AI could add US$1t to S-E Asia's GDP by 2030

Singapore

ARTIFICIAL intelligence (AI) could add US$1 trillion to South-east Asia's gross domestic product (GDP) by 2030 according to management consulting firm Kearney and Asian-based strategic investor EDBI.

That being said, adoption is still in its nascent stages - about 30 per cent of the respondents surveyed are developing their AI strategies or just starting to invest. About half are at least piloting some initiatives; and only 15 per cent are in advanced stages of AI implementation, typically those in more service-oriented sectors.

The research surveyed more than 110 AI users, providers and investors, and includes interviews with over 25 companies and government agencies in the region.

When it comes to investment, 83 per cent are devoting less than 0.5 per cent of their revenues to embedding AI solutions into their operations.

Indeed, the region is lagging more advanced countries by two to three years. The region received AI investments of only US$2 per capita between 2015 and 2019, compared with per capita investments of US$155 and US$21 respectively for the United States and China. Singapore is the only standout in the region, with US$68 per capita investment; the country with the second largest investment was Thailand, at US$0.37 per capita.

While AI can have a strong overall impact - a 10-18 per cent GDP uplift across South-east Asia by 2030 - the impact variance seen across countries will differ due to the different sectorial makeups and the relative maturity of each country's AI infrastructure and adoption readiness, said the report.

Singapore will reap the greatest benefit (18 per cent uplift) with Brunei, Cambodia, Laos and Myanmar on the other end of the scale (10 per cent). Malaysia can expect a 14 per cent uplift, followed by Thailand (13 per cent) and Indonesia, the Philippines and Vietnam (12 per cent).

"Our study indicates that 80 per cent of AI's potential value comes from less than 20 per cent of use cases. Many companies are implementing AI without clearly identifying high-impact use cases or getting business stakeholders on board," stated the report. "Full involvement of business owners at each step of the use case deployment is crucial to maximising the value of AI."

"At the aggregate level, use cases in sales and marketing as well as in supply chain management deliver the biggest impact," added the report.

It further identified five challenges that have impacted the proliferation of AI. These include the fragmented and nascent AI ecosystem within the region; evolving data governance and infrastructure; new regulations especially in Indonesia, Vietnam and the Philippines where regulatory constraints are an understandable yet significant bottleneck; and user resistance to AI adoption.

The last concern, lack of access to AI capabilities, is "overestimated" argued the researchers, stating that the gap is in fact closing rapidly as capable AI models and providers are now readily available.

The arrival of 5G networks in South-east Asia will further accelerate this process, said Basil Lui, EDBI managing partner, investments, given that 5G will enable the transformation of existing Internet of Things (IOT) solutions into massive IOT solutions. "Where this will be most beneficial will be in automation because you need to install many such devices in factories and buildings . . . And that's also where you need very smart devices, and hence AI, to effectively come up with predictive outcomes. It's all interconnected," said Mr Lui at a briefing on Thursday.

Nikolai Dobberstein, Kearney partner and author of the report, added: "The value of AI is not in the technology but in how it can help businesses solve problems and create value in the near term. Our report emphasises that a comprehensive improvement agenda is needed, both at an organisational level and a national level, but the long-term economic rewards are compelling."

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