Low outlay on technology this year in major ASEAN economies: report
Even though tech spending in the Asia-Pacific (APAC) is expected to grow by 6-7% from 2024 to 2027, the spending in six major Southeast Asian economies is expected to grow by only 1% this year, according to a report by research and advisory company Forrester.
The “Asia Pacific Tech Spend Forecast” published on Tuesday (June 11) expects tech spending in the region to remain robust and grow by a compounded annual growth rate of 6.4% to 7.4% annually, reaching US$876 billion in 2027.
Over the next few years, software spending would continue its rapid growth, followed by spending on IT services, communications equipment, and computer equipment, the report said.
The share of software purchases would climb from 26.4% in 2024 to 30% of total tech spend in 2027, outpacing the other IT categories due to demand generated by artificial intelligence (AI) and AI-augmented enterprise software and services, the report said.
“While challenges such as regulatory environments, global economic conditions, and talent shortages in the region present hurdles, overall, the APAC market is well-positioned for tech growth,” Forrester’s principal analyst Leslie Joseph said.
“As the region continues to grow in importance in the tech world, new opportunities offered by the explosion of AI and the increased demand for cloud can be significant revenue and growth drivers for firms.”
However, the spending in five Southeast Asian economies – Indonesia, Malaysia, Philippines, Thailand, and Vietnam – as well as Taiwan, is expected to increase by only 1%, or $74 billion, this year.
Uptick in digital consumption spurred by large Millennial and Gen Z populations, favourable policy environments, and investments from tech giants would accelerate digital innovation, the report said.
India leads APAC tech spending
India’s technology spending this year is expected to be the highest in APAC, with an estimated growth of 8%, or $54.5 billion, this year, according to the report.
The Indian tech economy continues to enjoy strong growth due to an all-round digitisation push from the central and state governments, the report said.
Singapore is expected to see the second highest growth in technology spending at 5% – $18 billion – followed by Australia (4% – $49 billion) and China (2% – $261.9 billion).
Despite slowing economic growth and trade restrictions, China’s efforts governing AI risks and introducing regulation would contribute to this growth, the report said.
Thailand’s bid to digital transformation
Several tech giants have announced their investment plans in Thailand, which could support the Thai government’s bid to become a digital hub in the ASEAN region.
Amazon Web Services had announced investments of $5 billion (190 billion baht) to set up its data centre in Thailand over 15 years.
Under the memorandum of understanding with the Thai government to envisage the nation’s digital-first, AI-powered future, Microsoft had announced its commitment to build new cloud and artificial intelligence (AI) infrastructure in the country.
The company’s chairman and CEO Satya Nadella said the company also was committed to providing AI skills to 2.5 million people in the ASEAN region, which is expected to benefit more than 100,000 individuals in Thailand.
“Thailand has an incredible opportunity to build a digital-first, AI-powered future,” he said. “Our new data-centre region, along with the investments we are making in cloud and AI infrastructure, as well as AI skilling, build on our long-standing commitment to the country – and will help Thai organisations across the public and private sector drive new impact and growth.”
