Indonesia leads Asean in AI adoption as demand for sovereign models rises: BT survey

[SINGAPORE] Indonesia is aggressively positioning itself as South-east Asia’s artificial intelligence pacesetter, with businesses planning to proactively invest in multiple AI capabilities.

Just over six in 10 of the country’s companies (62 per cent) were considered “first movers”, placing it ahead of Thailand (55 per cent), Malaysia (46 per cent) and Singapore (36 per cent), a regional survey by The Business Times showed.

The study, The Business Times Insights: Asean Intelligence 2026, divided respondents into three tiers: first movers, pragmatic optimisers and cautious traditionalists. They were grouped based on their responses to a set of questions.

AI first movers are early adopters, defined as businesses that feel a strong pressure to transform and proactively invest in multiple AI capabilities.

Pragmatic optimisers are those that recognise the need for AI but are pacing their investments and focusing on initiatives with proven impact.

The third category, cautious traditionalists, feel lower urgency and tend to invest more conservatively in AI.

Almost half (45 per cent) of respondents were identified as first movers; 42 per cent were deemed pragmatic optimisers. The rest (13 per cent) were identified as cautious traditionalists. 

Singapore sits in the middle, with 36 per cent of companies polled identified as first movers and 47 per cent as pragmatic optimisers.

The city-state also came in right behind Indonesia (69 per cent versus 70 per cent) in identifying “moderate pressure” to “strong pressure” to transform due to new technologies such as AI, automation and sustainability-related trends.

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Working with market research firm Kantar, the BT survey in February polled more than 500 business leaders in the Asean-6 economies: Singapore, Malaysia, Indonesia, Thailand, the Philippines and Vietnam.

Beyond the AI hype

Hanno Stegmann, managing director and partner at BCG X, said that Singapore’s results are best understood in the context of the market’s familiarity with AI.

“Greater awareness of AI advancements and the changes ahead may lead Singaporean respondents to answer such questions more conservatively than their regional peers,” he noted.

Vivek Luthra, AI and data lead for Accenture in the Asia-Pacific, added that the sectors that anchor Singapore’s economy shape the country’s approach to technology.

“Singapore’s workforce has moved beyond curiosity and hype into a more considered, deliberate relationship with technology,” he said.

“This is shaped in large part by the sectors that anchor Singapore’s economy – financial services, healthcare and the public sector – where our research shows organisations apply the strictest governance and compliance standards to AI.”

Luthra added that respondents in those sectors “tend to be more measured” in how they rate themselves.

“When you work in a highly regulated environment with clear governance expectations, you are less likely to call yourself a first mover because you can see the full picture of what responsible adoption actually requires.”

That being said, Indonesia is showing some “genuinely exciting signals”, he said.

He identified the level of intent at the leadership level of Indonesian firms as one of the key driving points, noting that the majority of leaders in the nation already recognise the need to prepare their workforce in generative AI over the next three years.

“That kind of top-down ambition is a strong foundation.”

AI adoption is even more widespread at the grassroots level. BCG X’s Stegmann noted that Indonesia has the second-highest AI usage in the Asia-Pacific, coming in second only to India.

In terms of where countries see their AI investments focused in 2026, most countries chose AI infrastructure and data platforms. Only companies from the Philippines and Vietnam chose risk, fraud and compliance AI as their focus for 2026.

The biggest barrier to AI adoption for all countries, besides Vietnam, was cost. Vietnam identified legacy infrastructure issues as their greatest barrier.

Sovereign AI models leading the charge

Indonesia’s drive for AI stems from a high demand for sovereign AI infrastructure.

The Sahabat AI initiative – an Indonesia national AI initiative developed in collaboration between Indosat Ooredoo Hutchison (IOH), GoTo group, Nvidia and AI Singapore –  is aimed at driving the country’s digital sovereignty by understanding local nuance in the language.

Chirag Sukhadia, chief data and AI officer of IOH, noted that uptake for the Sahabat AI language model has been strong.

Unlike mainstream large language models such as ChatGPT and Gemini, the value proposition of the Sahabat model is that it was trained on Indonesian data and dialects, and better reflects nuances in local culture.

“The adoption is moving beyond just experimentation,” he told BT.

As the second-largest telco operator in Indonesia and the lead infrastructure provider and developer of the initiative, IOH integrates the model into its daily operations – specifically targeting human resources and sales.

The company is also using AI to optimise the capital-intensive nature of its telco operations. Sukhadia said that using AI allowed IOH to reallocate and optimise up to 22 per cent of its capital expenditure.

Beyond optimisation and reallocation, he estimates that AI could deliver a US$200 million to US$300 million incremental earnings before interest, taxes, depreciation and amortisation over the next three years.

He added that, from a company perspective, this gives a better return on investment.

Beyond cultural nuances, data sovereignty is another factor driving high adoption rates for the Sahabat model.

“Leaders are recognising that scaling AI sustainably isn’t just about access to the best models,” said Accenture’s Luthra. “It’s about control over your data, your models and your technology environment.”

He identified banking, telecoms, energy and consumer retail as sectors where AI implementation is “moving with real purpose”, noting that such sectors are embedding AI into its core workflows.

BT’s survey found that this is not only the case in Indonesia; among all respondents, the consumer, retail and healthcare sector showed a significantly higher share of first movers.

AI adoption is more than tech investment

With AI adoption is set to boom over the coming years, 56 per cent of survey respondents said they expect major disruptions in operations and manufacturing roles by the end of 2026.

Stegmann from BCG X noted that quality control inspectors, demand planners and inventory managers, procurement analysts and logistics coordinators may be most affected.

However, he noted that outright job elimination is less common than role transformation. That said, employers must proactively reskill their employees and have clear communication about the role evolution.

Luthra added: “The most important thing is recognising that AI adoption must be anchored in workforce readiness, not just technology investment.”

Despite Indonesia’s promising trajectory, Stegmann noted that the nation has to overcome foundational hurdles – such as data readiness, AI infrastructure and governance frameworks – before it can label itself as a front runner in the AI space.

“Indonesia has strong grassroots AI energy that its companies now need to channel into structured, top-down transformation programmes.”

Gain deeper insights into the future of business and be better informed as you navigate what is ahead with The Business Times Insights: Asean Intelligence.