Asean firms can’t afford to ignore EU’s AI Act

THE European Union (EU) is racing to regulate artificial intelligence (AI) but its flagship law, the EU AI Act, faces delays and industry resistance. Enforcement begins in 2025, phasing in until 2027, with penalties up to 7 per cent of global turnover for prohibited practices, similar to General Data Protection Regulation’s extraterritorial reach. For Asean businesses, this is not just a distant European story, but rather a development where speedy compliance could turn into a source of competitiveness.

Competitiveness or control?

At the Act’s core lie two near-contradictory goals: Europe wants to lead the world in AI regulation, while maintaining its position in the global innovation race. Penta’s recent survey of 1,500 senior policymakers across the EU and the US reveals that over 46 per cent of EU officials rank AI among their top three regulatory priorities.

Industry leaders are uneasy. Over 40 chief executives from Europe’s largest companies, including ASML and Siemens, have urged a two-year “clock stop” on enforcement, warning that overlapping rules and heavy obligations could stifle the very innovation that Europe needs to remain competitive globally.