This press release was issued by Bain & Company.

• AI productivity gains alone are insufficient in Southeast Asia due to lower labor costs. CEOs must focus on growth, scalability and new business models 
• Bain & Company to launch new AI Innovation Hub in Singapore, supported by the Singapore Economic Development Board, to accelerate AI transformation for enterprises across Southeast Asia

AI is reshaping competition worldwide, but in Southeast Asia’s diverse markets, CEOs must lead AI transformation as a business transformation, not just a technology adoption, to unlock growth, according to a new report from Bain & Company.

The report, “The Southeast Asia CEO’s Guide to AI Transformation: Six lessons that can turn AI Potential into a competitive edge for Southeast Asia”, highlights that while bold claims about disruption are widespread, AI’s true impact in Southeast Asia remains unclear. The region’s unique characteristics – fragmented markets, high trade dependency, a highly digitally engaged population, and persisting gaps in essential services – make it challenging for CEOs to cut through the noise and define the right AI strategy for their organization.

The report suggests that real AI transformation begins with an outside-in perspective on how AI could reshape the business, followed by strategic bets that deliver meaningful impact.

The report highlights key lessons from companies that are already seeing tangible returns from their AI investments. It finds that productivity gains alone rarely drive bottom-line growth, particularly in Southeast Asia where labor costs are relatively low. Average monthly wages in the region are about 7% of US levels, leaving limited room for headcount reduction to deliver meaningful returns on AI investments. With large-cap companies making up only 40% of Southeast Asia’s market capitalization (compared with 60% in India), fewer firms in the region have the scale to absorb AI’s upfront costs or spread investments across large operations.

The report urges CEOs to set bold goals around speed and scalability by defining KPIs that measure how quickly outcomes are delivered and how efficiently the business can grow, and to use AI to redesign core commercial and delivery models to boost productivity and expand capacity without increasing team size.

CEOs must also recognize that successful AI transformation depends on people and change management as much as technology. The report highlights the concepts of the “Lab,” where technical talent reinvents processes and drives adoption, and the “Crowd,” where employees across the organization are upskilled to build AI fluency.

Empowering businesses to accelerate AI transformation through a new Singapore AI Innovation Hub

Building on its commitment to advancing AI in Southeast Asia, Bain & Company will launch a new AI Innovation Hub in Singapore. The hub, supported by the Singapore Economic Development Board (EDB), will serve as a regional center for developing and scaling AI solutions, helping companies move from experimentation to enterprise-wide transformation.

With more than a thousand AI startups in Singapore and S$198.3 billion worth of economic benefits attributable to AI by 2030, the AI Innovation Hub is well-placed to leverage the growth of the industry in Singapore.

It will focus on developing production-level AI solutions for priority sectors such as advanced manufacturing, energy and natural resources, financial services, healthcare, consumer products and retail.

From predictive maintenance in manufacturing and regulatory support in financial services to personalization in consumer industries, the hub will deliver proofs of concept and minimum viable products for AI solutions. It will also help companies strengthen their in-house capabilities, from setting up AI centers of excellence to embedding engineering excellence.