The BGA Enterprise Technology Senior Director William Heidlage wrote an update to clients on AI regulations in the Indo-Pacific region.

Context

  • Artificial intelligence (AI) adoption will impact industries and countries across the Indo-Pacific. Notwithstanding its prevalence, the regulatory outlook for AI varies greatly between sectors. Not all uses fall within the same risk categories, and in some cases the benefits are not clear, so regulators face the prospect of considering guidelines and regulatory mechanisms that would cover a broad range of issues, from infrastructure policies to trade policies and safety guidelines to privacy and child protection. 
  • Barring a few exceptions, AI use in the financial services, consumer packaged goods and energy sectors are viewed positively by regulators and more likely to be supported with more accommodating requirements and regulations. Efficiencies in these sectors not only stand to benefit companies’ bottom lines but also the environment, consumers and governments’ growth agendas. The technology sector has a more challenging outlook and is the most exposed to regulatory developments. 

Significance

  • The healthcare sector faces the most uncertain regulatory future despite optimistic breakthroughs. Governments and medical professionals in the Indo-Pacific are hesitant to adopt clinical AI solutions since they are concerned about the “black box” issue with AI algorithms. They are also unsure how to effectively regulate ever-evolving models that have a high-risk potential. Despite optimism and trial runs, it will take a long time for clinical AI solutions to become integrated in most markets in the region.
  • AI will be one of the many facets driving energy demand growth in several markets in the Indo-Pacific in the short to medium term. Its impact on the sector will be two-fold: on one hand it can drive efficiencies in energy supply chains – in oil and gas exploration, infrastructure maintenance, grid operations and demand modeling – but on the other hand it will also put pressure on the net-zero commitments of the countries aiming to become AI hubs. The regulatory outlook on the use of AI for optimization in the energy sector will likely remain active with minimal restrictions. However, countries’ policies on their power grids and resource efficiencies of AI infrastructure are likely to differ, dictating and competing with business interests. 

Implications

  • AI’s development is increasing tensions between technology companies’ climate and sustainability targets and growing demand and uses for AI tools. The vast amounts of energy and water consumed by data centers in training and deploying such systems is putting resource pressures on concentrated data center hubs in the region. Singapore, Taiwan and most recently Johor in Malaysia, have introduced limits on data center construction over concerns about adequate power supplies and resource intensity in these operations. 
  • Looking ahead, technology companies are increasingly focused on similar future challenges: ensuring AI safety and ethics, managing energy consumption, developing sustainable AI practices, and building trust with users and regulators. The monitoring of regulatory trends can help develop understanding of the subtle cultural nuances in AI policies of the region. This can allow companies to identify emerging opportunities within this domain and engage the right government stakeholders. As thought leaders within AI safety and ethics, knowledge of the developing AI policy landscape can also allow companies to best align their strategies with governments’ priorities in the region and help in proactively shaping the dialogue on AI safety. 

We will continue to keep you updated on technology developments as they occur. If you have any comments or questions, please contact BGA Enterprise Technology Senior Director William Heidlage at wheidlage@bowergroupasia.com. 

Best regards,

BGA Technology Team

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Senior Director

Will helps external stakeholders understand how BGA can address their toughest business and policy challenges in the Indo-Pacific. He has extensive experience as a commercial advisor and is an expert on China’s domestic politics, global technology policy and corporate communications.  In his spare time, Will serves as the Global Executive Director of Young China Watchers, a nonprofit organization for young professionals with over 6,000 members in 10 chapters worldwide, including the chapter he founded in Washington, D.C.  Before his current position at BGA, Will was the director of strategic partnerships at Protocol, a startup technology media company and subsidiary of ... Read More