Diverse policies shape Asia-Pacific’s 2025 innovation climate

Compliance pressures, and cybersecurity demands are reshaping how businesses innovate.

Asia-Pacific’s digital transformation market is projected to reach US$900 billion this year, but the path forward for innovation is anything but uniform. Differences in regulatory regimes, funding structures, and talent pools across markets are creating a fragmented environment that businesses must navigate.

“Asia Pacific in 2025 isn't a singular innovation. Climate is a collection of different policy styles, funding arrangements and talent pools. Every single country and market has its own nuances due to its cultural diversity,” said Lyon Poh, Partner and Head of Corporate Transformation, KPMG in Singapore.

For companies striving to innovate while remaining compliant, the competing demands can feel paralysing. “[They] often feel that they are driving with one foot on the accelerator at the same time the other foot on the brake,” Poh said. “So the core challenge in innovation thrives, usually on the speed and the risk taking, while the compliance demands for controls and risk management, and hence it can slow down, sometimes the innovations in a process.”

Nowhere is this tension sharper than in cybersecurity and data protection. “Security and data protection are probably the sharpest edge of the innovation and compliance trade off today. They don't just shape but also on what the firm can innovate, but also how to execute the innovation programs,” Poh explained. “And typically, innovation speeds are slowed down by all these regulatory gates… it does help to shift the mindset from moving fast and shifting a fix later to one that you need to integrate compliance and protections in the innovation process.”

Yet, Poh believes regulation can be turned into a strategic advantage. “I think compliance and cyber security and regulations are not just constraining innovation, they are reshaping the way we innovate. Businesses will integrate compliance needs into the innovation process and cycles are finding ways to turn it into a source of trust and differentiation in the marketplace,” he said.