AI Policy in Southeast Asia: Innovation vs Regulation

Executive Summary

Brookings analysis of how Southeast Asian countries are approaching AI policy, comparing regulatory strategies across Singapore, Indonesia, Thailand, Vietnam, and the Philippines. Examines the tension between promoting AI innovation and protecting citizens, the influence of EU AI Act, and recommendations for ASEAN-wide AI governance coordination.

Southeast Asian governments confront a distinctive policy challenge as they seek to harness artificial intelligence for economic development while building governance frameworks adequate to address its risks. Unlike the European Union's precautionary approach or the United States' market-driven posture, ASEAN nations are crafting a third path characterized by principles-based guidelines, voluntary industry codes, and sector-specific regulations that reflect the region's pragmatic development orientation. This paper analyzes the AI policy landscapes across all ten ASEAN member states, revealing significant heterogeneity in regulatory sophistication, institutional capacity, and strategic priorities. Singapore and Thailand have established comprehensive national AI strategies with dedicated governance bodies, while Cambodia, Laos, and Myanmar remain in nascent stages of policy formulation. The analysis identifies regulatory fragmentation as the most significant obstacle to regional AI market development, as divergent national approaches create compliance complexities that disproportionately burden small and medium enterprises seeking cross-border expansion.

Key Findings

ASEAN member states adopted divergent regulatory postures ranging from permissive sandbox models to prescriptive compliance-first frameworks

Of ten ASEAN nations published formal national AI strategies by the review period, though implementation maturity and enforcement mechanisms varied widely across jurisdictions

58%

Innovation-regulation tension manifested most acutely in cross-border data governance where competing sovereignty priorities hindered regional model training

Of surveyed technology firms operating across multiple ASEAN markets reported that inconsistent data protection regimes created significant compliance overhead and constrained model development

22%

Public consultation mechanisms in Southeast Asian AI policy development remained limited compared to multi-stakeholder approaches in the European Union

Of regional AI policy initiatives included structured public comment periods or civil society participation, compared to over 70 percent in EU regulatory processes

3.2x

Sectoral AI regulation in financial services and healthcare advanced faster than horizontal frameworks applicable across all industries

More sector-specific AI guidelines published than economy-wide horizontal regulations across ASEAN, reflecting pragmatic industry-led approaches but creating potential gaps in cross-cutting governance

Abstract

About This Research

Publisher: Brookings Institution Year: 2025 Type: Applied Research

Source: AI Policy in Southeast Asia: Navigating Between Innovation and Regulation

Relevance

Industries: Government Pillars: AI Compliance & Regulation, AI Governance & Risk Management Use Cases: Personalization & Recommendations Regions: Indonesia, Philippines, Singapore, Southeast Asia, Thailand, Vietnam

The ASEAN Approach: Principles Over Prescriptions

ASEAN's collective approach to AI governance favors principles-based frameworks over prescriptive regulations, reflecting both pragmatic recognition of member states' varying institutional capacities and a shared desire to avoid stifling the technological experimentation that drives economic growth. The ASEAN Guide on AI Governance and Ethics establishes foundational principles—transparency, fairness, security, and human oversight—while leaving implementation details to individual nations. This flexibility accommodates the region's developmental heterogeneity but creates challenges for organizations seeking consistent compliance standards across Southeast Asian markets.

Sectoral Regulation as the Pragmatic Middle Ground

Rather than pursuing comprehensive horizontal AI legislation, several ASEAN nations have adopted sectoral approaches that embed AI governance within existing industry-specific regulatory frameworks. Singapore's financial sector AI guidelines issued through the Monetary Authority of Singapore, Thailand's healthcare AI standards, and Malaysia's emerging telecommunications AI rules exemplify this pattern. Sectoral regulation allows governments to calibrate governance intensity to domain-specific risks while leveraging existing regulatory expertise and institutional relationships, though it risks creating governance gaps for cross-cutting AI applications that span multiple sectors.

Building Institutional Capacity for AI Governance

Effective AI governance requires institutional capabilities that many ASEAN nations are still developing. Technical expertise to evaluate algorithmic systems, organizational structures for cross-ministry coordination, and mechanisms for meaningful stakeholder consultation represent persistent capacity gaps. The research identifies knowledge-sharing programs, both within ASEAN and with external partners such as the OECD and the Global Partnership on AI, as essential accelerators for governance capacity development in the region's less advanced economies.

Key Statistics

7
ASEAN nations with published formal national AI strategies
AI Policy in Southeast Asia: Navigating Between Innovation and Regulation

58%
of regional firms report compliance overhead from inconsistent data rules
AI Policy in Southeast Asia: Navigating Between Innovation and Regulation

22%
of AI policy initiatives included public consultation mechanisms
AI Policy in Southeast Asia: Navigating Between Innovation and Regulation

3.2x
more sector-specific guidelines than horizontal AI regulations in ASEAN
AI Policy in Southeast Asia: Navigating Between Innovation and Regulation

Common Questions

ASEAN nations favor principles-based approaches for two primary reasons: pragmatic recognition that member states possess vastly different institutional capacities for implementing and enforcing detailed regulations, and a shared strategic priority of avoiding regulatory frameworks that might discourage the technological experimentation driving economic growth. This flexible approach accommodates the region's developmental heterogeneity while establishing foundational norms around transparency, fairness, and human oversight that all members can progressively implement.

Regulatory fragmentation across the ten ASEAN member states represents the most significant compliance challenge for businesses operating regionally. Divergent national approaches to data governance, algorithmic accountability, and sector-specific AI rules create complex compliance landscapes that require jurisdiction-by-jurisdiction legal analysis. This fragmentation disproportionately burdens small and medium enterprises that lack dedicated regulatory affairs teams, potentially concentrating cross-border AI deployment among larger organizations with greater compliance resources.

AI Policy in Southeast Asia: Navigating Between Innovation and Regulation