While the United States and China continue to dominate the global artificial intelligence landscape, a new multibillion-dollar partnership is emerging between Southeast Asia and the Gulf. As middle powers, these two regions are leveraging their unique strengths to shape the future of the AI economy, bypassing direct competition with the world's two tech superpowers.
Currently, full-stack AI capacity is heavily concentrated. Last year, the U.S. and China produced 80 notable AI models. The U.S. alone operates 5,427 data centers, which is more than ten times its nearest competitor. Furthermore, out of the 33 nations hosting public-cloud AI capacity, only the U.S. and China run these systems using their own proprietary chips and providers. This has left the rest of the world operating largely as "rule-takers" under a fragmented regulatory environment where the U.S. favors a laissez-faire approach, the European Union emphasizes regulation, and China utilizes state direction.
Rather than chasing self-sufficiency at the technological frontier, the Gulf and Southeast Asia are building a collaborative model. Within the Gulf, the United Arab Emirates (UAE) has committed $148 billion to AI infrastructure over the last two years. Abu Dhabi’s state-backed AI group, G42, is partnering with OpenAI, Oracle, NVIDIA, SoftBank, and Cisco to construct Stargate UAE, a 1-gigawatt computing cluster expected to cost $30 billion. Additionally, G42 has developed the Jais 2 model, trained on 600 billion Arabic tokens, to foster a regional Arabic-language AI ecosystem.
The UAE is actively translating its financial scale and rapid development pace into deep ties with Southeast Asian nations like Singapore, Malaysia, and Vietnam. In February of this year, G42 signed a framework agreement worth up to $1 billion with a Vietnamese consortium to build national AI and cloud infrastructure. This initiative will cover government systems, industrial applications, academia, and workforce upskilling. Vietnam is highly prepared for this influx, boasting an active standalone AI Law, a national strategy to become a regional AI hub, and more than 25 percent of Southeast Asia’s generative-AI start-ups.
Other bilateral connections are also expanding rapidly. Malaysia, which drew $23 billion in data-center investments in 2024, has formal digital economy and AI agreements with the UAE, including cooperation under the MADANI AI initiative. In January 2025, Abu Dhabi’s state-owned clean energy company, Masdar, signed a $15 billion agreement to develop renewable energy in the Philippines. On the financial front, Project mBridge—a cross-border digital-currency initiative—now links the UAE, Saudi Arabia, and Thailand. These efforts are reinforced by political backing from the Joint Declaration on Economic Cooperation between ASEAN and the GCC, which explicitly endorsed collaboration in AI and the digital economy. Additionally, Singapore and the UAE have established memoranda on digital government.
Recent research from the AI Asia Pacific Institute identifies this exact pattern of growing cooperation across the UAE-Singapore agreements, the UAE-Malaysia MADANI AI initiative, and the UAE-Vietnam framework.
Geopolitical tensions, such as the recent Iran-U.S.-Israel conflict, have highlighted the vulnerability of technology supply chains and investments. Although the Gulf has shown resilience, the conflict underscored the necessity of diversifying economic partnerships to avoid over-reliance on single markets. This makes the partnership with Southeast Asia's booming digital economy highly strategic.
Looking forward, experts suggest the two regions could launch sectoral pilots to test AI applications based on their respective strengths. Southeast Asia, with its large underbanked population and fast-growing fintech sector, serves as an ideal testbed for financial inclusion and small-business credit. Meanwhile, the Gulf can leverage its growing state capacity and digitized legal frameworks to pilot AI in public administration and courts. These pilots could eventually expand into logistics, health, energy, and language models tailored for Arabic and Southeast Asian languages, demonstrating how middle powers can responsibly deploy and shape the global AI economy.
