Quite frankly, I don't know why city placement is an issue with the A.I. Even if the A.I. settles a city in a location without good resources, resources aren't the only thing that makes a city important. There is also strategic placement, which anywhere on the archipelago map would be helpful, but there is also the fact that it's plainly a city. Historically, civilizations have many times settled cities in pretty inhospitable locations like basically a large part of wintry Canada by France. Even if the beaver resource was one of the reasons that France settled there, the prevailing motivation was the fact that the imperial court just wanted to expand their empire in the New World. Just simple empire building isn't that far-fetched an inspiration, and that colony in the picture was right next to the mainland of Siam. Cities have a good in and of themself.