This article is the eighth in a series from the ASEAN GenAI Startup Report 2024. GenAI Fund invests in early-stage GenAI startups across Southeast Asia, focusing on growth strategies and exit opportunities.
As Generative AI (GenAI) continues to revolutionise industries globally, the Southeast Asian (SEA) region stands uniquely poised to leverage its inherent strengths and become a leader in this transformative technology.
The ASEAN GenAI Startup Report 2024 outlines several advantages contributing to the region’s potential as a global hub for GenAI innovation, including diverse technical talent, cost efficiencies, and the strategic advantage of being a second mover in technology adoption.
Leveraging technical talent and cost efficiencies
SEA is home to a rapidly growing pool of technical talent, particularly in countries such as Vietnam, which boasts over 530,000 IT professionals. This abundance of skilled labour is not only driving the development of innovative GenAI applications but also doing so at significantly lower costs compared to Western counterparts.
For example, startups in Vietnam are increasingly recognised for their ability to deliver high-quality GenAI solutions at competitive prices, which gives them a crucial edge in the global market.
Furthermore, the cost of living and operational expenses in SEA are generally lower than in more developed economies. This allows startups to stretch their funding further and invest in scaling their operations without the financial pressures often found in more expensive regions. This cost advantage is especially crucial for early-stage companies that need to manage cash flow carefully while exploring and developing new technologies.
Second-mover advantage in technology adoption
While SEA may lag behind in some areas of technology innovation, this “second-mover” position offers distinct advantages. By observing the advancements and challenges first-movers encounter, SEA startups can learn from others’ experiences and adopt technologies with a more strategic approach. They can implement newer and more evolved versions of AI technologies, avoiding the pitfalls experienced by earlier adopters.
This approach is evident in the region’s strategic adoption of cloud technologies and infrastructure, which has seen rapid growth due to the availability of advanced services from global providers like AWS, Google Cloud, and Microsoft Azure. SEA startups are quickly integrating these technologies, often leapfrogging traditional IT solutions directly into more advanced, scalable solutions.
Strategic collaborations and market access
SEA’s strategic geographic location offers another significant advantage. Situated between East and West, the region is a gateway for companies looking to expand globally. The region’s startups benefit from access to diverse markets, from the rapidly growing economies within SEA to the vast markets of China and India and even more established markets in Europe and America.
Also Read: Building moats: Strategies for ASEAN GenAI startups to create sustainable value
Collaborations across the region are also enhancing its GenAI capabilities. Governments are fostering partnerships through initiatives like Singapore’s AI Verify Foundation and the National Multimodal LLM Programme, which not only develop local talent and technology but also facilitate cross-border collaborations that enhance the entire region’s capability to innovate.
Challenges to harnessing the SEA advantage
Despite these advantages, harnessing the full potential of SEA’s GenAI capabilities can be challenging. Regulatory diversity across the region can complicate cross-border operations, making it difficult for startups to scale effectively.
Additionally, while the region benefits from a large pool of IT professionals, there is a continuing need for specialised training in the latest AI technologies to ensure that the workforce can meet the rapidly evolving demands of the GenAI sector.
Moreover, language and cultural diversity, while a source of strength, also pose significant challenges for GenAI applications that require deep understanding and integration of local contexts to be effective.
The SEA region holds significant promise as a dynamic hub for GenAI innovation, fueled by its technical talent, cost efficiencies, strategic position, and adaptive approach to technology adoption.
By continuing to invest in education, infrastructure, and regional collaborations, SEA can overcome existing challenges and cement its position as a global leader in the GenAI revolution.
For regional startups, the path forward involves tapping into these regional strengths while advocating for supportive policies and initiatives that facilitate growth and innovation. As SEA continues to mature in its GenAI capabilities, it stands not only to benefit from this technological revolution but also to shape it.
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