AI risks widening divide in ASEAN

The global boom in artificial intelligence may be a boon for some in Southeast Asia. But analysts are warning of the risks it poses in further widening the regional economic and digital divide.

While major technology exporters such as Malaysia, Singapore, and Vietnam are expected to be the biggest winners in the AI race, this is unlikely to be the case for other members of the Association of Southeast Asian Nations — especially those that are not fully integrated into the global electronics supply chain.

Priyanka Kishore, director and principal economist at the Singapore-based consultancy Asia Decoded, said Singapore and Malaysia, which are more plugged into global AI supply chains, are well-placed to continue capitalizing on the AI boom.

She also noted that Singapore leads in AI deployment and adoption, with Vietnam not far behind.

In its research note published in January, French investment bank Natixis said that the steady rise in semiconductor demand amid AI-related supply shortages would drive Asian GDP growth in the first half of 2026.

Dominic Ligot, founder of CirroLytix, a Manila-based AI training and consulting company, said economies with stronger digital infrastructure, larger tech ecosystems, a digital talent pool, and sectors that can upgrade into higher-value services will benefit most from the AI boom.

Ligot said urban hubs with better infrastructure and talent pipelines will enjoy most of the benefits.

However, he said those without these resources will fall further behind in innovation capacity and firm competitiveness. The net result, he added, is a wider gap in productivity, job quality, and the ability to own AI-enabled value chains.

"In labor markets, the risk is polarization," Ligot told China Daily. He said that while high-skilled, AI-complementary workers are likely to earn higher wages, routine service workers will probably be displaced by automation.

More disparities

Lavanya Venkateswaran, a senior economist for ASEAN at Singapore-based OCBC bank, said AI's most obvious impact on ASEAN is improving productivity and efficiency to bolster growth. She said tech exporters will indeed benefit from the AI boom, but "the adoption of AI is not limited only to economies that are plugged into the supply chain".

The AI boom has again shown the wide economic disparity that has long existed in Southeast Asia. While ASEAN includes some of the world's wealthiest economies, such as Singapore, the regional bloc's membership also includes less-developed economies, like Laos and Timor-Leste.

According to an Economic Research Institute for ASEAN and East Asia, or ERIA, study in July 2025, digital divides across firms and individuals, both within and between countries, are evident in ASEAN, while significant disparities exist in digital readiness among countries, governments, companies, and individuals.

ERIA said digital uptake disparities are noticeable between ASEAN countries with robust digital infrastructure and capabilities and those with limited resources in these areas.

Elina Noor, a nonresident scholar in the Asia Program at the Carnegie Endowment for International Peace, said the "digital divide" makes it very hard to measure the impact of AI on ASEAN economies.

Elina said that what is missing from the discourse on AI is the environmental and social costs that are associated with AI-related investments.

prime@chinadailyapac.com