From Pax Silica and WAICO to India’s open digital rails, Southeast Asia’s overlapping alignments could strengthen regional bargaining power—if interoperability turns diversity into agency.
When President Prabowo Subianto and Prime Minister Narendra Modi met in Jakarta in July, they welcomed the launch of the Indonesia Open Network, built on India’s Open Network for Digital Commerce architecture. Beside the global race for chips, frontier models and data centres, the announcement looked modest. Yet it pointed to a quieter form of technological hedging: Indonesia was diversifying at the level of commerce and payments, the digital rails on which economic life increasingly runs.
Nine days later, Indonesia became a founding member of the World Artificial Intelligence Cooperation Organization, or WAICO, established in Shanghai with twenty-eight other states. The same country was now participating in a China-initiated governance institution while adopting Indian open-network architecture.
Singapore offers another layered example. It remains one of the region’s most influential authors of AI governance standards, while also belonging to the original group that signed the non-binding Pax Silica Declaration. The Philippines moved further into that American-led ecosystem in April, pairing its accession with plans for a 4,000-acre economic security zone and an AI-native industrial acceleration hub.
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These are not neat bloc choices. Southeast Asian states are connecting to different external architectures at different layers of the AI stack. What appears untidy may become a source of geopolitical optionality.
The Race to Export Entire AI Worlds
The familiar question asks whether Southeast Asia will align with Washington or Beijing. That framing has become less useful as both powers begin exporting entire visions of how AI should be financed, deployed and governed.
The United States has formalised a programme for exporting full-stack AI packages spanning chips, data centres, models, applications, financing and standards. American technology travels with preferred supply chains, security expectations and regulatory assumptions.
China is pairing open-source AI with capacity building and a new institutional architecture. At the 2026 World Artificial Intelligence Conference, Beijing pledged 5,000 training opportunities for developing countries and proposed application centres with ASEAN, the League of Arab States, the African Union, CELAC, the Shanghai Cooperation Organisation and BRICS. WAICO now gives that proposition a standing governance platform.
The more revealing story lies inside Southeast Asia, where memberships and partnerships overlap rather than divide neatly. Five ASEAN states—Indonesia, Malaysia, Cambodia, Laos and Myanmar—became founding members of WAICO. Singapore and the Philippines are connected to Pax Silica. Indonesia has simultaneously opened an Indian protocol route through ION. The region is building a portfolio across several technological worlds.
These arrangements can create skills, investment and jobs. They also influence which standards institutions recognise, which supply chains industries join and which governments become preferred technology partners. Capacity building rarely remains neutral once it begins shaping the next procurement decision.
Layered Alignment Across the Region
Singapore and Vietnam show how governance can become leverage.
Singapore built its regulatory influence before the current infrastructure boom. Its Model AI Governance Framework, AI Verify and 2026 framework for agentic AI have made the city-state a translation point between global standards, commercial deployment and regional realities. Pax Silica adds a strategic-supply-chain layer to that governance role. Singapore is hedging through standards and partnerships at the same time.
Vietnam has taken a more state-directed route. Its standalone AI law took effect in March 2026, embedding risk management within a wider push for industrial capability. Regulation, domestic champions and infrastructure are moving with unusual coherence. That coherence brings speed, although the country remains exposed to a limited number of national firms and foreign technology partners. Vietnam’s achievement lies in organising dependency more deliberately.
Malaysia may be the clearest example of layered alignment. It has paired semiconductor ambitions and a RM2 billion Sovereign AI Cloud with deep relationships across Western cloud ecosystems. Its reciprocal trade agreement with the United States also requires consultation before Kuala Lumpur enters a digital trade agreement that Washington considers harmful to essential US interests. Malaysia’s founding membership in WAICO adds a third layer: domestic sovereign-cloud ambitions now sit alongside American market-access exposure and participation in a China-initiated governance institution.
Thailand’s sovereign AI ambition rests heavily on foreign hardware. Domestic hosting can improve control over workloads and data, while the underlying roadmap still depends on external suppliers.
Indonesia’s emerging hedge sits at a different layer. The Indonesia Open Network asks whether local firms, logistics providers, financial services and public systems can interact through shared rules without being enclosed by a single platform. WAICO membership simultaneously places Indonesia inside a new governance institution promoted by China.
