Additional Coverage:
- A World Bank expert thinks countries should leverage ‘small AI’—and avoid competing with the biggest tech giants (fortune.com)
Southeast Asia Grapples with AI’s High Price Tag, Eyes “Small AI” Solutions
Kuala Lumpur, Malaysia – The global race for artificial intelligence dominance is in full swing, but for regions like Southeast Asia, the hefty price tag of AI infrastructure, from processors and data centers to power and water, presents a significant hurdle. Unlike economic giants such as the U.S. and China, smaller nations face an uphill battle in keeping pace with these escalating costs.
Despite these challenges, experts at the recent Fortune Innovation Forum in Kuala Lumpur expressed cautious optimism for Southeast Asia’s AI future. They believe that smaller countries can strategically invest in “small AI” – targeted, potentially offline-compatible solutions that don’t directly compete with the large-scale innovations emerging from bigger nations.
Mahesh Uttamchandani, regional practice director for digital at the World Bank, highlighted this opportunity, stating, “There’s an opportunity to really leverage what has come to be known as ‘small AI,’ which is much more targeted, potentially suitable for offline use, and doesn’t necessarily compete with some of the large innovations we’re seeing [come] out of larger countries.” Jon Omund Revhaug, Asia head for Telenor, echoed this sentiment, affirming “ample opportunity” for sovereign AI investment.
Countries like Singapore, Malaysia, and Thailand are already making strides, fostering local AI model development, investing in critical infrastructure, and implementing regulations to maintain data sovereignty. However, significant work remains.
Lionel Yeo, Southeast Asia CEO for ST Telemedia Global Data Centers, emphasized the urgent need for more data centers in the region. This expansion, however, brings its own set of challenges, particularly concerning power supply.
“How do we secure the power all the way from upstream to downstream?” Yeo questioned, suggesting cross-supply chain collaboration and engagement with regulators to address power grids and transmission.
Water scarcity is another critical constraint. Singapore temporarily halted data center construction in 2019 due to concerns over water consumption, and Malaysia’s Johor state anticipates continued water constraints until mid-2027, even as it seeks AI infrastructure investments. Uttamchandani sees this as an opportunity for “cross-border collaboration,” proposing that resources like water and power could be shared among nations, as not every country will warrant its own data centers.
The talent gap further complicates matters. Wendy Tan White, CEO of Intrinsic, pointed out a shortage of skilled personnel to assemble servers and data centers, noting that some tasks, like cable handling, remain exclusively human-driven.
Despite these obstacles, White believes Asia holds a unique advantage. “At the moment, [it’s] partly the center of manufacturing, but it has got population decline coming, and it’s dealing with geopolitics. I think it could really take a forward stance here in regulation and policy.”
Governments in the region are beginning to act. Uttamchandani cited the Philippines’ recent decision to remove legislative approval requirements for new telecom entrants, highlighting how “legacy legislation [and] regulation on the books that may act as a detractor” can impede progress.
Ultimately, Yeo suggests a degree of “self-moderation” will occur as demand outpaces supply. “Everyone’s rushing to build data centers to cater to AI, but the infrastructure, the talent, the power is not going to keep up with it.” Businesses, he concludes, will need to adapt and “find a way to live with the infrastructure and make themselves more efficient so they can make AI work.”