A new report, the 2025 State of Design & Make Report – APAC, sheds light on the evolving landscape of architecture, engineering, construction and operations (AECO), design and manufacturing (D&M), and media and entertainment (M&E) industries across the Asia Pacific (APAC) region, including key Southeast Asian nations.
The study, based on surveys and interviews with over 2,152 industry leaders, futurists, and experts, reveals a region grappling with economic headwinds and technological disruption, even as digital transformation continues to yield significant benefits.
Digital transformation delivers, but challenges persist
The report underscores the overwhelmingly positive impact of digital transformation efforts, with most APAC leaders reporting over 50 per cent return on investment through improvements in customer satisfaction, innovation, and productivity.
Digitally mature companies, defined as those approaching or having achieved their digital transformation goals, are notably more resilient, better equipped to diversify supply chains (by 61 per cent), and faster in developing products and completing projects.
However, the path to digitalisation is not without obstacles. Cost remains the primary barrier to digital transformation for 40 per cent of APAC leaders, a rise from 32 per cent in the previous year. Time investment and a lack of necessary knowledge or technical skills follow as significant challenges.
Notably, more digitally mature organisations in APAC are less concerned with cost and talent, focusing instead on the limitations of current digital tools.
Sustainability gains momentum, AI emerges as key enabler
Sustainability transitions are moving from being solely pressure-driven to becoming a source of profitability, with 94 per cent of leaders in APAC reporting their organisations are taking steps to be more sustainable.
This shift is driven by a growing understanding of the business value of sustainability, with 71 per cent of business leaders in APAC believing sustainability measures can generate more than 5 per cent of their annual revenue. Stakeholder influence on sustainability initiatives is declining, suggesting organisations are increasingly incorporating sustainability into their long-term strategies.
Artificial intelligence (AI) has solidified its position as the top sustainability enabler for Design and Make organisations in APAC for the third consecutive year, with 39 per cent of leaders using it for sustainable outcomes, up from 37 per cent in the previous year. Applications range from natural disaster mitigation to project lifecycle management.
Interestingly, India has taken the lead in AI adoption for sustainability within APAC, with 52 per cent of business leaders utilising it. South Korea has witnessed the most significant and consistent increase in AI adoption for sustainability.
AI hype meets implementation realities
Despite the enthusiasm surrounding AI, sentiment towards the technology has cooled across APAC. While 72 per cent of leaders believed AI would enhance their industry in the 2024 survey, this figure has dropped to 68 per cent. Concerns about industry disruption from AI have risen, with 50 per cent of leaders now agreeing it will destabilise their sector, a notable increase from 43 per cent in the previous year.
Fumihiro Ojima, General Manager at Japan’s Tokyu Construction Co. Ltd., observes, “I think that generative AI is important, but when generative AI first appeared, there was an excessive sense of expectation towards generative AI and AI in general, and I think that we have just passed the peak of that. There was an impression that generative AI could do anything, but in fact there are things that it is suited to and things that it is not suited to, and I think that we have finally come to understand that”.
This adjustment reflects the realities of AI implementation, the ongoing shortage of technical skills, and the technology’s current limitations.
Consequently, leaders are adopting a more conservative outlook on their AI roadmaps. However, investment in AI remains strong, with 68 per cent of respondents in APAC stating their AI investments will increase over the next three years.
Digitally mature organisations are leading this charge, with 78 per cent planning increased AI investment compared to 58 per cent of less digitally mature companies.
Yongsik Jeong, Vice President at South Korea’s Samoo Architects & Engineers, notes, “AI requires a much larger investment than we expected. So, there is a bit of a delay moving forward. And, not all things related to AI are positive signals; there are clear limitations… We clearly believe that we will be able to reach ROI when we invest in AI for new business opportunities and business areas”.
Cost, technology, and talent remain key concerns
Amidst geopolitical and economic uncertainties, cost control has emerged as the top business challenge for 34 per cent of leaders in APAC. Technological advancements, including AI, are a close second, cited by 32 per cent of leaders as a major challenge, particularly concerning implementation. Talent acquisition and retention also remain a significant hurdle, with 29 per cent of leaders identifying it as a top concern.
Notably, Japan stands out as the only surveyed country where attracting, training, and retaining talent is the most pressing challenge. Leaders in Australia, India, and Singapore are primarily focused on cost.
The search for skilled talent is intensifying, with 62 per cent of APAC business leaders reporting that a lack of access to skilled talent hinders their company’s growth, a significant increase from 50 per cent in 2024.
Alarmingly, 50 per cent of leaders report having had to let people go due to a lack of technical skills, up from 37 per cent, exacerbating labour shortages.
When it comes to future hiring priorities, AI skills top the list for 45 per cent of leaders in APAC, up from 41 per cent, highlighting the continued strategic importance of AI despite implementation challenges.
Cautious near-term outlook despite strong investment intent
Overall sentiment across the design and make industries in APAC has cooled, with most business leaders feeling more uncertain about the future and less prepared to handle unforeseen changes. Sixty-eight per cent of leaders agree that the global landscape is now more uncertain, a 9-point jump from the previous year. Confidence in their organisation’s ability to weather future obstacles has also declined.
Despite this caution, 68 per cent of business leaders in APAC still anticipate increasing their investments over the next three years, although this is a decrease from 72 per cent in 2024, reflecting a more conservative approach.
Notably, China is the only country in the region where a greater percentage of leaders plan to increase investment. India continues to lead the region, with 84 per cent of leaders indicating increased investment.
However, companies generally pull back on expansion efforts, with reduced enthusiasm for entering new markets and offering new services.
These findings present a mixed bag for Singapore and Southeast Asia’s burgeoning tech startup ecosystem. The strong emphasis on digital transformation and AI skills highlights significant opportunities for startups offering solutions.
However, the challenges related to cost control and the need for practical AI applications suggest that startups must offer demonstrable value and return on investment. The intensifying search for talent, particularly with AI expertise, also indicates a competitive landscape for skilled professionals.
Ultimately, the report underscores the critical importance of digital maturity and strategic technology investments for companies in the Design and Make sector to navigate current uncertainties and secure a competitive edge in the APAC region.
Source: e27 / Digpu NewsTex