AS THE saying goes, “data is the new currency”. This rings especially true today, as artificial intelligence (AI) is unlocking business transformation and fuelling an incredible surge in data demand across South-east Asia.
At the same time, data and AI capabilities are becoming assets of national strategic importance, particularly in a world of growing geopolitical tensions.
These converging trends raise several questions: Where will all this data reside? How can South-east Asia build the data and energy infrastructure it needs quickly while managing risks? What role can Singapore’s public and private sector play in shaping the next phase of the region’s digital economy?
A new value chain
Looking past the hype, it is clear that AI is a multi-trillion-dollar game, set to drive 3.5 per cent of global GDP in 2030. Next-generation AI applications are evolving beyond mere pattern recognition capabilities to generate new multimedia content and even act autonomously.
This defining feature – the use of multiple modalities including not just text but images, audio and video – as core inputs, is transformative.
Applications include AI tools that respond to environmental changes in manufacturing, mobility and logistics, and chatbots that tailor recommendations to consumers based on visual data.
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Alongside the rise of next-generation AI applications is a value chain that is emerging to support it – the platforms that enable the creation and deployment of AI-generated content, and the infrastructure to power and scale platforms and applications.
In particular, the explosion in data volume and real-time processing needs is driving an urgent demand for data centres optimised to handle vast streams of high-resolution image data that go beyond plain text, and at scale.
Data and AI as strategic assets
The rapid emergence of the AI value chain is happening at a time of growing geopolitical tensions, where data and AI sovereignty are matters of strategic importance, including in South-east Asia.
Sovereign cloud has been a major focus area in recent years, with governments increasingly recognising the power of their data and the ability to store, process, and secure it onshore.
Now, with the rise of AI, sovereign AI is another key priority. Nation-states are finding value in having ownership over their AI capabilities, as export controls are pushing them to develop their own capabilities in AI chips and more widely, their AI ecosystems.
In South-east Asia, governments are racing to attract investments and build hyperscale advanced data centres, subsidising land and electricity in some cases, signalling the intensifying competition to develop such AI ecosystems.
Besides national security, local AI capabilities are also valuable as they are tailored to their specific contexts.
For example, large language models (LLMs) that “speak” South-east Asia’s vernacular languages can address their under-representation in models commonly used today. Another example is in healthcare, where AI tools trained with data representative of the local population are crucial to ensure their accuracy.
Singapore as a regional AI leader
Singapore has been an early mover in AI, having unveiled its first National AI Strategy in 2019 and its second iteration in 2023.
The city-state also led the development of the Asean Guide on AI Governance and Ethics to promote the deployment of AI-powered services and solutions across borders in a trustworthy manner. As the field continues to evolve, such an approach to regulation is critical in safeguarding society, as well as enterprises and their customers.
In terms of sustainability, Singapore is promoting the development of green data centres, ramping up its green energy deployment while supporting research in energy-efficient technologies.
At the same time, it is equally important for the country to ensure that these ambitions are balanced with cost competitiveness amid the demand for affordable and scalable solutions.
The government is also working with multinational companies to position itself as the region’s AI hub, with a comprehensive suite of incentives and grants such as the Refundable Investment Credit. Its recently launched Global Founder Programme is set to encourage established founders of AI ventures to relocate to Singapore and expand their operations regionally, with support from the Economic Development Board in market strategy and networking.
Furthermore, Singapore plans to work with 100 leading corporates to set up AI centres of excellence. Such hubs result in multiplier effects in terms of job opportunities and knowledge transfer, benefiting startups and small-and-medium enterprises.
The country’s partnerships with global technology leaders also extend to developing onshore AI data centres and local LLMs – another proof point of its AI leadership.
Opportunities in cooperation
While Singapore is home to a strong AI ecosystem, it faces natural constraints in terms of market size, as well as land and power resources. This makes regional cooperation and investment crucial.
The region’s strong user base and thriving digital economy makes it a bright spot for growth. South-east Asia is home to a population that’s ahead of the curve when it comes to adopting AI tools. Singapore can take the lead in facilitating initiatives to develop talent who are not just technically proficient, but who have the human understanding and adaptability needed to work effectively with AI.
Other than talent, infrastructure is another essential element. Investment in AI-ready data centres not only enables always-on data processing capabilities, but it also helps capture ripple effects of job creation and innovation within the region.
Amid tightening data regulations, sovereign AI infrastructure also ensures that data and capabilities remain onshore. However, many of the region’s existing data centres lack the high-performance graphics processing units required for the intensive workloads needed for next-generation applications.
In addition, electricity consumption by data centres in South-east Asia is expected to more than double between 2025 and 2030, driven by power-intensive AI requirements. Meeting this surge requires new power generation capacity to come online not just rapidly, but also sustainably.
Eight out of the 10 Asean member states have set net-zero greenhouse gas emissions goals, as have the tech players behind data centre infrastructure. Collaboration between organisations in Singapore and the rest of the region can help achieve these sustainability goals, while keeping costs competitive for the global market.
To address this, government cooperation to advance the Asean power grid, along with private investment in renewable energy, will be crucial to meet the rising demand for reliable, sustainable energy at scale.
Public agencies and private sector players, particularly in the technology and telecommunications sectors, can also work together to advance connectivity infrastructure such as AI-ready data centres, submarine cables and 5G networks.
Regional partnerships and investments are already taking shape. Singapore’s telecommunications and energy players are currently exploring opportunities in Batam and the Johor-Singapore Special Economic Zone.
Nevertheless, the scale of the market opportunity means that there is significant room for further collaboration, both in terms of knowledge exchange and infrastructure development. Opportunities can be found in areas such as sustainability, data centre technology, talent readiness and risk management.
Moving forward together
South-east Asia has both the demand and ambition to tap AI’s transformative potential. However, the speed of technological and regulatory change, along with infrastructure gaps across the region, means that public and private sector leaders across the value chain must act quickly.
While Singapore is well-positioned to lead in AI innovation, it cannot progress alone. Cross-border cooperation and investment will be key to shaping the future of AI as a driver of growth for the region.
This could start from projects aimed at the public good, such as developing databases for AI in healthcare, or efforts to grow scalable, cost-competitive green power. These efforts will build trust and pave the way for the region to move forward together – rapidly, sustainably and responsibly.
The writer is chief executive officer, Deloitte South-east Asia
