What if the difference between thriving and merely surviving in Southeast Asia’s digital economy came down to a single decision made in a cramped office in Jakarta or a bustling shophouse in Singapore?

For Yihao Zhang, CEO of Indonesia’s Lita Global, that moment arrived when his gaming platform faced a choice: embrace artificial intelligence or watch competitors leave them behind. “Either you grow and adopt, or you die,” warns Professor Jochen Wirtz from the National University of Singapore Business School—a stark reality that captures the urgency facing Southeast Asia’s 70 million small and medium enterprises today.

The numbers tell a compelling story of both promise and paradox. While AI and generative AI are projected to contribute US$120 billion to Southeast Asia’s GDP by 2027, only 23 per cent of organisations in the region are truly transformative in their AI adoption. Even more striking, among SMEs specifically, adoption plunges to a mere 4.2 per cent. Yet those who do make the leap are reaping remarkable rewards: 75 per cent of ASEAN small businesses investing in AI are 1.8 times more likely to experience growth, with 90 per cent reporting positive results.

The pioneers: Real stories from the digital frontlines

• Lita Global: From translation bottlenecks to revenue multiplication

In the linguistically diverse landscape of Southeast Asia, Lita Global discovered that AI could solve one of their most persistent challenges. The Indonesia-based social media platform for gamers was struggling to expand across the region due to language barriers. Marketing events that could boost weekly revenues by 20 per cent were limited by the time-consuming process of translating announcements from English to Vietnamese, Thai, and other Southeast Asian languages.

Since integrating OpenAI’s models in the second half of 2024, the transformation has been dramatic. The company now hosts almost twice as many online gaming events monthly, directly translating to significant revenue growth. But the AI implementation went beyond translation. The platform’s chat function, where users hire gamers for online sessions, now uses AI-recommended responses during peak demand periods. Gamers using these AI suggestions have seen a 10 per cent to 20 per cent uptick in orders.

“So we’re using AI to really help them to improve their efficiency, to help them to be more available to the users,” Zhang explains. The case illustrates how AI can address multiple business challenges simultaneously—language barriers, operational efficiency, and customer service—creating compound benefits that justify the investment.

• The livestreaming revolution: TopviewAI’s US$1-per-minute solution

For many SMEs across Southeast Asia, the rise of live shopping presents both an opportunity and a barrier. Traditional livestreaming requires studio rental, merchandise samples, and human hosts—costs that can quickly overwhelm small business budgets. TopviewAI has emerged as a game-changer in this space, offering AI livestreaming services at approximately US$1 per minute.

Jensen Wu, CEO of TopviewAI, explains how this technology democratises access to live commerce: instead of investing in full studio setups, companies can have one person monitor the AI-powered livestream while achieving what Wu describes as a “pretty good” return on investment. This innovation is particularly significant in a region where Google’s e-Conomy SEA report notes that live shopping has become increasingly popular, yet many SMEs lack the resources to participate effectively.

Also Read: Anthropic data shows businesses use AI to automate, not collaborate

The adoption landscape: Understanding the divide

The contrast between early adopters and the majority reveals important patterns about AI readiness in Southeast Asia. Research shows that high-growth ASEAN SMEs are focusing on three key areas: using AI-driven insights to better understand customers, automating processes with agentic AI to reduce manual workloads, and integrating systems to eliminate operational inefficiencies.

Vernon Cheo, Regional Vice President for SMB at Salesforce ASEAN, captures the transformative potential: “AI is rapidly transforming the way ASEAN’s small and medium businesses operate, helping them do more with less while staying competitive in an increasingly digital economy. By automating routine tasks, delivering data-driven insights, and enhancing customer engagement, AI empowers SMBs to scale efficiently and focus on what truly matters—building relationships and driving growth.”

The data supports this optimism. SMBs across ASEAN are doubling down on technology, with 76 per cent increasing their investment in digital tools and only five per cent cutting back on tech spending. Singapore-based SMBs are leading the charge, quickly adopting cloud solutions and automation to work smarter, not harder.

The barriers: Why 77 per cent still haven’t made the leap

Despite the success stories, significant obstacles prevent widespread adoption. The primary challenges include resource constraints, with many SMEs viewing AI implementation as prohibitively expensive; technical expertise gaps, highlighted by Singapore’s 5,000-person shortage of AI specialists; and data quality issues, with 72 per cent of Singapore SMEs citing data problems as their primary obstacle.

The talent challenge is particularly acute. Average tenure for AI specialists in small businesses is just 16 months, as they’re often lured away by larger organisations offering better compensation packages. This creates a vicious cycle where SMEs struggle to build internal AI capabilities, making them more dependent on external solutions that may not fully address their specific needs.

Integration challenges compound these difficulties. A Singapore Business Federation study found that 58 per cent of SMEs experienced operational disruptions during technology implementation projects, often due to conflicts between new AI tools and legacy systems. The average SMB uses seven different business applications, and over half report frequent data inconsistencies across their various tools.

Also Read: AI lead generation for B2B sales: A practical guide

The path forward: Lessons from success stories

The experiences of successful adopters reveal several key strategies for overcoming these barriers. First, starting small with high-impact, low-complexity use cases—such as customer service automation or basic predictive maintenance—allows SMEs to build confidence and demonstrate value before scaling up.

Second, leveraging government support can significantly reduce financial barriers. Singapore’s Productivity Solutions Grant funds up to 70 per cent of pre-approved AI solutions, while the Enterprise Development Grant supports broader transformation projects. The government has also allocated SG$150 million (US$116.4 million) for the Enterprise Compute Initiative, enabling eligible businesses to access AI tools and compute power through cloud service providers.

Third, focusing on solutions that address multiple business challenges simultaneously—as Lita Global demonstrated with translation and customer service—maximises return on investment and justifies the initial expenditure.

The regional advantage: Youth, connectivity, and ambition

Southeast Asia possesses unique advantages for AI adoption. Countries like Vietnam, Malaysia, and the Philippines have the highest percentage of business owners and leaders under 40 years of age, bringing digital nativity and openness to new technologies. As Soumik Parida from RMIT University Vietnam notes about Vietnam’s prospects: “the future is bright because it’s a very young population, is a very internet-savvy population. They are starting to have a global voice and they’re very easy to adapt any new technology.”

The region’s high internet penetration and growing digital economy create fertile ground for AI adoption. Singapore, the Philippines, and Malaysia rank among the top 10 globally for AI-related searches and demand, indicating both awareness and appetite for these technologies.

Also Read: Empowering retailers: The transformative potential of  digital shelf in e-commerce 

The imperative: From everyday use to transformative impact

The evidence is clear: AI has moved beyond experimental technology to become a competitive necessity for Southeast Asian SMEs. The companies that embrace AI today are not just improving their operations—they’re positioning themselves to capture disproportionate value as the technology becomes more sophisticated and accessible.

The success stories from Lita Global, TopviewAI, and others demonstrate that with the right approach, even small businesses can harness AI to achieve remarkable growth. The key lies in starting with clear business problems, leveraging available support systems, and building capabilities incrementally.

For Southeast Asia’s 70 million SMEs, the question is no longer whether to adopt AI, but how quickly they can begin their transformation journey. Those who act now will shape the region’s economic future; those who wait risk being shaped by it instead.

The divide between AI adopters and non-adopters will only widen. The time for Southeast Asian SMEs to bridge that gap is now.

—

The post The great divide: How Southeast Asian SMEs are bridging the AI gap between survival and success appeared first on e27.