the Microsoft Research Asia Lab (MSRA), the company’s 14th research lab and its first in Southeast Asia, was officially opened in Singapore. The lab aims to partner with local collaborators to apply advanced AI technologies in key industrial domains like logistics, manufacturing, finance and healthcare.
Malaysia leads in bigtech AI investment
Another key player in Southeast Asia’s AI landscape is Malaysia, which is rapidly emerging as a key destination for AI infrastructure investment. According to East Ventures, the country has so far attracted about US$22 billion in commitments from major technology firms including Oracle, Microsoft, AWS, Nvidia, and ByteDance, reflecting Malaysia’s strong potential as an AI and cloud hub.
Oracle is looking to invest more than US$6.5 billion in Malaysia to expand its AI and cloud computing capabilities. This includes establishing a cloud region with 150+ infrastructure and SaaS services.
AWS is planning to inject MYR 29.2 billion (US$6.2 billion) in the country through 2038. The upcoming AWS Asia Pacific (Malaysia) Region intends to offer Malaysian and APAC customers world-class cloud infrastructure with security, performance, and scalability. It will enable local data residency while providing businesses with low latency access to advanced technologies like AI and genAI.
China’s ByteDance, the parent of social media app TikTok, is investing around MYR 10 billion (US$2.13 billion) to set up an AI hub in Malaysia. As part of the deal, ByteDance will also expand its data center facilities in Malaysia’s Johor state through an additional MYR 1.5 billion (US$354 million) investment.
In May 2024, Microsoft launched Malaysia West, its first cloud region in the country. Strategically located in Greater Kuala Lumpur, the facility includes three availability zones and offers services for productivity, data analytics, cybersecurity, computing, and storage, coupled with in-country data residency, high levels of security, and lower latency.
A diverse group of organizations, enterprises, and startups are already leveraging the Malaysia West cloud region, including PETRONAS, Malaysia’s global energy and solutions provider, as well as FinHero, SCICOM Berhad, Senang, SIRIM Berhad, Veeam, and TNG Digital, the operator of TNG eWallet.
At the policy level, Malaysia established in December 2024 the National AI Office (NAIO). The agency aims to position Malaysia as a regional leader in AI, and has been tasked with fostering innovation, promoting cross-sector collaboration, and leading efforts in AI research, adoption, and commercialization.
Featured image: Edited by Fintech News Singapore, based on image by DC Studio via Freepik
