Seizing the Opportunity: Why Southeast Asia Could Be Your Next Growth Frontier

Amid one of the most significant global economic downturns triggered by a pandemic, a fast-growing, innovative American tech company made a groundbreaking announcement of its expansion into Southeast Asia, hiring its first employee based in Singapore. Snap, the brains behind the popular app Snapchat, recently unveiled a new company director for Southeast Asia market development. However, Snap is not alone in its quest to explore business prospects in this vibrant region. Southeast Asia, also known as the Association of Southeast Asian Nations (ASEAN), is currently a hotbed of activity for many tech companies and high-growth startups. But what's driving this tech boom in the region?

Understanding Southeast Asia: The Key Nations

Throughout history, this region has been recognized as a crucial passage for traders en route to the Spice Islands, the expansive Chinese market, and the Maritime Silk Road. In contemporary terms, Southeast Asia encompasses the landmasses and archipelagos comprising Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Leveraging Large Markets and Connected Consumers

Tech giants such as Facebook, Google, Microsoft, and Amazon have already established their presence in Southeast Asia, following the trailblazing footsteps of foundational tech pioneers like HP, IBM, NCR, and Intel. As these markets continue to evolve, more players have set up shop in Singapore over recent months, with this trend poised for rapid acceleration.

For instance, ByteDance, the parent company of the popular video streaming app TikTok, inaugurated an office in Singapore's central business district this year and is considering relocating its global headquarters there. In May, Chinese e-commerce behemoth Alibaba acquired half of a $1.2 billion skyscraper in the same neighborhood. Successful mergers and acquisitions, an influx of private equity, venture capital, and startup-friendly policies and infrastructure have marked this journey into the Southeast Asian market. The timing and conditions have never been more favorable for tech firms to capitalize on this burgeoning opportunity.

The reasons behind the attraction are apparent. Southeast Asia boasts an enormous market, housing over 650 million residents, with six countries—Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam—contributing to over 95% of the region's GDP. According to the Economy SEA 2019 report by Google, Temasek, and Bain & Company, Southeast Asia's digital economy could reach an impressive $300 billion by 2025. From 2015 to 2019, the region added more than 100 million internet users. A decade ago, four out of five Southeast Asians had no internet connectivity, whereas today, 90% of them access the internet primarily through mobile phones. ASEAN has embraced cutting-edge open-source software and application development, representing a mobile-first market swiftly embracing the latest technology waves.

Moreover, over half of Southeast Asia's population is under 30. Singapore, in particular, stands out as an ideal hub for international tech companies, not only due to its strategic regional positioning and English as the official language but also owing to the substantial consumer base it offers for further growth. Singapore provides a favorable business environment and lies adjacent to promising emerging markets like the Philippines, Thailand, and Vietnam. These markets exhibit shifts in supply chains and possess population demographics that make them highly appealing as both consumer markets and manufacturing hubs.

A Flourishing Talent Ecosystem

Beyond its market potential, Southeast Asia boasts a youthful population that contributes to a rich talent pool for your business. With more than 6,500 higher education institutions and 12 million students across the ASEAN nations, the region nurtures an environment ripe for innovation and growth.

Consider some staggering statistics: The Philippines produces over 130,000 information technology and engineering graduates annually, while Vietnam contributes around 80,000 graduates. Over the past decade, educational investments in economies like Vietnam have yielded substantial results, with tech giants like IBM and Oracle establishing development centers in the region to drive technological advancements.

Technology has not only reshaped how youth in Southeast Asia live and work but also influenced their mindset. The region's young populace seeks organizations that imbue their work with meaning and purpose, value their autonomy, provide stability, and nurture a thirst for knowledge. This augurs well for innovative companies in search of dynamic talent pools. Southeast Asia represents an environment where the learning curve is manageable, and the time-to-value is rapid—a perfect market landscape in line with the demands of contemporary global operations.