Reawakening Southeast Asia’s Slumbering Giants

While a bearish economy and hawkish fed rate hikes have had worldwide repercussions, Southeast Asia has not lost any momentum, as its tech startups raised an impressive $8.2 billion in 2019.

A joint report by Google, Temasek, and Bain & Co. found that Southeast Asia’s middle classes are expanding rapidly and its population is coming online at a breakneck pace, with an estimated 40 million new internet users in 2020 and 2021.

During Covid-19, digital connectivity in Asia sustained conventional trade. The same report also showed that 94% of new digital consumers intend to continue using digital services even after the pandemic.

Meanwhile, STEM education spending has increased, and living costs are low, making the region’s skilled workforce affordable.

The Southeast Asian tech ecosystem, in addition to labor arbitrage, is also characterized by market valuations that are 30% to 40% lower than those of the U.S. and lower regional startup costs, helping the region’s tech ecosystem gain more traction.

To wit, “the Philippines and Malaysia have become the top two countries in e-commerce retail growth, increasing by 25% and 23% per year, respectively,” reports Thailand Business News.

Emerging Asian economies are projected to expand by 5.8% on average in 2022 and by 5.2% in 2023, OECD predicts and is likely to avoid stagflation. The White House plans to invest another $150 million in Southeast Asian nations to deepen U.S. relations within the region. With SEA valuations near rock bottom, this is likely a good time to invest.

With tourism slowly reviving, countries are also benefiting from greater export growth and the shift of production from China to the likes of Vietnam. As better economic news spreads, Southeast Asia’s nations are awakening from their sleep.