AI's Uneven Impact: Widening Economic Gaps in Southeast Asia?

AI’s Uneven Impact: A Growing Economic Divide in Southeast Asia

Artificial intelligence (AI) is transforming Southeast Asia, but its impact is far from uniform. While some countries and industries thrive, others face job losses and economic challenges, deepening the region’s existing inequalities. This uneven distribution of AI benefits raises concerns about the future of work, digital infrastructure, and regional cohesion.

In Singapore, AI is driving career advancement and economic growth, with the city-state attracting significant investment in AI-ready data centers. Meanwhile, in the Philippines, call center workers are grappling with job insecurity as automation threatens their livelihoods. These contrasting experiences highlight the double-edged nature of AI, which promises prosperity for some but displacement for others.

Singapore Leads in AI Adoption

Singapore stands out as the region’s AI powerhouse, boasting the highest concentration of AI professionals. The country has pledged over $1 billion to develop its AI ecosystem, positioning itself as a global leader in AI innovation. However, this rapid advancement risks exacerbating inequality, as mid-skill service jobs and less digitally advanced countries struggle to keep pace.

"Singapore’s dominance in AI could widen the gap between digital haves and have-nots," warns Dr. Lee Hsien Loong, a technology policy expert. "Without inclusive policies, the region may see a two-speed economy, where only a few reap the benefits of AI."

Uneven AI Investment Across Southeast Asia

While Singapore leads the way, other nations are also investing heavily in AI. Malaysia has secured a US$2.2 billion investment from Microsoft, while Indonesia is channeling up to US$1.2 billion into tech and AI initiatives. However, the distribution of these investments is uneven, with Singapore attracting the lion’s share of AI venture capital in the ASEAN region.

This imbalance is reflected in AI adoption rates, which vary widely across Southeast Asia. Countries with advanced digital infrastructure, such as Singapore and Malaysia, are poised to benefit sooner, while less developed nations may see slower progress. “The digital divide is real, and it’s growing,” notes Dr. Amelia Tan, a researcher at the Asian Development Bank.

The Role of Digital Infrastructure

Digital infrastructure plays a critical role in determining how quickly countries can adopt and benefit from AI. Factors such as reliable power, affordable connectivity, digital skills, and data governance are essential for AI deployment. Countries with robust digital frameworks, like Singapore and Thailand, are better positioned to leverage AI for economic growth.

In contrast, nations with limited digital infrastructure face significant challenges. “Without addressing the infrastructure gap, AI’s potential will remain untapped for many in Southeast Asia,” says Dr. Tan. “This could further widen the economic divide.”

AI’s Impact on the Job Market

One of the most pressing concerns is AI’s effect on the job market. A significant portion of Southeast Asia’s workforce could see their jobs reshaped or displaced by automation. Service-heavy industries, such as call centers and business process outsourcing, are particularly vulnerable.

In the Philippines, which relies heavily on outsourcing, there are fears that AI could lead to job losses and investment shifts to more digitally advanced hubs. “The Philippines is at a crossroads,” says Maria Rodriguez, a labor economist. “Either we adapt and reskill our workforce, or we risk being left behind.”

Transforming Roles and Creating New Opportunities

While AI may reduce clerical and administrative roles, it also creates new opportunities. Sectors like information and communication technology (ICT) and media stand to gain the most. However, entry-level positions are at risk, and women and younger workers are disproportionately represented in jobs most likely to be reshaped by AI.

“AI is not just about job displacement; it’s about job transformation,” explains Dr. Hasyiya Karimah Adli, an AI expert. “We need to focus on reskilling and upskilling to ensure that workers can transition into new roles.”

Beyond National Lenses: AI in Agriculture

AI’s impact extends beyond urban centers and traditional industries. Farmers in Thailand are using AI-powered apps to forecast rainfall and optimize farm layouts. These tools, though not perfect, can significantly boost yields and improve agricultural productivity.

Thailand is also launching smart agriculture platforms to help farmers adopt AI technologies. “AI is not just for tech hubs,” says Preecha Rengsomboonsuk, a Thai agricultural scientist. “It has the potential to revolutionize farming and improve food security across the region.”

Skills and Talent Development

To ensure that AI’s benefits are more evenly distributed, experts emphasize the need for stronger skills policies. Middle-income countries could see their mid-skill workers squeezed out if they do not acquire practical AI skills. “Reskilling is not a luxury; it’s a necessity,” says Dr. Lee.

Across Southeast Asia, there is enthusiasm for AI, but also anxiety about job displacement. Governments and organizations must invest in training programs to help workers adapt to the changing landscape.

Regional Cohesion at Risk

The uneven pace of AI adoption threatens regional cohesion within ASEAN. This could undermine policy coordination and investment opportunities. There are also concerns about AI-driven cyber attacks, deepfakes, and over-reliance on opaque systems.

“AI presents both opportunities and risks,” says Dr. Amelia Tan. “ASEAN must work together to ensure that its benefits are shared equitably and that its challenges are addressed collectively.”

Strengthening Digital Integration

ASEAN is taking steps to strengthen its digital appeal. Initiatives like the Digital Economy Framework Agreement (DEFA) aim to boost cross-border digital trade. The Responsible AI Roadmap outlines steps for responsible AI use across member states.

“Digital integration is key to ensuring that AI benefits the entire region,” says Dr. Lee. “By aligning rules on data flows and setting common skills standards, ASEAN can create a more inclusive digital future.”

Localizing AI Language Models

Southeast Asian developers are creating language models that reflect the region’s diversity. Singapore has launched Sea-Lion, an open-source language model tailored for Southeast Asia. Crafting localized language models is crucial for data-driven transformation plans.

“Localization is not just about language; it’s about cultural relevance,” explains Dr. Hasyiya Karimah Adli. “AI must be adapted to the unique needs and contexts of Southeast Asia to truly drive transformation.”

Moving Forward with AI Integration

To ensure that AI’s benefits are more evenly distributed, ASEAN must prioritize AI integration. Aligning rules on data flows, setting common skills standards, and addressing digital infrastructure gaps are essential steps. The region may also need to add a new community pillar on digital governance.

“AI is not just a technological challenge; it’s a societal one,” concludes Dr. Lee. “By working together, ASEAN can harness AI’s potential to create a more prosperous and equitable future for all.”