Disclaimer: Warwick ASEAN Conference would like to clarify that all opinions expressed in this article are the authors’ and editors’ own.
BY MATTHEW NEO
The meteoric growth of the digital economy of Southeast Asia has fostered with it six technological unicorns – Go-Jek, Tokopedia and Traveloka from Indonesia, as well as Lazada, Grab and SEA from Singapore. From humble origins, these “unicorns” have succeeded in their respective fields and raised support and capital beyond what most tech companies could ever dream of.
Ask any stranger on the street about startups, and the likelihood is that he or she would quickly associate them with superpowers like the United States or China. Southeast Asia as a region pops up much less frequently. Yet, when one crunches the numbers, one can understand why Southeast Asia is actually a fertile breeding ground, albeit one that is more often than not overlooked in the discourse. With the proliferation of the Internet Age comes enhanced peer-to-peer collaboration, new outreach techniques such as social media marketing and cloud-based software storage systems. There are over 300 million Internet users in Southeast Asia as of 2018. These figures can be analysed in 2 ways. The first is a recognition that regional connectivity is already at a decent level. This helps to streamline business processes and eases restrictions in terms of communication and dissemination of information. The second, more importantly, is in the sheer potential that the Southeast Asian market still offers, with over half of its population yet to tap into this burgeoning network.
LIMITATIONS AND CONSTRAINTS
Oftentimes, however, one might fathom that startups just do not have the clout to compete on the big stage. Most startups in their infancy stages are the equivalent of Micro, Small and Medium Enterprises (SMEs). Thrown into the deep end of the market, they are matched up against the likes of Google, Facebook or Amazon, multinational corporations (MNCs) with significantly larger user bases and reliability indices. A lack of adequate support for startups might eventually lead to what experts have called “zombie firms”, inefficient and financially struggling companies that require bailout from the state to keep them afloat, which then affects the overall economic productivity of a country. Implications of such a scenario are far-reaching, because governments have to resort to lowering interest rates, creating a culture of “dependency” on easy loans and thus reduced pressure on both the firms and their creditors to clean up the stains on their balance sheets. Lenders might eventually continue to provide loans to firms that may not be able to pay them back. End day, this could ultimately lead to a vicious cycle of events, as the state becomes less invested in its own entrepreneurs, which means even less funding and incentive for those starting out to take risks.
According to Melanie Mossard, Director of Community at startup business incubator ImpactHub, beyond having to fend off stiff competition, one of the greatest challenges faced by nascent tech startups in other parts of Southeast Asia is the lack of funding itself. There are also other constraints at play, like access to networking opportunities, rampant governmental corruption and the skillsets of the general working population that are make-or-break factors.
MAKING BIG STRIDES
Nevertheless, encouraging signs are emerging. One thing to note is the growing number of co-working spaces. In Cambodia’s capital Phnom Penh alone, there are almost ten venues per person dedicated to those who wish to execute their ideas. Just last year, the Smart Axiata Digital Innovation Fund (SADIF) was launched to jumpstart budding businesses, most of whom could only rely on meagre self-funding or money from entrepreneur competitions to survive. SADIF is a $5 million venture capital fund focused on promoting funding for tech startups by injecting between $25,000 and $500,000 into each viable startup it selects, and aims to open up opportunities for the digital ecosystem in the Khmer Kingdom. Its results have been promising. Joonaak Delivery and Moorakot Technologies are just two startups which have directly benefited from SADIF and revolutionised functions like logistics and banking within the country, offering no less than convenience to society and its more efficient use of manhours.
Cambodia’s neighbour, Thailand is no slouch either. Under the Thailand 4.0 program introduced in 2016, the country is steadily moving away from heavy industry towards a knowledge-based economy. Agriculture remains a major contributor of Thailand’s GDP, but instead of giving up an entire industry, Thailand has worked its comparative advantage to its benefit by making farming “smart” with the help of automation and drones. By incorporating geographic information systems (GIS) technology, apps like Ling Farm have been designed squarely for farmers, to help them map out plots of land and organise them into categories according to the types of crop they cultivate. The motivation behind their project, says its pioneers, was to create an integrated to-do list that keeps farmers efficient with their processes, while easing them into the transition process with an easy-to-use interface for those especially in rural areas, who are not as comfortable with new technology.
The aforementioned countries, among others, need not look far for inspiration. Singapore’s strategic geographical location, exceptional public infrastructure and highly conducive business environment have all lent it a significant edge in grooming its fair share of tech startups, all within a short timespan of 50 odd years of independence. The young but efficient nation-state has been dubbed Southeast Asia’s answer to “Silicon Valley”. Yet this should not discourage other countries from aspiring towards a similar objective. Even without the strong infrastructure of its northern neighbour, Indonesia’s influence in the startup scene is and will only grow stronger. Apart from having a 260 million strong population, it is set to become the fourth largest economy in the world by 2050. We have thus reason to be hopeful that Indonesia does not cease to be content with their existing “unicorns”, but that they model the way for something greater.
Southeast Asia remains to this day one of the most diverse regions of the world, a melting pot of cultures and religions. For those who are willing to take the leap, there are golden opportunities to be seized in setting up shop within the region, as well as numerous employment prospects for locals. While we celebrate the achievements of homegrown entrepreneurs and those who have gone on to scale great heights, it is imperative that we continue to create the optimal conditions for tech startups to be born and instill the belief that they can truly succeed, especially where fears of long-term viability are concerned. Apart from the tangibles like stable polities and greater connectivity, I believe a propitious culture of trust between startups and government, as well as stakeholders such as banks and consumers must be put in place for tech startups to thrive. It is my sincere hope that Southeast Asia would one day witness our own versions of Google, Facebook or Uber take centre stage, and etch themselves in the history books for their global counterparts to emulate.