Artificial Intelligence (AI) is currently a major topic of discussion regarding global technological dominance. With its capabilities, AI can provide efficiency for the production of both goods and services and is reliable in nature. This is what makes AI play an important role in the production sector and will determine the future direction of geopolitics.

This has led to rivalry between various blocs and countries, especially superpowers, striving for dominance and even hegemony in AI. The competition between the United States and China in this regard can be described as contested leadership (Flemes & Lobell, 2015). The recent clash of AI chips in the semiconductor industry and supply chain of rare earth materials can describe this clash as becoming more serious. In addition, The United States, as the pioneer of the internet, is striving to remain dominant, while China is striving to become a new player with cheaper production, and the European Union seeks to become a leader in the ethical use of AI. While Indonesia, or the Global South in this case, is once again not a major player, even though it has great potential in terms of both material and human resources.

The global development of artificial intelligence is largely shaped by the dominance of the United States and China. Their technological capabilities, corporate ecosystems, as well as regulatory frameworks have become benchmarks for much of the world. The strategic rivalry between these two powers increasingly mirrors an arms race (Williams, 2025). This issue is not just limited in terms of military applications of AI but also in economic, political, and normative dimensions. This competition inevitably influences Southeast Asia, where countries are deeply embedded in global supply chains and rely heavily on external technological innovation. Decisions regarding digital infrastructure, which are dominated by technology providers from the U.S and China, and policy orientations within the region are closely tied to the competing influences of Washington and Beijing.

A key component of AI governance lies in the vulnerability of its supply chains, especially those regarding the critical minerals essential for building AI infrastructure. The production of semiconductors and batteries strongly depends on materials such as nickel, cobalt, and rare earth elements (Miningworld.com, 2024).Indonesia, as the world’s largest holder of nickel reserves, has introduced increasingly protectionist measures to safeguard these strategic assets and also promote domestic value creation through industrial down-streaming. This  particular form of resource nationalism depicts Indonesia’s ambition to secure a stronger position within the new AI-driven global economy. At the same time, other countries are seeking to diversify their supply networks to reduce dependence on single sources, while major powers like the United States and China continue to compete for dominance over these very critical supply chains.

Other than minerals, artificial intelligence results in heavy energy and water requirements (Robinson, 2025; Hererra et al., 2025) especially to power data centers and cool high-performance computing systems. Such resource strains increase the possibility of new types of conflict over access to essential inputs, instead of just minerals including the energy and water required to support the large-scale AI processes. As a result, the geopolitics of AI is becoming more and more connected to global resource governance, further complicating international as well as regional power relations.

From Indonesia to ASEAN: Challenges and Opportunities

The strategic stance of Indonesia in its natural resources management and the insistence on technological independence reflects a wider problem that many nations in Southeast Asia have been experiencing.  Being the largest economy in the region and a major player in the ASEAN, Indonesia frequently sets a precedent in terms of balancing national interests with regional cooperation. Its downstream-industry focus and digital sovereignty has influenced other nearby states to replicate this ambition in an attempt to enhance their role in the global supply chains of AI. This assertiveness does, however, also underscore the conflict between national and regional interests, in which efforts to build domestic capacity may impede ASEAN’s unity and cohesion when it comes to issues of formulating and implementing a common strategy in dealing with AI governance.

This dynamic has triggered each ASEAN member to assert its sovereignty by positioning itself as a potential leader in the development of AI in the region. National strategies concerning digital transformation and AI are expressed more and more as essential pathways to economic competitiveness, technological self-reliance, as well as geopolitical power. However, the pursuit of these goals is not always aligned at the regional sphere, which enhances the risks of fragmented strategies and overlapping ambitions. With the national interests of countries taking center stage, the competition over resources, markets and technical alliances can intensify. In severe instances, this desire to lead can cause tensions or conflicts between the ASEAN members, particularly when AI development collides with security agents, cross-border data patterns, or affiliation to foreign interests such as the United States and China. Therefore, even though national strategy is based on sovereignty, it also has the potential of creating intraregional rivalry which can weaken the collective unity of ASEAN.

