ASEAN’s AI Hub Race: Growth Hopes and Risks for Workers and SMEs

ASEAN nations like Malaysia, Singapore, and Thailand are racing to become AI hubs through semiconductor and data centre investment. However, risks include job displacement affecting 40 million gig workers, widening inequality, environmental strain, SME exclusion, and potential financial bubble concerns.

Key Points

• ASEAN nations, particularly Malaysia, Singapore, and Thailand, are aggressively investing in AI infrastructure, semiconductors, and data centres, with Malaysia generating US$117 billion in semiconductor exports and Singapore securing US$234 million in tech agreements.

• AI adoption threatens over 40 million gig workers and white-collar jobs, with major banks planning to cut tens of thousands of positions, potentially widening inequality while SMEs struggle to compete with large corporations.

• Environmental concerns, energy shortages, water stress, and warnings of an AI investment bubble comparable to the 2000 dot-com crash pose significant risks to the region’s rapid AI expansion.

ASEAN’s Race to Become an AI Hub

Regional governments are accelerating investment in artificial intelligence infrastructure, with Malaysia, Singapore, and Thailand leading the charge. Malaysia’s semiconductor exports reached US$117 billion in 2025, representing 25% of total exports, while over 140 data centre projects are underway. Singapore has secured US$234 million in agreements with Google and OpenAI, and Thailand approved a US$774 million AI integration budget. Companies like Malaysia’s Zetrix AI are developing intelligent agents targeting 1 million users by 2026, reflecting broader confidence that AI will become fully mainstream by 2031.

Environmental and Labour Risks Threaten Inclusive Growth

Data centres and chipmaking facilities consume enormous amounts of electricity and water, placing significant pressure on ASEAN’s already strained energy and environmental systems. Much of the required clean energy remains insufficient across the region, while water-intensive cooling systems risk worsening drought conditions. AI is simultaneously reshaping labour markets, with major corporations including Standard Chartered, HSBC, and Mizuho Bank collectively eliminating tens of thousands of jobs. ASEAN’s 40 million gig economy workers face particular vulnerability, lacking adequate welfare protections as automation accelerates across both low-skilled and white-collar sectors.

Inequality, SMEs, and the Threat of a Market Bubble

Economic gains from AI risk flowing disproportionately to capital owners rather than workers, as the ILO reports labour’s share of global income has already declined. Small and medium enterprises, which form the backbone of ASEAN economies, face significant barriers to AI adoption due to high infrastructure and talent costs, potentially widening the competitive gap with large corporations. Meanwhile, financial markets are raising alarms, with the Magnificent Seven technology giants surpassing US$23 trillion in combined valuation. Investor warnings comparing current conditions to the 1999-2000 dot-com bubble highlight the urgent need for ASEAN governments to balance opportunity with robust policy safeguards.

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