This is the region’s emerging pattern: layered alignment rather than clean division. The Philippines has entered an American security and supply-chain architecture. Singapore combines Pax Silica with independent governance influence. Indonesia works through WAICO and Indian protocols. Malaysia spans domestic infrastructure, American market access and Chinese-backed governance cooperation.
Fragmentation here is more than policy variation. It is a portfolio of external relationships spread across governance, supply chains, infrastructure and protocols.
When Fragmentation Becomes Leverage
Regional institutions often treat national variation as an obstacle. In AI, premature convergence could destroy the flexibility Southeast Asia needs.
A single regional AI stack would be unrealistic. States differ sharply in capital, industrial depth, energy, language, regulatory capacity and political priorities. A system designed around Singapore’s capabilities could overwhelm newer digital economies. A lowest-common-denominator framework would constrain the more advanced ones.
Interoperability offers a more practical route: shared rules that allow systems, audits, identities, payments and data arrangements to connect across borders while national architectures remain different.
This gives the ASEAN Digital Economy Framework Agreement, or DEFA, significance beyond trade. Negotiations concluded at the end of May, with signing expected alongside the 49th ASEAN Summit in November 2026. DEFA could create a common procedural floor from which eleven national systems deal with external powers.
Without such a floor, each capital bargains alone. Training programmes begin shaping institutional preferences long before procurement, while cloud contracts are negotiated without regional reference points. Over time, supply-chain cooperation may harden into strategic alignment almost unnoticed.
A shared floor would compel external partners to accommodate systems that remain different yet can connect. It would also give ASEAN governments a basis for comparing terms, recognising audits and renegotiating arrangements when commercial or geopolitical conditions change.
Interoperability therefore offers protection against silent alignment. Foreign technologies can enter, while the region retains greater influence over the conditions of entry.
The Dependency Multiplication Trap
More partners do not automatically produce more autonomy.
The dependency multiplication trap emerges when a country diversifies across foreign providers without increasing its domestic ability to inspect, modify, replace or bargain with the systems it adopts. Exposure appears dispersed, while control remains external.
Malaysia captures the dilemma particularly well. Its sovereign cloud may increase domestic capacity, US-linked trade arrangements preserve market access, and WAICO opens another governance channel. Yet each additional relationship introduces its own technical standards, political expectations and exit costs. A diversified portfolio can still become difficult to govern.
A state using American cloud, Chinese models, Indian protocols, European compliance standards and Japanese network equipment may look well hedged. It may also be carrying several dependencies that become visible only when commercial or geopolitical conditions change.
The Tech Policy Design Institute’s 2026 AI Agency Tool offers a useful way to read this problem. Developed by a team that includes researchers affiliated with the Oxford Internet Institute, the framework assesses whether a country can steer outcomes, protect national interests and capture value through access, control, resilient choice and leverage.
For Southeast Asia, AI agency means retaining the capacity to inspect systems, adapt them to domestic needs, bargain over their terms and move when a partnership becomes untenable. Sovereignty describes an ambition; agency shows whether a country can act on it.
The real test is what each relationship leaves behind. Local firms need substantive roles rather than ceremonial participation. Regulators must be able to inspect and challenge systems, while engineers acquire the ability to modify them. Critical workloads should remain portable when vendor terms or geopolitical conditions change. One question sits beneath all the others: does the country understand where control actually lies?
The region’s AI landscape increasingly resembles a crowded harbour. Eleven vessels arrive with different engines, suppliers and maps. A fleet is harder to capture than a single ship. Yet diversity offers little protection when every vessel still depends on foreign navigational systems, foreign fuel and weather forecasts written elsewhere.
DEFA could allow those vessels to remain different while bargaining as a fleet. External powers would face a connected region rather than eleven isolated negotiations, and fewer technological weaknesses could be converted into private opportunities.
Fragmented AI strategies may become a geopolitical asset through common rules, regional alertness and the institutional courage to examine what every partnership leaves behind.
Southeast Asia may succeed in avoiding a single technological bloc. That victory will feel hollow if, after choosing among many partners, it discovers that the roads, tollgates and maps were never its own.
