Artificial intelligence (AI) and automation present enormous investment opportunities, some in ways we don’t even know yet. As the world adapts to technological advances, Franklin Templeton Emerging Markets Equity’s Sukumar Rajah and Eric Mok think some promising developments in Asia could dictate the pace of change in the burgeoning AI market. Alongside this, they think infrastructure for new technology is likely to be just as significant if AI development is to truly thrive. They take a look at the implications for the region.

As the race to harness new technology heats up across the globe, we’ve already seen signs that Asia is at the forefront of integrating automation into our everyday lives.

Asia, generally perceived to be the “factory of the world,” accounts for 65% of the world’s total industrial robot usage in manufacturing.1 In our view, such a sizable investment in robotics to power an already established industry signals that change is already underway. And with further technological developments on the horizon, we expect machines to take over even more aspects of manufacturing in the near future.

The advent of what some have dubbed the “fourth industrial revolution” builds upon the foundations of the last groundbreaking period of digitization to integrate technology into almost every aspect of our lives.

It won’t just bring technological innovation, though. The current speed at which we discover breakthroughs is unprecedented, and we think that could provide ample opportunity for Asia to tap into the AI market, as we’ve already seen the region harness AI technology—at a faster pace than the rest of the world—through manufacturing across several industries.

Look Beyond the Software

In our view, some countries in Asia could be in a prime spot to take advantage of technological advancements. There’s a common misconception that the region is a combination of low-cost exporters, cheap manufacturers and a place to outsource tasks.

In fact, some Asian economies have leapfrogged the structure commonly found in developed economies, since there’s little sunk capital investment in legacy technology and infrastructure. This is particularly noticeable in China which has adopted mobile payment systems at a remarkable pace. For example, there’s an expectation that payments made for a meal, an online order or to a taxi driver are done through a digital e-wallet.