Technology and AI

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To understand how the current business climate is shaping CEOs’ thinking, KPMG embarked on the 11th edition of its annual Global CEO Outlook, which features 1,350 CEOs from the world’s biggest economies and key industries, of which 400 respondents are from Asia Pacific. The survey is a wide-ranging study that seeks to cut to the core of CEO sentiment regarding the global economy, emerging technological innovations, talent management and the sustainability agenda.

This article looks at how technology, particularly AI, is reshaping CEO priorities in Asia Pacific and its implications on business operations and workforce strategy.

AI is a top investment priority in Asia Pacific, and not without good reason — 87 percent expect to see a return on their AI investments within three years, a sign of growing confidence in the benefits of the technology’s adoption.

Most CEOs (75 percent) in the region also see AI as a key trend that will impact their companies’ prosperity over the next three years. Confidence in AI is high, albeit with little caution, owing to evolving regulations and cybersecurity fears. Nevertheless, spending on AI remains high given its potential benefits.

The adoption and implementation of AI to support business growth and resilience is now a mainstream theme in Asia Pacific, as evidenced by the fact that 75 percent of regional CEOs view the successful integration of AI into business processes as a key trend that will impact their organizations’ prosperity over the next three years.

Unsurprisingly, AI remains a top (and growing) investment priority for CEOs regionally, building on last year’s momentum. In 2024, 65 percent of executives cited generative AI¹ as a top investment priority; one year later, that share has increased to 67 percent.

Spending on AI in Asia Pacific is expected to continue growing strongly, with 82 percent of companies set to allocate more than 10 percent of their annual budgets on AI in the next 12 months, dovetailing with global trendlines.

Exhibit 1: Spending on AI is expected to grow in Asia Pacific

Notably, Japanese companies appear particularly invested in growing their AI capabilities, with 91 percent of executives expecting to commit more than 10 percent of their budgets to the technology. It is notable that Japan is investing heavily in AI: given its rapidly aging populations and shrinking workforce, AI is increasingly seen as a strategic solution to maintaining and boosting productivity levels by automating labor-intensive tasks and supporting eldercare in a society facing demographic decline.

That said, across the region, CEOs are shifting focus away from simply investing in AI towards opportunities where these technologies can deliver tangible values. In Asia Pacific, leaders’ confidence in AI’s “time-to-value” is growing, with 87 percent of CEOs now expecting a return on their AI investments within three years. That represents a marked change from 2024, when 80 percent believed it would take longer than three years to see returns from generative AI investments.

AI and generative AI will have broad application for companies, but for the majority of Asia Pacific CEOs, the top benefit of implementing this technology is the enhancements to the organization’s decision-making and data analysis capabilities (21 percent). 

Exhibit 2: AI expected to bring myriad benefits to Asia Pacific companies

Overall, there is a high level of confidence among Asia Pacific CEOs regarding their ability to keep up (71 percent) with the speed of AI developments and how they will impact their organizations’ operations, workflows and systems. This is slightly lower than the global average (74 percent), possibly reflecting the varying degrees of AI progress across Asia Pacific’s diverse clutch of economies.

Moreover, AI is increasingly an arena of geopolitical competition between states, and this could manifest in the development of different AI rules and standards that could stymie AI progress.

A smaller share of CEOs in the region is concerned around the ethical challenges of AI use (56 percent, versus 65 percent in 2024). This also reflects growing familiarity with AI technologies.²

But there is still some way to go, as ethical challenges are still the biggest barrier to adoption.

AI skepticism has led many CEOs to believe that AI regulation should be increased (48 percent). However, at the same time, two in three (65 percent) are of the view that the pace of progress on AI regulations will be barrier to their organizations’ success. These contradicting sentiments reflect a deep-seated uncertainty among Asia Pacific businesses regarding negative impacts that AI could generate, as well as potentially a lack of in-depth understanding of the technology. They also highlight the challenge facing CEOs as they seek to balance the powerful growth potential of AI against its inherent risks.

Exhibit 3: The many benefits and drawbacks of AI

While AI will undoubtedly benefit companies, these technologies are also set to supercharge the pace, frequency and intensity of cyberattacks, a major vulnerability for Asia Pacific.³ This is why, as companies digitalize, 93 percent of regional CEOs cite fraud detection and identity theft as top concerns. Additionally, 36 percent of executives in the region are increasing cybersecurity and digital risks resilience.