I’d like to share this interesting report entitled AI in Southeast Asia: An era of opportunity, published by McKinsey and Company in 2026.

This report examines the rapid acceleration of AI across Southeast Asia, identifying the region as a primary global hub for digital innovation. Driven by over $50 billion in investments from major American and Chinese tech giants, countries like Malaysia and Singapore are establishing extensive data center networks and specialized centers of excellence. While large enterprises are successfully scaling AI into core business functions, smaller firms still face hurdles related to high costs and specialized talent shortages. High-performing organizations distinguish themselves by fundamentally redesigning workflows and implementing rigorous governance rather than just treating AI as a series of isolated experiments. To sustain this momentum, the region is focusing on collaborative ecosystems and national strategies that balance aggressive growth with ethical standards and environmental sustainability.

1/ Southeast Asia is a central hub for global AI. Big tech companies from both the U.S. and China have invested over $50 billion into the region’s cloud and data infrastructure. This creates a unique arena where businesses can choose between different technology stacks to stay flexible.

2/ The region is moving faster than the global average. Roughly 46% of companies in Southeast Asia have moved past the pilot stage and are now scaling their AI use. Indonesia and Singapore lead this push, with more than half of their enterprises reporting scaled adoption.

3/ Real value comes from reinvention, not just adding tools. The high performers in the region are twice as likely to redesign their entire workflows to fit AI rather than just layering new tech over old processes. These leaders treat AI as a core part of their business strategy.

4/ Major hurdles still block full progress. The biggest barriers to success are a lack of internal talent, the difficulty of connecting AI to old systems, and a lack of clear financial returns. About 20% of executives say finding the right experts is their top challenge.

5/ Micro, Small, and Medium-size Enterprises (MSMEs) are at risk of being left behind. While small and medium businesses make up nearly 99% of the region’s firms, they struggle with high pricing and complex onboarding. For AI to benefit the whole economy, providers need to offer simpler, lower-cost options.

6/ Infrastructure growth brings environmental risks. Data centers are booming in places like Johor and Singapore, but they require massive amounts of energy and water. While some firms have set net-zero goals, the surge in AI processing could double global data energy use in five years.

7/ The book uses detailed interviews with leaders from companies like Grab, Petronas, and DBS to show how AI works in the real world. It also provides a clear comparison of how different countries in the region are performing against global peers.

8/ However, the research focuses almost entirely on the six largest economies—Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. It excludes smaller frontier nations like Cambodia, Laos, and Brunei, leaving a gap in the regional picture. Additionally, while it identifies a talent gap, it offers few specific technical solutions for how to train people beyond general upskilling programs.

9/ Read more: Vinayak, H. V., Lath, V., Yu, A., & Basu, S. (2026). AI in Southeast Asia: An era of opportunity. McKinsey & Company. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ai-in-southeast-asia-an-era-of-opportunity

© mhsantosa (2026)