Navigating digital transformation in Southeast Asia: new insights on AI and digital trade

Southeast Asia is at a pivotal moment in its digital journey. Rapid growth in digital technologies and artificial intelligence (AI) offers huge opportunities for economic development, innovation, and regional integration. At the same time, these advances bring new risks that, if not carefully managed, could undermine trust and widen inequalities.

Cambridge Industrial Innovation Policy are launching a series of new policy briefs that draw on the Lloyd’s Register Foundation World Risk Poll and related data sources to address these challenges. The policy briefs link public perceptions of risk to policy responses, offering fresh insights into how policymakers in Southeast Asia can navigate the digital future.

AI in focus: opportunities and risks

By Zoi Roupakia, Hanlin Zhang, Jiaqi Li and Dr Jennifer Castañeda-Navarrete

The new policy brief AI risks and governance in Southeast Asia highlights the scale of economic potential. Projections suggest that AI could add up to $950 billion to the region’s GDP by 2030, equivalent to 10-18% of national output in some countries. Yet public opinion shows caution. Only a third of people in the region believe AI will mostly benefit society, with optimism particularly low among women in countries where digital inclusion is limited.

Concerns about data theft also shape public views in Southeast Asia, which ranks among the most worried regions in the world. In this region, such concerns are closely linked to lower trust in AI. Globally, countries with responsible AI governance frameworks and stronger implementation capacity show higher levels of optimism in AI’s benefits.

Governance frameworks are being developed across the region, but implementation is uneven and often voluntary. The policy brief points to the need for gender-responsive and environmentally sustainable approaches, inclusive capacity-building to build trust in AI systems and regional collaboration to advance the institutional foundations for responsible AI.

Key findings:

• Only 33% of people in Southeast Asia believe AI will mostly benefit society, below the global average.
• Women are less optimistic than men, particularly where digital inclusion is low.
• Concerns about data security are widespread and linked to lower trust in AI.
• Governance frameworks exist but remain uneven, with limited enforceable safeguards.
• Responsible AI governance and readiness are associated with greater optimism about AI.

Watch the explainer video on AI governance and public perceptions:

Digital trade in focus: trust and regulation

By Dr Karishma Banga and Deep Mehta

The policy brief Rising risks and digital trade policy in Southeast Asia examines how concerns about data privacy and security influence policy. In Southeast Asia, many people fear their data will be stolen and worry about government misuse of personal information. These perceptions are reflected in policy choices. Countries with higher digital risks often participate in more trade agreements with provisions on e-commerce, consumer protection, and data privacy. At the same time, many preserve flexibility by avoiding commitments to unrestricted cross-border data flows.

The analysis shows a fragmented landscape. While some Southeast Asian countries allow free flow of data, others impose strict localisation requirements. This divergence creates uncertainty for businesses and complicates regional integration. The brief recommends embedding a risk-based approach in trade agreements, fostering cooperation on AI standards, and strengthening regional dialogue to build trust in digital trade.

Key findings:

• 86% of people in Southeast Asia are concerned about their data being stolen
• A similar proportion also fear government misuse of personal data.
• Countries perceiving higher digital risks retain more policy space, avoiding commitments on free cross border data flows or localisation bans.
• Policies remain fragmented, particularly around cross-border data flows.

Watch the explainer video on digital trade and data governance:

Towards inclusive and resilient digital futures

Together, these briefs highlight the central role of public perception in shaping effective governance. By linking citizens’ concerns with policy responses, they provide a roadmap for inclusive and resilient digital futures in Southeast Asia.

Download: AI risks and governance in Southeast Asia

Download: Rising risks and digital trade policy in Southeast Asia

About the project

These new policy briefs form part of the project Policymaking for a more resilient world: leveraging the World Risk Poll for more effective digital, labour, and industrial policies, funded by Lloyd’s Register Foundation. Led by Cambridge Industrial Innovation Policy (IfM Engage), the project explores how public perceptions of risk can inform policymaking, with a particular focus on Southeast Asia.

Four policy briefs have been published, covering AI, digital trade, labour policy and industrial policy. Each brief is accompanied by accessible materials such as explainer videos and infographics, and the findings are being shared with policymakers and regional stakeholders through in-person and online workshops. The project runs from September 2024 to December 2025 as part of Lloyd’s Register Foundation’s ‘World Risk Poll into action’ programme.

Read more: Insights on labour and industrial policy