The Future of AI in Southeast Asia
Last Updated: August 03, 2020

AI (Artificial Intelligence) is rising in southeast asia due to constant technology development in order to improve quality of life in various areas such as government, organization, healthcare, security framework, energy, etc. However, AI remains unclear for many people on what this technology is about, AI refers to the ability of machines that are able to exhibit human-like intelligence; it is capable of imitating human behaviour and human conventional response patterns. For instance, AI is able to solve a problem without requiring detailed, human-developed software. By reviewing a large number of datasets patterns, machines can “learn” to perform tasks such as identifying images, identifying relevant information, recognizing speech, drawing conclusions, and forecasting.



While China and the United States have become the centre hubs for the use of AI for the past decades, Southeast Asia in the past few years, startups have made significant change and they are the main reason for critical development in Southeast Asia, it’s also possible because legislative commitments from ASEAN government to prepare the region for industry 4.0, the fourth industrial revolution characterized by digitisation across industries.



In Southeast Asia, digitisation is growing rapidly and the pace of change is accelerating. If we look back, in 2011, only 6% of Southeast Asia large corporations talked about the terms related to AI such as big data, machine learning, advanced analytics, and the Internet of Things in their annual report. By 2016, large numbers of corporations indicated that these technologies are efficient to gain traction and, thus, it’s considered as one of the top strategy priorities. According to McKinsey’s findings, early adopters of AI reported higher profit margins relative to their competitors specifically in manufacturing, financial services, and transportation industries.



There was a time where a large part of ASEAN was still lagging behind in digital adoption such as AI, machine learning, big data, etc. However, if you see Southeast Asia now, you will have a different perception on this matter, the days where ASEAN hiding in a shadow are long gone, thanks to the booming of technology startups that have been making an exceptional pace over the last couple of years.



Before this article elaborates the prediction of AI in the future in Southeast Asia, let’s take a look at the challenges of AI such as the cost of AI and insufficient resources. Even though AI is able to significantly boost businesses productivity and performance, the cost of AI is rather extremely expensive.


There are three main factors determining the cost of AI. Firstly, available data can determine the cost of AI. The potential of AI systems relies on machine learning features, with the use of machine learning, an AI system can develop systems that were previously absent, adding new features and accuracy to the system, however this is only possible with large amounts of data. The cost of implementing AI could increase if the organization doesn't have the resources or data to be processed, that simply means there will be additional work to outsource the data by using data augmentation methods to increase the size of the dataset. Secondly, data format is another factor that can affect the cost of AI implementation, having structured data will be easier and cheaper to work with, when the data is not stored properly, it will require a lot of organizing and conversion which will increase the cost. The fact is most companies have either unstructured or semi-structured data which requires them to spend more. Thirdly, Algorithm tuning is mathematical code that determines the capability of the AI, the better the algorithm tuning the better the result and efficiency of AI.




 The Future of AI in Southeast Asia
The Future of AI in Southeast Asia Infographic



The future of AI in several sectors


The future of AI in Southeast Asia is so bright, a tremendous amount of organizations and governments are aware of AI implementation to increase productivity and performance,leading each of them to become AI powered and data-driven enterprises. The 2019 Global Industry Analysis & Forecast report states that the AI market is expected to reach US $169 billion by 2025 and multiply by approximately 100 times to US $15.7 trillion in 2035. The International Data Corporation predicts that the retail, healthcare, baking and manufacturing sectors will wake half of all AI-related funds.



Financial sector


Financial sector in Southeast Asia uses AI power to mostly increase customer experience, applying AI functions such as credit scoring, dynamic pricing, and digital marketing. The industry must accelerate digital transformation, the main priorities are first to digitising customer interaction, management, analytics, and setting up data collection. The digital transformation is reinforced by the fact that middle class consumers in Southeast Asia, the consumer base, are digital-savvy; the consumers easily go online to find better offerings.


There are more of less of 300 fintech startups have emerged in Southeast Asia, providing solution in various area such as peer to peer lending, wealth management, payments solution, etc., financial firms who combine the ability to design practical applications for AI and smooth customer experience will come out on top. Progress in this sector will have a significant impact on the region, around 266 million people in Southeast Asia lack access to credit they need in order to thrive. Analytics and AI could offer the right solution by bringing affordable financial service to lower income people that have been excluded from traditional systems. For instance, In China, Alibaba implements advanced analytics and its rich access to merchant and consumer data to develop Zhima credit, an in-house credit that could open the way for Alibaba to lend to unbanked groups. Government and central banks can boost the adoption of AI in Southeast Asia, the regulation from the government determines the pace of innovation, it’s critical to have regulations that are focused on creating a balance between data availability and privacy.



Telecom and high-tech


There’s no doubt that telecom and high-tech industries are the early adopters of AI technology. At a larger scale, some tech giants have implemented AI to the point of disrupting traditional industries, the companies such as Amazon (retail sector) and Netflix (entertainment industries) have created huge disruption that will forever change the way people buy their products and watch their movies. Similar, but in a much smaller scale, local telecom companies are in the lead in Southeast Asia, taking advantage of coverage and data of population they have, telecom companies have been using predictive analytics to forecast customer churns and upsell, also on cross-selling such as selling additional services, the possibility for this industry is big including moving towards an entirely new types of markets.


The high tech industry crosses all sectors touched by AI such as health tech, fintech, ed tech, etc. Governments have a significant role in nurturing local high tech companies, who can pave the way for a larger AI adoption across industries. Government can do so by improving education on computer science to fill the gap of high demands on specialised high tech jobs. Singapore has already taken action in this direction by allowing easier regulations to open a business and providing the businesses with great amounts of funding. Other than that, Government support in the high tech industry can prevent these startups from retaining talented firms that might go overseas for better opportunities.



Manufacturing


AI technology plays an important role in manufacturing’s next step growth, manufacturers will be able to manage its entire value chain and manage the factory seamlessly with the help of data, enabling manufacturers to implement real-time decision making and better efficiency across departments. This whole new world of digital manufacturing is often called industry 4.0, adopting AI and IoT is a natural progression for asean based companies. Thai food and beverage conglomerates Thaibev and Malaysian car manufacturers Proton, are just the two examples of large companies who are aiming to implement industry 4.0 technology in their companies.


Many companies are still reluctant to proceed with the implementation of industry 4.0 technologies, as the cost is expensive and there’s more capital investment required to support digital transformation. The labour cost in Southeast Asia is relatively low, many companies don’t see the need to extremely change their business with the power of AI. However, this will change overtime, take an example from China as this issue already exists in China, labour costs have doubled in the last couple of years forcing companies to seek better solutions, this the main reason why chinese companies have aggressively implemented robotics in its manufacturing, the investment of AI also predicted to rise to $59 Billion by 2020.



In conclusion developing AI is not as expensive as it used to be, there companies that offer AI platform and Machine learning system for businesses. Volantis is here to help organizations ready to compete in the era of industry 4.0, the era of automation and digital technology is here, if your company wants to unlock its maximum potential with the power of AI, machine learning, big data, and many more, consult with us for more information, click here