As Vietnam leads on AI rules, Southeast Asia risks ‘economic own goal’

Southeast Asian countries are racing to assert control over their data flows, driven by a potent mix of nationalist sentiment and security anxieties.But analysts warn that while certain measures may deliver domestic economic benefits, the broader push risks undermining innovation, deterring foreign investment and even cutting the region off from the global digital economy.On March 1, Vietnam became the first Southeast Asian nation to have in force a comprehensive law on artificial intelligence. Passed last December after about three months of drafting, the legislation requires companies to clearly label AI-generated content, such as deepfakes, and disclose to customers when they are interacting with an artificial agent.The speed of its passage has alarmed the business community. The Business Software Alliance, a global trade association whose members include Amazon Web Services and Microsoft, in February voiced concerns that Hanoi’s regulations “appeared to be rushed” and did not provide companies with adequate time to comply.It called for the removal of a requirement that all AI systems with “foreign elements” maintain a local presence in Vietnam, arguing the rule was “disproportionate” and would “unfairly disadvantage foreign AI providers operating in Vietnam which do not deploy high-risk AI systems”.It is not Vietnam’s first brush with regulatory controversy. A cybersecurity law passed in 2018, which forced global technology companies to set up local offices and store data in the country, also triggered a backlash.