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APAC: Navigating the AI advancement

In this Insight article, Huzaifah Sehgal, from Walker Martineau Saleem LLP, explores the rapid rise of artificial intelligence (AI) in the Asia-Pacific region, its impact on various industries, the challenges related to AI regulation, and the need for an accountable and ethical approach to foster trust and further integration of AI technologies in the APAC region.

blackred / Signature collection / istockphoto.com

The notion of artificial intelligence (AI) started developing as early as the 1940s. However, it was not until another decade that this term started representing the idea of computers or machines making decisions akin to human intelligence. Three-quarters of a century down the road, AI has revolutionized industries and societies in more ways than one can even contemplate. Nevertheless, AI's untapped depths of potential are yet to be unveiled, especially in the APAC region.

The Covid-19 pandemic played a substantial part in the increased adoption of AI technologies by businesses, organizations, and even governments in the Asia-Pacific region. The benefits that AI brought to the table, in the form of reduced risks, increased quality, and efficiency, encouraged the further retention and incorporation of AI technologies.

Trends in APAC

The APAC region is witnessing unprecedented growth and investment in the field of AI. The market size of AI in this region is expected to quadruple from $22.1 billion in 2022 to $87.6 billion by 2028. There has been a notable increase in AI startups and businesses in China, Australia, India, and Singapore. Chinese startups alone have secured funding of billions of dollars. The lack of concrete regulatory regimes for AI and a general inclination towards innovation and research have created a nurturing environment for such entrepreneurial ventures.

Additionally, AI-powered tools have swept across a variety of industries in APAC, with the most prominent being the banking sector. AI is employed to detect fraud and mitigate risks in the banking industry. The ability of AI software to effortlessly navigate through layers of data and identify minute discrepancies, unlike humans, is also heavily relied upon in healthcare sectors of APAC countries. The AI healthcare market size in this region surpassed $274 million in 2020 with an estimated growth rate of 48% between 2021 and 2027. AI-driven robotic surgery has recently been introduced in Pakistan, which marks a transformative development in the field of medicine and surgery. While only a selected few top hospitals provide this procedure, the usability of AI in the medical setting is slowly but surely gaining momentum in developing South-East Asia.

Following the banking and healthcare sectors, AI technologies are widely utilized by governments of APAC countries as well as private businesses and professional service providers; the latter are aggressively catching up to the banking sector. Of particular interest to such private businesses and professional service providers is generative AI, which has reformed the areas of content creation and digital marketing. The augmented usage of AI in the private sector has gravely impacted the job market too, making many jobs redundant while also opening doors to many others. The relatively infant yet well-remunerated field of Data Prompt Engineering is one such example.

APAC organizations are now ensuring that their employees keep up with the pace of AI growth by acquiring new skills in AI. This activity of keeping up with the changing market dynamics not only ensures the continued employability of its employees but also determines the relevance of these APAC organizations in the coming years.

A rather unusual utilization of AI is seen in Chinese schools and classrooms, where AI-powered gadgets are used to monitor the behavior of children. Prior to their operation being suspended, AI headbands were used to monitor children's level of focus via neurofeedback. The headband not only changed color when the student lost focus but also sent the information to the student's parents and teachers, adding undue pressure on the student. In addition to this, AI-powered cameras are still used in certain Chinese schools and classrooms to monitor the behavioral activities of students tracking when the student yawns or uses a phone. According to reports, the data obtained through these AI tools is utilized for research purposes. Clearly, these practices illustrate an utter disregard for data privacy and security of students.

Nevertheless, the increased significance of AI in the Asia-Pacific is evident from the commitment of APAC countries toward AI research and development. Japan, China, Singapore, India, and even Pakistan have all announced multi-faceted national AI strategies. Made public in May 2023, the draft of the National AI Policy presented by the Ministry of Information, Technology and Telecommunication Pakistan, has laid down a four-pillar strategy towards AI development. From raising awareness and building a trusted environment to transformation and evolution, the forty-page policy sets both short-term and long-term goals for AI adoption in Pakistan, highlighting the elevated relevance and power of AI in the contemporary APAC landscape.

