SEA is emerging as a global hub for AI innovation and adoption, finds the 9th edition of the e-Conomy SEA report – Profits on the Rise, Harnessing SEA’s Advantage, released by Google, Temasek, and Bain & Company. The report examines the health of the digital economy through the lens of profit.
With significant investments in AI infrastructure and a thriving ecosystem of startups and developers, the region is poised to unlock the transformative power of AI across various sectors. The region is well positioned to compete and attracted more than $30 billion in AI infrastructure investment in the first half of 2024 alone.
Additionally, there is an increasing consumer interest in exploring and adopting AI solutions, with searches for AI growing by 11 times in just four years. With its young and growing population, coupled with high rates of digital literacy, and smartphone penetration, SEA provides a large and receptive market for AI-powered products and services.
From AI-powered travel planners to Generative AI-powered fraud detection, AI is driving value for the region’s digital economy through sector-specific and broader business use cases. Pro-innovation policies that support AI growth and governance will help create more opportunities in the digital economy.
With a more complex online landscape, a collective effort to address digital trust is essential, as cybercrimes continue to pose a threat to the region’s burgeoning digital economy. Rapid digital adoption necessitates a strong focus on building and maintaining digital security.
Singapore leads globally in appetite for AI-related information and services
Singapore’s digital economy has demonstrated remarkable resilience and is projected to reach $29 billion in GMV in 2024, up 13% from 2023. E-commerce has rebounded from $8 billion GMV in 2023 to $9 billion in 2024, while online media and travel have grown at double-digits, fuelled by robust infrastructure and pro-business policies.
Singapore is among the top 10 countries in the world in terms of interest in AI-related topics, with education, marketing, and travel driving AI search interest. There is a strong demand for mobile apps with AI features such as content creation, photo apps, and AI assistants.
AI has also played a key role in fuelling the growth of Singapore’s tourism sector, with chatbots powering personalised recommendations, analysing visitor data to optimize marketing strategies, and enhancing visitor experiences through interactive exhibits and bespoke guides.
Investments are growing to meet this demand. In H1 2024, investments to build AI-ready data centres in Singapore reached $9 billion, second to Malaysia, where $15 billion was invested.
The DFS sectors have emerged as a dominant force, with digital payments and wealth management poised to lead its growth. Singapore’s reputation as a regional financial hub has attracted significant venture capital and private equity investment too.
To maintain its competitive edge, the Singapore Exchange (SGX) has implemented measures to improve exit options and attract investor capital and IPOs. Singapore’s favourable business environment, political stability, and tax incentives have also solidified its position as the premier wealth advisory hub for high-net-worth individuals in Asia Pacific.
“Singapore’s digital economy thrives on government support, investor confidence, and AI innovation. Strong growth is projected in e-commerce, travel, and digital financial services, while SGX initiatives aim to improve the exit environment. The country embraces AI with high levels of interest and adoption, supported by government initiatives and a dynamic tech ecosystem,“ said Sapna Chadha, Vice President for Southeast Asia and South Asia Frontier, Google.
“Singapore continues to be a tech and fundraising hub, bolstered by the presence of industry giants which have cultivated a strong pool of talent who drive innovation and attract further investments. Initiatives to promote regional cooperation and improve capital market conditions in Singapore will ensure that the country continues to maintain its competitive edge,” said Fock Wai Hoong, Head, Southeast Asia, Temasek.
“We are optimistic that Singapore’s digital economy will continue to do well as it matures, driven by strategic government initiatives and strong tech infrastructure that has fostered innovation and rapid adoption of advanced technologies. As digital adoption accelerates, it is crucial that digital security evolves in tandem to safeguard data, maintain trust, and ensure the sustained progress of the digital sector,” said Florian Hoppe, Partner, Bain & Company.
