Regulations on artificial intelligence (AI) do not necessarily hinder smaller players in the market. Critics argue that these rules will favor large market players and create barriers for startups. However, experts believe that thoughtful regulation is important, such as the need for transparency from tech companies. This can help prevent harm and navigate the industry away from negative outcomes. Florian Hoppe, partner at Bain & Company, suggests that while smaller players may lack the resources to develop their own large language models (LLMs), they can still build specialized or domain-specific AI applications on top of existing LLMs. Regulations play a necessary role in mitigating AI risks.
Conversations between governments and industry players have been positive regarding the regulatory framework for AI. This is particularly true in Southeast Asia, where the region is technology-forward and aims to strike a balance between regulation and market innovation. A conducive environment is essential to ensure that AI brings economic and business benefits while safeguarding against risks like data bias. Investments in digital and physical infrastructures, as well as economic development plans, will enable digital organizations to expand services to areas outside metro cities, where demand is growing.
According to the e-Conomy SEA report by Google, Temasek, and Bain & Company, the Southeast Asian digital economy is projected to reach $100 billion in revenue this year. This represents a compound annual growth rate of 27% since 2021 and is growing 1.7 times faster than gross merchandise value (GMV). E-commerce, travel, transport, and media will account for $70 billion in revenue. GMV is expected to expand 11% year-on-year to $218 billion in 2023, with travel and transport on track to exceed pre-pandemic levels. E-commerce revenue is projected to increase by 22% this year, reaching $28 billion. The report emphasizes the need for digital businesses to focus on monetization and profitability, as well as digital inclusion and infrastructure development in rural areas.
To sustain digital growth in the region, the report calls for the development and harmonization of policies and agreements across ASEAN. This includes trade and data governance agreements to facilitate cross-border data flow and digital economy activities. A policy framework for responsible AI development is also important, with balanced legal frameworks and privacy laws to protect personal data. Interoperable AI governance frameworks and common standards are necessary to ensure responsible development and adoption of AI technologies. Fock Wai Hoong, Southeast Asia head for Temasek Holdings, highlights the need for a unified and multilateral approach to drive growth in the region, establishing a “single digital Southeast Asian” market.
In September, ASEAN member states announced their efforts to establish protocols that will ease cross-border digital trade and address emerging challenges in the digital economy. By working together and establishing unified agreements, Southeast Asia can unlock its full potential and drive growth in the region. Singapore, for example, already has digital economy agreements with countries like France, New Zealand, and the UK, and can explore similar pacts with its peers in Southeast Asia.
Overall, regulations on AI do not necessarily hinder startups and smaller players in the market. Thoughtful regulation is important to mitigate risks and ensure transparency from tech companies. Southeast Asia is experiencing resilient growth in its digital economy, and investments in infrastructure and policy harmonization are crucial to sustain this growth. By establishing a unified digital market and focusing on digital inclusion, the region can unlock its full potential and drive economic and business benefits from AI.