AI and GenAI investment areas for public sector in Asia Pacific

Artificial Intelligence (AI) is one of the few areas of spending that governments in the Asia Pacific region, say are immune to budget cuts.

The pressure to invest, especially in generative AI (GenAI) projects, is immense, with multiple stakeholders pushing to capture the opportunities and use cases the technology enables. 

However, a recent survey by IDC found that 48 per cent of Asia Pacific government agencies said that their previous AI technology investments needed significant overhaul and 27 per cent added they were prioritising new investments in 2024.

In this situation, it is often too easy to get distracted by concentrating on the demand for action rather than getting the basics right.

The focus should be on addressing government objectives and mapping those to GenAI use cases from a functional and industry perspective to gain the greatest value.

These may include productivity, improving citizen experience and running risk simulations for natural disaster responses.

Despite these opportunities, only one in 10 agencies are investing significantly in GenAI, with clear spending plans for training staff and acquiring GenAI capabilities.

Most investment going into pilots

Most of the investment (80 per cent of agencies) is being channeled into proof of concept (POC) projects in ringfenced pilot activities. Very few are going into full scale production.

Some of the biggest challenges governments need to address with GenAI implementations are associated with transparency, governance, and compliance.

Only a third of Asia Pacific government agencies interviewed by IDC have developed an AI governance committee and only half of those have executive oversight, such as a Chief AI Officer.

Agencies can rectify this by forming a diverse AI governance committee and a single executive for oversight to craft a responsible AI approach that can provide the framework for good policy.

IDC believes that in the case of GenAI project implementation success will depend on robust governance. This is essential for generating trust and accountability and moving beyond initial minimal risk to much higher value projects.

Within a broader scheme of things, trust underpins the success of AI, more so than any other technology. Any lack of explainability must be addressed right from the start as there is the big concern that AI and GenAI models operate like black boxes.

State of flux in regulatory policy

A big challenge is created by the state of flux and uncertainty around where regulatory policy will land. While some may view regulation as a barrier to innovation, the feedback IDC receives from the sector indicates the opposite is true – a lack of policy can result in many agencies being trapped in a holding pattern where decisions are deferred until the regulatory outlook becomes clear.

In a March 2024 IDC survey, 86 per cent of Asia Pacific government agencies said they agreed with the statement, “Laws and regulations governing the use and development of AI technologies are necessary for our industry to move forward".

In the same survey, 59 per cent said laws and regulations governing the use of AI will have mostly positive consequences for the future of AI technologies, due to the certainty and assurance they provide to both government agencies and private industries.

However, waiting for policy and regulation to develop is no longer an option. Rather, trials need to take place as policies evolve, targeting specific functions in a secure and safe environment and testing solutions in the context of the problems they are addressing.

Singapore’s light-handed approach

Singapore has taken a light-handed approach to regulation and the pace of its GenAI activities aimed at capturing the opportunities, such as fostering an incubator like environment to attract and develop AI start-ups as well as opting for governance frameworks over regulations.

The revised National AI Strategy (NAIS) launched in December 2023 provides clear direction for the AI sector and its collaboration and partnerships with global tech leaders.

In terms of governance, the AI Verify Foundation (AIVF) and the Infocomm Media Development Authority (IMDA) announced the development of a draft Model AI Governance Framework for Generative AI, to guide the development of responsible GenAI innovation.

In Australia, the Digital Transformation Agency (DTA) was quick to release in 2023 provisional guidelines for GenAI, using a principles-based approach to ensure responsible, secure, and ethical use.

In September 2023, the DTA launched an AI in Government Taskforce which is made up of representatives from agencies across the APS, to focus on safe and responsible use of AI and use cases by the Australian Public Service (APS).

The hunt for right skills and talent

The key to successful AI deployment is having the right skills and talent.

The critical skills shortages in government have come to a tipping point with AI. Three out of four agencies have told IDC that skills shortages significantly impact transformation rollouts, including AI projects.

For most, the delay is three to six months. Given the speed of change and urgency of transformation, this results in a significant negative impact.

Forty per cent of agencies told IDC that they were having difficulty in finding AI talent, particularly those with GenAI capabilities. This, combined with the understanding that AI is an essential tool to enhance productivity, will result in the need for agencies to reskill all employees for the next age of AI-driven productivity.

The biggest public sector investors in AI and GenAI are Singapore, Australia, India, and South Korea.

All these countries view the technology as not only a means to deliver on government objectives (productivity, citizen experience and service innovation) but more importantly, each has ambitions to use the technologies to capture opportunities in the digital economy.

For more information, please download the AI and GenAI Advancements are Revolutionising Government, Education, and Healthcare Use Cases in Asia/Pacific eBook now.

The author is the Head of Public Sector Research for IDC Asia Pacific.