Southeast Asia has become the hottest continent for investment for AI mega-companies such as Nvidia Corp and Microsoft Corp, which are pouring money into cloud services and data centers. But the region’s local tech companies have failed to capitalize on the boom.
The world’s largest tech companies are poised to spend up to $60 billion over the next few years in Southeast Asia as its young population is drawn to streaming video, online shopping and generative AI, opening up a floodgate of startups in the region.
However, foreign investors remain wary of unsettled bets and the region has yet to show much confidence in producing a significant surge in innovative firms.
According to Preqin data, venture capital investment in young AI firms in Southeast Asia has amounted to just $1.7 billion so far this year, compared with about $20 billion for the Asia-Pacific region as a whole.
The disconnect raises doubts about the emerging region’s ability to build a private sector and compete with the U.S. and China, the world’s AI leaders.
Globally, investors are racing to capitalize on the AI opportunity, but for now their focus is on the US and China. The US is set to grab $68.5 billion in AI funding by 2024, while China is taking in about US$11 billion.
The wider region, with countries such as the Philippines, Indonesia, Thailand and Malaysia, is a rich area with diverse cultures and economies, complicating efforts to rapidly scale products and services.
Southeast Asia’s AI opportunity now lies at the beginning of the value chain, including the collection and organization of big data
