Home to more than 650 million people and a combined gross domestic product of about US$ 2.6 trillion, Southeast Asia is fast becoming one of the world’s most happening and dynamic regions for business and leisure alike.
Though the region has long been an area of interest for traditional businesses due to its strategic trade routes and general proximity to the world’s two largest markets China and India, Southeast Asia is really coming into its own in this digital era. The Association of Southeast Asian Nations (ASEAN) is made up of 10 markets – fast-growing, mobile-first and with a rapidly expanding tech-savvy middle class – and is a magnet for startups and expanding businesses looking to test their novel solutions in.
But what pushes entrepreneurs and business owners to take the leap and set up shop in this region?
Large, emerging market
Its position as the 3rd largest market after China and India alone makes a compelling case for a business to consider expanding to this region. A 2017 report commissioned by Google and Temasek Singapore predicts that by 2020, Southeast Asia will have 480 million active internet users, up from 330 million in 2016, making it a whopping 45% increase in just 4 years. The region’s internet economy and its mobile-first markets is also forecast to grow to $200 billion by 2025, a fourfold increase from 2016’s $50 billion. With numbers like those and the region’s growth potential, it is no wonder that businesses have started to express more serious interest in this market. An example of that is China’s tech giant Tencent’s joint ventures and investments in Thailand, its most recent being a buyout of the kingdom’s largest web portal Sanook.
The region is also welcoming new businesses with open arms, with improvements to its business infrastructure. Singapore, ASEAN’s most developed nation, maintained its 2nd position in the World’s Ease of Doing Business rankings, with its record of taking just 2.5 days to start a business (a blink of an eye compared to the world average of 19 days), while other ASEAN nations are improving their ranking year on year. Low corporate taxes and double tax treaties make this region an attractive place for new businesses and startups looking to stretch their dollar.
Other countries have also started taking an active interest in developing the region’s infrastructure, with multiple high-speed rail projects planned as part of China’s One Belt, One Road initiatives, and Japanese real estate companies’ joint ventures with local developers in Thailand, just to name a few – all in an effort to make Southeast Asia the gateway to the rest of Asia.
Young and skilled workforce
While other markets are maturing and reaching their saturation points, Southeast Asia is just coming into its own, as one of the youngest regions and markets in the world. It is estimated that by 2020, almost half of the Southeast Asian population will be under 30 and more than 55% of its working-age population will be made up of tech-savvy millennials, potentially making it the next Silicon Valley.
ASEAN countries are making huge strides towards having a technically skilled workforce to meet the demand of the global economy. Upskilling and “rightskilling” through intra-ASEAN education exchanges and global internships will make the ASEAN workforce competitive and and ready to take on the challenges of the digital economy.
Governments elsewhere in the region have also stepped up and have implemented more relaxed and expat-friendly migration laws that allow and invite talent to their shores. Thailand’s new Smart Visa, targeted at entrepreneurs, highly-skilled professionals and executives, aims to encourage knowledge transfer to boost local business growth and bring about long-term economic benefits. The region’s diverse culture and once-in-a-lifetime experiences also make it a top spot for youths who are looking to work hard and play hard.
More Bang(kok) for your buck
The world has found its end of the rainbow and the fabled pot of gold is right here in Asia. With Asia’s millionaires being the richest they have ever been, and growing richer by the year, startups are swimming in options to get funding for their latest brainchild.
Southeast Asia in particular is fast becoming the hotbed for venture capitalists nurturing the booming startup industry in the region, looking for the next Airbnb. Grab and Go-jek, rival ride-hailing companies in Southeast Asia have managed to secure astronomical funding amounts of US$2 billion and US$1.5 billion respectively as Southeast Asian startups.
Making those funds last as long as possible is the next challenge that startups face. Southeast Asia’s relatively affordable cost of living and doing business makes it an attractive place for founders to set up their startup. Co-working spaces, more than just a fancy office with trendy bean bags, have in fact revolutionised working spaces and networking. Startups are almost spoilt for choice, working alongside potential partners, employees and investors in the same space.
While the region is welcoming to one and all, it is important to also keep in mind that it has its own unique charm and culture, both as consumers and as a business hub. Market familiarity and localisation are essential when entering this market – with Uber learning the hard way.
Our Insights portal is an easy-to-use tool for startups and SMEs alike to understand the Southeast Asian region. You can tap on it to find your next potential market, or drop us a line to find out more about how we can help you.