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Southeast Asia’s Digital Economy Sees Slower Private Funding Growth Despite AI Boom

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Private funding for Southeast Asia’s digital economy rose 15% year-on-year to $7.7 billion in the 12 months to June 2025, lagging the global private investment growth rate of 25%, according to a new report by Google, Temasek Holdings, and Bain & Company.

While the figure marks an improvement from 2024, it remains about 70% below the region’s 2021 record high of $27 billion, reflecting a slower recovery from the post-pandemic investment cooldown.

The report found that funding is increasingly concentrated in late-stage rounds, with the share of seed-to-Series B deals dropping from around 30% to 20% over the past year.

This year’s edition expanded its coverage to include Brunei, Cambodia, Laos, and Myanmar, alongside Indonesia, Thailand, Vietnam, Singapore, Malaysia, and the Philippines — a region of nearly 700 million people and one of the world’s fastest-growing internet markets, driven by a young population and rising smartphone use.

Despite the funding slowdown, AI startups remain a bright spot, attracting 32% of all private capital in the region during the first half of 2025 — up slightly from 30% in the second half of 2024. Over 680 AI startups secured more than $2.3 billion, with Singapore hosting more than 495 of them.

The report also highlighted rapid data center expansion, as countries rush to build infrastructure for the AI boom. Data center capacity in Southeast Asia is expected to grow 2.8 times, surpassing the 2.2 times growth forecast for the wider Asia-Pacific.

Malaysia leads this expansion, with 2,415 MW of new capacity planned — more than half the region’s total 4,620 MW — attracting major investments from Microsoft, Amazon, Google, Tencent, Huawei, and Alibaba.

Meanwhile, TikTok plans to invest $4 billion in data hosting facilities in Thailand, while Google and Amazon are each investing $1 billion and $5 billion respectively in the country, underscoring the growing competition in Southeast Asia’s digital infrastructure landscape.

India Begins Repatriation of Citizens Who Fled Myanmar Cybercrime Center

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India has begun repatriating hundreds of its nationals who fled from a major cybercrime hub in Myanmar following a military raid on the facility last month. The operation marks the latest effort to rescue victims of human trafficking linked to Southeast Asia’s booming online scam industry.

An Indian Air Force transport plane departed Thailand on Thursday carrying 270 people, with another flight scheduled later in the day. A total of 465 Indians will be flown home from the Thai border town of Mae Sot, where they had taken refuge after escaping the notorious “KK Park” compound in Myawaddy, Myanmar, according to Thai army commander Maj. Gen. Maitree Chupreecha. The remaining group is expected to leave on Monday.

Myanmar’s military raided KK Park in mid-October, part of a wider crackdown on cyber scams and illegal gambling operations that have flourished along its borders. The compound reportedly hosted a large-scale scam network where foreign workers — many trafficked or deceived by false job offers — were forced to run fraudulent online schemes.

In total, more than 1,500 people from 28 countries fled the Myawaddy raid. Thai authorities temporarily housed nationals from India, China, the Philippines, Vietnam, Ethiopia, and Kenya while coordinating repatriation with their governments.

The United Nations estimates that cyber scam centers across Southeast Asia generate nearly $40 billion annually, often using trafficked labor. While Myanmar’s junta says it is dismantling such operations, independent media including The Irrawaddy report that scam networks continue to operate in Myawaddy despite the raids.

The issue has drawn global attention: the U.S. and U.K. recently sanctioned organizers of a Cambodian scam ring, while South Korea was shaken by the death of a young man believed to have been lured into one such operation.

Laos to cut electricity to crypto miners by 2026, prioritising AI and clean industry

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Laos plans to stop supplying electricity to cryptocurrency miners by the first quarter of 2026, shifting focus toward industries that contribute more directly to economic growth, such as AI data centers, metals refining, and electric vehicles, the country’s Deputy Energy Minister Chanthaboun Soukaloun told Reuters.

The landlocked Southeast Asian nation saw a crypto mining boom after a 2021 policy shift that attracted operators with cheap hydropower. However, the government now says the sector offers low economic value, creating few jobs and limited local supply chains.

“Crypto doesn’t create value compared to supplying power to industrial or commercial consumers,” Soukaloun said, noting that the government originally approved mining operations to absorb surplus electricity.

Power allocation to miners has already been reduced from 500 megawatts in 2021–2022 to around 150 MW, a 70% cut. Soukaloun added that while the government had planned to end supply earlier, abundant hydropower generation this year allowed operations to continue temporarily.

Often referred to as the “battery of Southeast Asia”, Laos exports most of its hydropower to Thailand and Vietnam and is now exploring increasing bilateral capacity to Vietnam beyond the current 8,000 MW.

Soukaloun also confirmed that talks with China are underway over a $555 million arbitration claim by a subsidiary of the Power Construction Corp of China regarding a hydropower project dispute.

Additionally, Laos expects to resume electricity exports to Singapore via the Lao-Thailand-Malaysia-Singapore (LTMS) corridor soon, pending final terms with Thailand.