By Ralph Romulus Frondoza
Artificial Intelligence (AI) is reshaping global economics and politics faster than almost any technology before it. In 2024, global corporate investment in AI surged to $252.3 billion, while venture capital grew more than 60 percent year-on-year due to the boom in generative AI. Yet these figures mask a deep divide; most of the benefits and dividends are concentrated in a handful of countries, leaving much of the Indo-Pacific scrambling to catch up.
The United States remains the clear leader, attracting over $109 billion in private AI investment, while China lagged far behind at $9.3 billion. Europe remains fragmented. This imbalance is stark in Asia. Southeast Asia recorded $30 billion in AI infrastructure investment in the first half of 2024, with global tech giants pledging billions more. More than three-quarters of this investment flowed into Singapore. For Indonesia, Vietnam, and the Philippines, the challenge is not ambition but limited funding and structural capacity.
AI is not just another technology. It is becoming the backbone of competitiveness, labor markets, and state capacity. Countries that integrate AI successfully will boost productivity, improve public services, and strengthen resilience. Yet fewer than one-third of developing Asia-Pacific economies have national AI strategies. Without deliberate policies, the divide between leaders and laggards could harden into a new axis of inequality across the Indo-Pacific.
The Philippine Experience
The Philippines illustrates both promise and risk. Its AI market is projected to reach $1 billion in 2025, with potential to contribute ₱1.8 trillion ($31 billion) to the economy by 2030. The government has launched the National AI Strategy Roadmap 2.0 and supported more than 100 AI projects through the Department of Science and Technology. The country’s global AI readiness ranking improved from 65th in 2023 to 56th in 2024.
Yet adoption is uneven. Only 14.9 percent of businesses reported using AI in 2021, even though surveys show 86 percent of Filipino knowledge workers now rely on AI tools in some form. Infrastructure gaps persist in rural areas, while small and medium enterprises struggle with literacy and financing. Without targeted support, AI’s benefits will remain concentrated in corporations and urban centers.
A Region of Contrasts
Other Indo-Pacific nations face similar challenges. Vietnam and Indonesia have digital economy blueprints, but adoption remains concentrated in their capitals. Thailand is testing AI in healthcare and tourism, but suffers from skills shortages. By contrast, Singapore’s coordinated investments have turned it into Southeast Asia’s AI hub, while South Korea leverages its semiconductor dominance to anchor its AI role. India embeds AI into agriculture, education, and governance under Digital India. Australia is weaving AI into cyber defense, smart infrastructure, and resource management in Singapore.
These examples show that countries can carve out niches if they align their national strengths with smart policy. The challenge is whether lagging economies will have the resources and political will to follow through.
The Human Factor
The impact of AI on workers is often overlooked. While AI creates opportunities in data science and digital services, it threatens millions of routine jobs.. This makes reskilling and education reform essential. From embedding AI literacy in schools to offering retraining for mid-career workers, governments must act quickly.
Equity is another challenge. Left unchecked, AI could widen divides between urban and rural economies, large and small firms, and men and women in the labor force. Governments must also build public trust in AI through strong data privacy standards and transparent use of algorithms in public services. Without trust, adoption will remain slow, and citizens may resist AI integration even in sectors where it offers clear benefits, such as healthcare and disaster management.
Building Regional Resilience
Governments have three priorities.
1 – Invest in digital infrastructure and skills. Broadband access and data centers are as vital as preparing a workforce capable of designing, deploying, and regulating AI.
2 – Expand access to capital. Venture ecosystems must broaden so startups in Manila, Jakarta, or Ho Chi Minh City can scale, not only those in Singapore.
3- Embed AI into regional cooperation. Regional initiatives could also create shared research hubs and training centers so that smaller economies can access expertise without duplicating costly infrastructure. Coordinated action would help level the playing field across Southeast Asia, where disparities in resources remain the greatest obstacle to inclusive AI growth.
The Stakes
AI will not automatically deliver inclusive growth. Left to market forces alone, investment will concentrate in a few hubs while most countries fall behind. The challenge is ensuring AI becomes a regional public good rather than a source of advantage for a handful of economies.
The Indo-Pacific’s future prosperity will depend not only on who leads in AI but also on how inclusive that leadership becomes. The choice is clear. AI can either strengthen resilience and shared prosperity across the region or deepen a digital divide that may be impossible to close in the decades ahead.
Author: Ralph Romulus A. Frondoza – Resident Fellow of the International Development and Security Cooperation (IDSC). He is a corporate and risk strategist who writes analyses on issues at the intersection of emerging technologies, geoeconomics, and strategic risks.
(The views expressed in this article belong only to the author and do not necessarily reflect the views of World Geostrategic Insights).