For decades, Southeast Asia has turned great-power rivalry to an economic advantage. By maintaining healthy ties with Washington and Beijing, ASEAN governments attracted investment, expanded trade and preserved room for diplomatic maneuver.
The great-power race for artificial-intelligence dominance, however, is changing that bargain. As the United States and China build competing technology networks, neutrality may no longer be enough to protect the region’s strategic autonomy.
The emerging divide is visible in the institutions taking shape around AI. Singapore and the Philippines have joined the US-led Pax Silica initiative, which aims to strengthen trusted supply chains for advanced technology.
Indonesia, meanwhile, became one of 29 founding members of the World Artificial Intelligence Cooperation Organization (WAICO), launched in July 2026 under China’s initiative.
Cambodia, Laos, Malaysia and Myanmar also joined as founding members. These affiliations do not mean ASEAN has split into opposing camps, but they do reveal how the region is entering different institutional networks as competition over AI intensifies.
AI is no longer merely another commercial sector. Its foundations include advanced semiconductors, cloud computing, data infrastructure, software, electricity and specialized expertise.
Control over these assets can shape access to markets, the security of critical systems and the capacity to innovate. Decisions and policy choices that appear technical today can carry strategic consequences tomorrow.
For ASEAN, the danger isn’t only that Washington or Beijing might demand political allegiance. More subtly, each power can influence the choices open to governments and businesses through export restrictions, technical standards, investment conditions and access to essential infrastructure.
A country may remain diplomatically nonaligned while becoming technologically dependent on an ecosystem it cannot easily leave.
That is the paradox of Southeast Asia’s AI moment. The region’s traditional hedging strategy rests on preserving options, yet technological dependence can gradually eliminate them. Neutrality remains valuable, but without the means to manage such dependence, it risks becoming a liability rather than a source of strength.
Technology and geopolitical leverage
The US and China are building influence through different, though not mutually exclusive, approaches. Pax Silica emphasizes trusted supply chains and cooperation across strategic technologies, while WAICO offers a framework for international AI cooperation and governance.
Neither initiative is an identical or inherently exclusive bloc, but both show that AI competition increasingly involves organizing international networks as well as developing better algorithms.
Recent export-control developments illustrate the stakes. On October 16, China proposed adding 23 AI technologies to its export-control catalog as part of a broader revision covering 40 technologies across AI, biotechnology and solar energy.
The proposal includes restrictions affecting the overseas deployment of certain AI models involving sensitive technologies. This followed years of US restrictions on advanced semiconductor exports to China. The policies are not identical, but both treat access to strategic technology as an instrument of state power.
Consider a Southeast Asian company operating a data center with American chips, foreign cloud software and services connected to Chinese technology suppliers. Such an arrangement may be commercially efficient.
But any change in export rules, licensing requirements or security restrictions could disrupt access to components or services, even if the company has no dispute with either government.
Technology systems are interconnected, and replacing one component may require changes to software, data architecture, cybersecurity arrangements and employee training. Once these systems are embedded in public administration or industrial production, switching suppliers can be expensive and disruptive.
An initial decision to adopt a technology may therefore constrain future choices long after the original investment is made. This is how economic interdependence can become geopolitical leverage: not necessarily by forcing another country to obey, but by making certain choices prohibitively costly. ASEAN’s challenge is to recognize that exposure before it hardens into dependence.
Investment without tech autonomy
Southeast Asia has good reasons to welcome the AI boom. A growing digital economy, strategic location and expanding infrastructure make it attractive to global technology companies.
Cushman & Wakefield reported in August that Asia-Pacific’s data-center development pipeline reached 26.5 gigawatts in the first half of 2026, with Southeast Asia accounting for approximately half of the region’s capacity under construction. Malaysia had 1,039 megawatts under construction, while Jakarta’s development pipeline reached 1,699 megawatts.
These figures show the region’s growing importance to the global AI economy. They do not, however, establish that Southeast Asia is gaining control over the technologies powering the expansion.
Data-center capacity is not the same as domestic technological capability; a country can host advanced computing infrastructure while relying on foreign suppliers for processors, software, intellectual property and specialized expertise.
This is especially relevant for Indonesia. Its participation in WAICO could widen opportunities for international cooperation and AI capacity-building, but it also needs a broad range of technologies, investment and expertise, including from American companies.
Its strategic interest is to ensure that cooperation with either side expands its options, not in swapping one dependency for another.
The same challenge applies across ASEAN, though national capacities differ considerably. Singapore has a sophisticated technology ecosystem, while Malaysia has become a major data-center hub.
Indonesia offers a large domestic market, but size alone cannot guarantee tech autonomy. Governments need skilled workers, research institutions, competitive domestic firms and the capacity to negotiate favorable investment terms.
Otherwise, the region could become indispensable to AI’s physical buildout without capturing a comparable share of its intellectual property and higher-value economic returns.
Foreign investment would still create jobs and infrastructure, but the most strategic capabilities could remain elsewhere. The issue is not whether foreign technology should be used, but whether its use strengthens domestic capability or entrenches dependence.
From diplomatic hedging to strategic choice
ASEAN should not respond by choosing between Washington and Beijing. Such a strategy would forfeit the benefits of competition while ignoring the region’s diverse economic and security interests.
Nor is technological self-sufficiency a realistic objective; even the most advanced economies rely on international supply chains. ASEAN should instead move from diplomatic hedging toward collective management of technological dependence.
First, governments should diversify critical suppliers wherever technically and economically feasible. That requires more than signing multiple agreements; it requires credible alternatives that can operate when access to a particular technology is restricted.
Second, regional standards for data portability, cybersecurity and interoperability should make it easier to switch between providers without compromising essential services. Third, public procurement and investment incentives should encourage knowledge transfer, workforce development and meaningful participation for domestic firms.
ASEAN’s collective market could also provide leverage. Individually, member states may struggle to negotiate favorable terms with global technology companies. Coordinated standards and procurement principles would give the region a stronger position, if governments can agree on practical rules and implement them consistently. Regional integration would then become more than a diplomatic slogan.
The most useful measure of AI sovereignty is not whether a country owns every component of its digital infrastructure. It is whether it can change suppliers, protect critical data and maintain essential services without prohibitive costs. This capacity to exit a technological relationship when necessary should become a central test of strategic autonomy.
ASEAN’s neutrality isn’t inherently a weakness. But its value depends on whether governments can turn diplomatic flexibility into technological resilience. As Washington and Beijing compete to shape the AI economy, ASEAN must preserve the ability to work with both while remaining able to refuse terms that undermine its interests.
In the AI era, neutrality will mean little if dependence dictates a country’s choices. True strategic autonomy begins when ASEAN can cooperate with the world without surrendering the freedom to choose its own technological future.
Ronny P Sasmita is a senior international affairs analyst at the Indonesia Strategic and Economic Action Institution, a Jakarta-based think tank. He holds a PhD in international political economy from the University of Tokyo.
