As the European Union gears up for the full enforcement of the Artificial Intelligence Act (EU AI Act) in 2027, businesses exporting into the EU face an increasingly complex regulatory landscape. The Act is reshaping compliance requirements, procurement practices, and customer expectations, presenting both challenges and opportunities for companies navigating this evolving environment.
Unlike the General Data Protection Regulation (GDPR), which introduced a framework for data privacy, the EU AI Act imposes even steeper penalties for non-compliance, with fines reaching as high as 7% of a company’s global turnover. While some businesses may hesitate at the level of investment required to meet these obligations, establishing an internal AI governance structure is becoming imperative for legal compliance, operational resilience, and building trust with stakeholders.
Policymakers in Brussels are grappling with two opposing priorities: fostering competitiveness through streamlined digital regulation and upholding the EU’s goal of becoming the global standard-bearer for AI ethics, safety, and consumer protection. This tension was highlighted recently when over 40 CEOs from major European firms urged for a two-year pause on enforcement, citing concerns that the rapid rollout of the Act could stifle innovation.
In response, the European Commission has opted for a pragmatic approach, maintaining the existing timelines while enhancing support for implementation through measures like simplification initiatives and the establishment of the AI Act Service Desk and the EU AI Office. The Commission’s message is clear: simplification, not suspension. Businesses that proactively address compliance could transform regulatory requirements into a competitive edge.
To prepare for the new regulations, firms must first assess where AI is currently utilized within their operations, whether in customer-facing applications, internal decision-making processes, or autonomous systems. Creating a comprehensive inventory of AI applications is essential; without this, developing an effective compliance strategy is impossible. Additionally, businesses must identify if any of these AI systems fall into the EU’s “high-risk AI” categories, which will dictate the level of regulatory oversight they face.
Leading firms across the ASEAN region are already taking steps to enhance their AI frameworks. For instance, Singapore’s DBS has introduced a Responsible AI Framework specifically for credit and customer decision-making systems, while Indonesia’s Telkom has established an AI Centre of Excellence. Following this, companies should designate an AI compliance lead, a role focused on monitoring regulatory changes, managing AI platform usage, and serving as a knowledge hub for governance issues. In larger organizations, this function may be supported by an AI ethics committee, ensuring accountability throughout design, procurement, and deployment processes.
Importantly, compliance is not solely about meeting legal requirements but also about fostering internal capabilities. Research from Penta reveals a disconnect: while senior leaders often believe their teams have sufficient AI training, employees express concerns about their preparedness. This gap poses significant risks that a robust AI function can help address by diagnosing weaknesses and developing tailored training programs.
As workforce readiness becomes a central theme in AI adoption, companies in ASEAN must prioritize training focused on ethical AI use, bias mitigation, and explainability—skills increasingly critical to European buyers, investors, and regulators. This trend is evident in Malaysia, where exporters in sectors like medical devices and electronics have noted a rise in EU requests for documentation concerning AI-assisted processes during environmental, social, and governance (ESG) audits.
Furthermore, businesses should align their practices with international AI management frameworks, such as ISO/IEC 42001 or the NIST AI Risk Management Framework. These frameworks offer structured methodologies for system design, data integrity, risk classification, and human oversight, thereby facilitating EU compliance while enhancing credibility with European partners.
In an age where generative AI is transforming how businesses are discovered, companies must take proactive measures to shape their narratives within the AI ecosystem. With projections by Gartner indicating a potential 25% drop in search engine traffic by 2026 due to GenAI-driven discovery, firms must actively curate the information that defines them in the digital space. Engaging in this narrative-building process is essential as policymakers increasingly rely on generative AI for insights rather than traditional searches.
Encouragingly, governments across ASEAN are beginning to respond to these demands. Initiatives such as Singapore’s AI Verify toolkit, Malaysia’s national AI road map, and Indonesia’s sandbox pilots all indicate an increasing institutional readiness for AI governance. Major firms in sectors such as banking, energy, and telecommunications are starting to embed responsible AI principles, reflecting a commitment to governance that aligns with global standards.
However, voluntary frameworks alone will not ensure access to the EU market. ASEAN firms must recognize that digital governance is shifting toward mandatory transparency and oversight. What is now required is the development of embedded capabilities within organizations: systems designed for accountability, leaders who comprehend the regulatory landscape, and teams equipped to convert governance into strategic value.
See also
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Global AI Regulation Evolves: EU, US, and Asia Set New Compliance Standards for 2026
AI Investments Surge to $1.5T in 2026, Focus Shifts to Governance and Security
