There's no doubt that artificial intelligence (AI) has maintained its appeal, as more businesses around the world look to bring the technology into their work environment. Singapore is no exception, having unveiled plans for further investments to drive adoption, but it now also has the opportunity to bring together its Asean neighbours and resolve a critical cross-border AI challenge that organisations increasingly face.
In his budget speech early this week, Singapore Prime Minister and Finance Minister Lawrence Wong said the country already is a base for the world's top tech companies that have substantial activities here.
"[They] are keen to do more out of Singapore, including in new frontier areas like AI and quantum computing," Wong said, adding that the country is a key chip player, supplying more than 10% and producing one-fifth of the world's semiconductors.
Apart from plans to pump more funds into its research and development (R&D) infrastructure, Singapore wants to encourage local enterprises to invest in technology and adopt off-the-shelf solutions, such as AI-powered analytics.
"Beyond a certain stage, enterprises will need AI solutions [that] are tailored to their needs and integrated into their business processes and systems," Wong said.
To facilitate this, Singapore is setting aside up to SG$150 million for a new Enterprise Compute Initiative, which will enable eligible businesses to work with cloud service providers to access AI tools and compute power. "This will help enterprises leverage AI more effectively in their transformation journey," Wong added.
Globally, demand for AI is expected to push the market to US$757.58 billion this year and climb at a compound annual growth rate (CAGR) of 19.2% to reach US$2.68 trillion by 2034, according to Precedence Research.
Asia-Pacific, in particular, is projected to be the fastest growing AI region, clocking a CAGR of 19.8% over the next decade, outpacing North America’s 19.22% growth figure, Precedence forecasts. The research firm notes that Asia-Pacific's AI growth will be fuelled by increasing adoption across several sectors, including automotive, healthcare, and retail.
As it is, 42% of Asian businesses now deem AI critical to their operations, above the global average of 37%, a report by Hitachi Vantara reveals. The figure is higher in some Asian markets, including 57% in Singapore and 53% in China, according to the study, which polled 1,200 respondents worldwide, including 325 across five Asian markets.
Increasing complexity as AI workflow grows
Attaining widespread AI adoption, however, will require more than financial incentives, said Lyon Poh, partner and head of corporate transformation for KPMG in Singapore. "It necessitates a fundamental shift in mindset amongst business leaders," Poh said, in his comments on Singapore's budget.
"Driving this cultural change is crucial for unlocking the full potential of AI, and Singapore’s leadership must champion a future-forward approach to ensure businesses gain the confidence and capability to undertake AI-driven transformations at scale," he explained.
Poh is right. Handouts alone aren't enough to support companies in their AI journey, which can get highly complex as the technology is applied to more workflows and business processes.
In particular, I believe Singapore's AI initiatives should encompass efforts to address a common challenge that organisations face in their AI adoption -- data security and governance.
Data plays an essential role in AI, most of us know that. And as businesses expand and look to use the technology more extensively, they will inevitably have concerns about what this means for their cross-border data management policies.
They will have to look closely at their AI workflow to ensure they remain in compliance with data sovereignty rules. At the same time, they need to understand data legislations in the different local jurisdictions within which they operate, so their AI deployments do not breach any laws as they move across borders.
Things can get more complex when organisations tap cross-border data centres to achieve cost efficiencies as they scale up their AI rollouts. Malaysia, for instance, has been offered up as an alternative for hyperscalers and datacentre operators looking to build new facilities in Singapore, but face rising cost challenges in the land-scarce nation.
This involves navigating a complicated legislative web, which can hold back enterprises from scaling up their AI-driven transformations and discourage smaller businesses from adopting AI altogether.
Bringing Asean together to address cross-border data challenge
It presents Singapore an opportunity to help ease some of the data friction.
The country already has taken steps to plug AI gaps specific to the region with its Southeast Asian Languages in One Network (SEA-LION), which aims to create large language models (LLMs) for populations that are currently under-represented in mainstream LLMs. SEA-LION is trained on data in Southeast Asian languages, including Thai, Bahasa Indonesia, and Vietnamese, so the foundation model can better understand cultural context and nuances specific to the region.
Singapore is working with various industry partners, including Google and IBM, to ensure the LLM is robust and can support different vertical use cases.
The country now can further bring together its Asean neighbours to address cross-border data challenges. For instance, it can lead discussions to explore the feasibility of establishing data embassies across the region.
The concept is touted as a solution to "insulate" an organisation's data from being accessed by authorities in the host country of the company's data centre, according to a January 2024 report by Asian Business Law Institute and Singapore Academy Law.
Built on a legal framework similar to that of a physical embassy operating on diplomatic relations, data embassies can offer a balance between a local government's need to exercise sovereignty and an organisation's desire to protect its data.
Estonia and Bahrain are amongst countries that have adopted the data embassy model, while others are assessing its potential. New Delhi reportedly is currently exploring plans for data embassies with several nations, including the United Arab Emirates.
Here, Singapore can pitched the potential for a regional bloc, in which Asean member states establish multilateral agreements for data embassies operating within the region. This can ensure a company's data is subject only to the laws of its state of origin, hence, reducing friction in moving AI data workloads across data centres.
If formally established, an Asean data embassy bloc will be the first of such high-level multilateral initiative. It will set up the region to take a place amongst leaders in the global AI map.
In addition, Singapore can help drive discussions within its Southeast Asian counterparts to harmonise data regulations and ease cross-border data management for local businesses across the region.
According to the Hitachi study, data security is a top concern for 44% of Asian businesses, compared to the global average of 38%. The figure is higher in countries such as India and Indonesia, where 54% and 50%, respectively, express concerns about data security.
"Asia's rapid AI adoption is not a promise; it's a reality. The region's markets show that when organisations pair advanced adoption with data best practices, AI can transcend pilot projects to become truly transformative," said Adrian Johnson, Hitachi Vantara's senior vice president and general manager for the Americas and Asia-Pacific.
"However, leaders must recognise that data availability, security, quality, and governance are not optional. Without them, AI's potential will remain under-realised," Johnson said.
Herein lies the opportunity for nations such as Singapore to step up and put the right stones in place for AI to truly thrive.
