Regional Powers Push Back Against Western AI Governance Models

SOUTHEAST ASIA AND THE GULF CHART ALTERNATIVE PATH IN FRAGMENTED AI LANDSCAPE

No unified governance framework governs the global artificial intelligence industry. Technological development unfolds instead across a patchwork of national and regional rules, with the United States pursuing a hands-off approach, the European Union emphasizing regulation, and China directing development through state power. This fragmentation leaves most of the world in a subordinate position, participating as rule-takers rather than rule-makers in an industry shaped by a small number of dominant players.

The concentration of AI capacity tells the story plainly. The United States and China together produced 80 notable AI models last year, with the U.S. alone operating 5,427 data centers, more than 10 times the number in any other country. Of the 33 countries that host public-cloud AI capacity, only the U.S. and China run it on their own chips using their own providers. That technological dominance translates directly into geopolitical influence and economic control.

Yet Southeast Asia and the Gulf, despite lacking the capacity to build frontier chips or train cutting-edge models, are attempting to convert their dependent status into strategic leverage. Rather than pursuing self-sufficiency at the technological frontier, both regions are deepening bilateral and multilateral AI cooperation that reaches multibillion-dollar scale, turning their complementary strengths into shared advantage.

The partnership rests on asymmetric but complementary endowments. The Gulf possesses abundant capital, inexpensive energy, and the infrastructure capacity to build at speed and scale. Saudi Arabia alone is investing $100 billion in AI start-ups and data centers through Project Transcendence. Southeast Asia, by contrast, commands strong and growing demand. Its digital economy is projected to exceed $300 billion in gross merchandise value by 2025, and its data-center market is forecast to more than double by 2030, from $13.7 billion to $30.5 billion.

Within the Gulf, the United Arab Emirates has emerged as the primary driver of this strategy. Over the past two years, the UAE committed $148 billion to AI infrastructure. Stargate UAE, a 1-gigawatt computing cluster that G42, Abu Dhabi’s state-backed AI group, is building in partnership with OpenAI, Oracle, NVIDIA, SoftBank, and Cisco, is expected to cost around $30 billion. G42’s Jais 2 model, trained on 600 billion Arabic tokens, is developing a homegrown Arabic-language AI ecosystem that extends well beyond the UAE’s borders.

The UAE’s substantial ties with Southeast Asia provide the connective tissue for this cooperation. In February of this year, G42 signed a framework agreement with a Vietnamese consortium worth up to $1 billion to build national AI and cloud infrastructure spanning government systems, industrial applications, academia, and workforce upskilling programs. Vietnam is well positioned to absorb such investment. Its standalone AI Law is already in force, its national strategy aims to establish the country as a regional AI hub, and it hosts more than a quarter of Southeast Asia’s generative-AI start-ups.

Malaysia, which attracted $23 billion in data-center investment in 2024, has formalized its own agreements with the UAE on AI and the digital economy. Masdar, Abu Dhabi’s state-owned clean energy company, signed a $15 billion agreement in January 2025 to develop renewables in the Philippines. Project mBridge, a cross-border digital-currency initiative, links the UAE, Thailand, and Saudi Arabia. The Joint Declaration on Economic Cooperation between ASEAN and the GCC explicitly endorsed cooperation in AI and the digital economy, providing political backing to what began as bilateral economic transactions.

Recent research from the AI Asia Pacific Institute identifies this same pattern across multiple UAE partnerships: Singapore memoranda on digital government, Malaysia cooperation under the MADANI AI initiative, and the Vietnam framework agreement. The relationship’s strength lies in its deal-by-deal structure, which matches specific capabilities to specific needs and allows cooperation to advance without requiring region-wide consensus.

Geopolitical events can reshape technology investment and supply chains with remarkable speed, as the recent Iran-U.S.-Israel conflict demonstrated. While the Gulf has shown considerable resilience, the conflict reinforced the importance of diversifying economic partnerships and reducing excessive dependence on any single market or geopolitical relationship. Against this backdrop, Southeast Asia’s rapidly growing digital economy and the Gulf’s expanding role as a global AI infrastructure investor are becoming increasingly complementary, making a deeper bilateral partnership both an economic opportunity and a prudent hedge against geopolitical uncertainty.

A promising next step would be sectoral pilots, each region testing AI in the domain best suited to its own endowments and learning from the other’s results. Southeast Asia, with its large underbanked populations and fast-growing fintech sector, is a natural testbed for financial inclusion and small-business credit. The Gulf, with its growing state capacity and legal digitization, is well placed to pilot AI in courts and public administration. These pilots could generate practical lessons for both sides and operate through the bilateral agreements already in place. The same approach could extend to health, logistics, energy, and language models built for Arabic and Southeast Asian languages.

Full-stack and frontier AI capabilities remain beyond the reach of any single middle power, and both the Gulf and Southeast Asia are likely to remain dependent on foreign technology imports for the foreseeable future. But they have an opportunity to demonstrate that middle powers can shape the AI economy through investment, trusted partnerships, and responsible deployment. The U.S. and China may define what AI can do. The open question is whether Southeast Asia and the Gulf can move fast enough, together, to define where it delivers the greatest value.