The majority of ASEAN member states are developing nations that are frequently referred to as Global South. Under the core-periphery concept, these countries have been at the peripheral end of the international system that provides raw materials but pays disproportionately expensive prices on manufactured products made in the industrialised core. In the realm of artificial intelligence, this particular imbalance is in the form of unequal distribution of digital resources.  ASEAN member states tend to serve as data providers of global technology companies and also turn into consumers of AI systems created and regulated by the same players of the Global North, including the United States, Europe, and China. Such a dynamic continues the dependency and also raises serious questions on digital sovereignty in the region.

The emergence of generative and “agentic” AI, systems that can make autonomous decisions add further challenges on this issue. Despite the fact that these technologies are capable of increasing efficiency and innovation in both the public and private sector, there is a risk of these technologies replacing large segments of the workforce, especially in labor-intensive economies. The World Bank estimates that AI could eliminate about 92 million jobs globally while creating approximately 170 million new ones (Arias et al., 2025). However, these aggregate numbers hide significant distributional problems: Which areas will the jobs be lost, and which regions will be the biggest beneficiaries of new opportunities? In case the displacement mostly takes place among the ASEAN states without the corresponding increase in the number of high-value jobs, it can lead to the increase in inequality, social dissatisfaction, and even pose a threat to the stability of the region. Therefore, although AI has potential to spur very significant economic growth, its disproportionate impact in the Global South render it as a kind of a double-edged sword for ASEAN’s socio-economic as well as political trajectories.

Another very big challenge facing ASEAN in adopting AI is the long-standing digital divide that exists not only between urban and rural areas but also among the member countries themselves. The growth of internet access across ASEAN remains very uneven, with notable disparities between urban and rural regions (Rashid, et al., 2025). Although the regional average approaches 80% (Statista, 2025), this does not guarantee that the use of the internet and AI will drive efficiency and economic growth in ASEAN, as deep inequalities in connectivity continue to constrain inclusive AI-driven development.

In addition to access, digital literacy remains a very fundamental and formidable barrier. According to the ASEAN Foundation, fundamental skills like critical thinking, data privacy awareness, and ability to identify misinformation remain underdeveloped in most of the member states. The absence of such competencies leaves citizens vulnerable to several cyber threats, such as information theft, online fraud, and transnational digital crimes. These vulnerabilities not only jeopardise the security of individuals, but also undermine the trust people have in technology, generating a social push-back against the adoption of AI.

To add to these challenges, ASEAN nations are becoming increasingly susceptible to cross-border cyber-attacks, hacking, disinformation campaigns as well as the manipulation of political narratives through the use of deepfakes. If left unchecked, such threats can weaken the national institutions of member countries and put pressure on the relations within the region. The concept of data sovereignty also makes the situation highly complicated: with data being a strategic national asset, the power to collect, store, and use it greatly influences the realm of security and policy-making. Nevertheless, the lack of a very unified and harmonized data governance system within ASEAN negatively affects the pursuit of privacy protection as well as the promotion of equitable digital transformation.

With new dynamics like the rapid development of artificial intelligence facing ASEAN,  the block has the potential to handle them with the same skill as it has addressed past crises and changes, turning them into highly essential drivers of future regional growth. The resilience of ASEAN's populace is a highly critical factor in this process. Historically, the people living in Southeast Asia have exhibited strong resilience and resourcefulness when it comes to economic crises, political shifts, as well as technological disruptions. This resilience establishes a very vital foundation to deal with the ambiguities and challenges of AI.

As artificial intelligence remakes the balance of world order and its future, Indonesia and its Southeast Asian neighbors will have to decide on whether they will become observers or become the architects of the new digital order. The rivalry between Washington and Beijing will keep on defining the margins and parameters of AI governance, but it should not dictate the fate of the Global South. With a further step towards cooperation based on common resources, inclusive governance, as well as digital sovereignty, ASEAN can pave its own way, a better way that safeguards its citizens against technological disruption and empowers them through innovation. In this uncertain age, Indonesia's leadership and the collective resilience of the region will not only determine how Southeast Asia responds to AI, but also how it contributes to a more equitable and balanced technological future.