Artificial intelligence is expensive. Processors are expensive, data centers are expensive, power and water are expensive, and data acquisition is expensive. Giants such as the United States and China can bear these costs. But can other smaller regions – such as Southeast Asia, home to the world’s largest group of offline people outside sub-Saharan Africa – keep up?
However, experts at the Fortune Innovation Forum in Kuala Lumpur, Malaysia, last week expressed hope that small countries can invest in AI that suits them, even as they pointed to several constraints that still hinder investment.
“There is an opportunity to really leverage what has become known as ‘micro AI,’ which is much more targeted, potentially suitable for offline use, and not necessarily competing with some of the big innovations that we are seeing (coming) from larger countries,” said Mahesh Uttamchandani, Regional Practice Director for Digital Sector in East Asia, South Asia and the Pacific at the World Bank.
John Omond-Riffhaug, head of Telenor in Asia, agrees that there is a “huge opportunity” for small countries to invest in sovereign AI.
Countries such as Singapore, Malaysia, and Thailand are trying to build their own AI industries, whether by encouraging the development of new AI models more attuned to local conditions, investing in infrastructure such as energy and data centers, or issuing regulations to maintain data sovereignty.
However, there is still a lot of work to be done.
“We just need more data centres. We need to build more in Southeast Asia,” said Lionel Yeo, Southeast Asia CEO of global data centers ST Telemedia.
He acknowledged that the growing data center sector also needs electrical power to keep it running. He asked: “How can we secure energy all the way from upstream to downstream?” “We have to look at collaboration across the supply chain,” he suggested, and work with “regulators to solve the problems of power grids (and) solve the problem of transmission and distribution.”
Water is another obstacle. Singapore temporarily halted data center construction in 2019 over concerns about excessive water use. The Malaysian state of Johor also warns that water may remain restricted until mid-2027, even as it tries to attract new investment in data centers and other AI infrastructure.
However, Uttamchandani said water “opens up an opportunity for cross-border cooperation.” “Not every country will guarantee its own data centres,” he said, so perhaps resources such as water and energy could be shared between countries.
Talent is another issue. “There aren’t enough people with the skills to put (servers and data centers) together. They’re not in the right places around the world,” said Wendy Tan White, CEO of Intrinsic.
Some of this work cannot be automated. “One of the biggest problems with assembling data centers is dealing with cables,” she said. “Right now, this is still limited to humans. There is no other way to do it.”
However, “Asia has an opportunity,” White said. “Right now, (it’s) partly a manufacturing hub, but there’s a population decline coming, and it’s dealing with geopolitics. I think it can really take a forward position here in regulation and policy.”
Asian governments have begun to take steps to encourage more investment. Utamchandi highlighted the recent decision in the Philippines that eliminated the need for the legislature to approve new entrants into the telecommunications market. “There is a lot of outdated legislation (and) regulations on the books that may be a detractor,” he said.
But at some level, supply will not be able to meet demand – which will lead to a certain amount of “self-moderation,” Yu says. “Everyone is rushing to build data centers to meet AI needs, but the infrastructure, talent, and power won’t be able to keep up.”
“Companies will have to find a way to coexist with the infrastructure and make themselves more efficient so they can run AI,” he said.
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