AI Regulation in APAC

Amidst the rise of AI in APAC, there are concerns about data security and privacy, particularly in the absence of any regulatory framework. Since the entire premise of AI technologies is built upon the data provided to it, data serves as the lifeblood that fuels the operation and worthiness of AI. Without a proper system of checks and balances, the information contained in this data may be misused by malicious AI software or cybercriminals, resulting in not only breaches of data privacy but also possible harm to individuals or their properties.

However, developing a regulatory mechanism for AI has been a daunting task for the global community as a whole, let alone the APAC region. The peculiarly complex nature of AI and its ever-evolving character have been two of the foremost reasons for the lack of consensus on AI regulation. What adds to the list of difficulties is that AI challenges the traditional concepts of intellectual property when it comes to who owns any particular AI technology - the person who developed the AI program, who utilizes it, or the AI program itself which is capable of making human-like decisions? This leads to further legal uncertainty; who is to be held liable for any unlawful activity of an AI program if the said activity took place without any human intervention or contribution? There are no easy answers to these questions.

Nevertheless, in line with the European and Canadian approaches towards AI regulation, several APAC members, including Australia, China, and Taiwan, have also opted for a risk-based regulatory approach.

In regard to AI regulation, Australia primarily relies upon a voluntary regulatory scheme based on its AI Ethics framework and existing laws on data privacy and intellectual property. The Federal Government of Australia has hinted towards AI-specific legislation by announcing a complete review of governance mechanisms; however, it is too soon to say anything for sure. Likewise, Singapore and Hong Kong have governmental guidelines to promote AI friendliness with no legal strings attached.

APAC countries in the South-Asian region, such as India and Pakistan, are trying to figure out what kind of approach they would like to adopt when it comes to AI regulation. Both states do not want to hinder the process of innovation by imposing strict legal structures. Considering that India and Pakistan have published their respective National AI policies, it won't be too long before AI-specific legislation is introduced in the Indian sub-region.

Unsurprisingly, China and Japan are the only two countries in the Asia-Pacific region that have some level of certainty when it comes to the regulation of AI. The Cybersecurity Administration of China has presented proposals for restrictive measures on companies that are developing generative AI, considering the extent of the impact of such technologies. These proposals are anticipated to be finalized before the end of 2023.

Japan, on the other hand, has opted for a two-faceted approach towards AI regulation, through general guidelines and sector-specific restrictions. This two-dimensional approach gives a measure of flexibility to deal with each case subjectively. Japan's Personal Information Protection Commission (PPC) has issued a warning to the ChatGPT developer, OpenAI, on the issue of collecting data without obtaining the consent of its users. This warning has been sent without prejudice to other actions which Japan may consider taking against OpenAI regarding breaches of data privacy.

The risks associated with unregulated AI are far-reaching, ranging from violations of data privacy and security to potential harm to individuals and properties. AI has been accused of showcasing biases on more occasions than one occasion, which has had a direct detrimental impact on individuals. Any regulatory mechanism incorporated by APAC countries for AI regulation has to find a way to inculcate AI ethics within the ambit of the law to eliminate and provide redressal for AI biases. This calls for increased transparency in AI systems and algorithmic functions, paving the way for the right of explainability, the technological equivalent of the legal principle that no one should be condemned unheard, in the Asia-Pacific basin.

The conventional notion of intellectual property also needs to be revisited to develop a contemporary interpretation of digital ownership. Until and unless the contention of ownership is resolved, the direly needed system for AI accountability cannot be established in this region. Building such a mechanism for AI governance and accountability is essential to foster an environment of trust in AI, which will, in turn, enable further integration of AI technologies in APAC.

Huzaifah Sehgal Associate
[email protected]
Walker Martineau Saleem, Pakistan