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Sourtheast Asia World Next Tech Hub

Southeast Asia’s response to the COVID-19 pandemic has been well augmented by the technological capabilities diligently developed before the pandemic. Over the years, Southeast Asia’s development in the tech industry and strengthening of its tech infrastructure have propelled it to become a region with some of the world’s fastest-growing internet economies. Notably, the region’s tech adoption rates are encouraging. With the 2025 adoption rate achieved in 2020, Southeast Asia has condensed five years of digital adoption to just one year. Many tech giants have recognised Southeast Asia’s potential and opened offices in the region, and they are not alone. A growing number of start-ups and established tech firms are betting on Southeast Asia as the world’s next tech hub. With the region’s vast potential, it is not hard to see why.


The Golden Era of Southeast Asia

Despite the disruptive effects of the COVID-19 pandemic, Southeast Asia is believed to be heralding a golden era, with the region seeing a substantial number of tech start-ups growing multi-fold. As of April 2022, there are 50 unicorns in Southeast Asia. Unicorns are privately-owned start-ups valued at more than US$1 billion, and their numbers continue to grow, signalling an encouraging market potential. Not surprisingly, governments have also been actively courting investors with attractive programmes. For one, the Indonesian government has implemented reforms to make the nation’s investment environment more favourable. Meanwhile, countries like Singapore support the start-up ecosystem with 190 accelerators and incubators and more than 200 angel networks.

With a fast-growing population of over 680 million people, Southeast Asia is also home to a burgeoning middle class. By 2030, 65% of the region’s population is expected to join the middle class, with those below the age of 35 accounting for 60%. In KPMG in Singapore’s Emerging Giants in Asia Pacific report, many of these young consumers have identified themselves as adept at using technology and eager to embrace its advantages. This increase in purchasing power and the high percentage of tech-savvy consumers are expected to boost the demand for goods and services, especially technology, presenting a rich pipeline of opportunities for investors.

Southeast Asia is Where the Money is 

In the face of the pandemic, the Southeast Asian economy remains relatively resilient, with investments continuing to flow into its financial hubs. According to the Southeast Asia Exit Landscape Report 2.0, the region’s start-ups reported chalking up a robust US$6 billion in funds within the first quarter of 2021 alone. The tech investment amount is particularly prominent at US$14.2 billion based on Cento Ventures’ Southeast Asia Tech Investments – 2021 report. This is an increase that is close to 70% of the total capital amount in 2020. Home to such a large pool of capital, Southeast Asia provides a deep source of funding for businesses and projects. This is supported by the uptick in the number of exits in the region. In 2021, venture capital investments increased 1.6 times to hit a record high, and this growth continued into 2022. This paints a picture of a healthy start-up ecosystem as the capital generated from exits is typically reinvested into the start-up scene. This increases the accessible capital for new companies looking to enter the market. The interest generated from major exits can also attract more external capital, making Southeast Asia an ideal destination for tech businesses looking to tap into its rich capital base.


Opportunities for Tech Businesses to Localise in Southeast Asia

Southeast Asia’s developing economies provide promising opportunities and gaps for new tech disruptors and existing players. However, success in this region is not guaranteed. Companies must be mindful of the unique dynamics at play in each Southeast Asian country. High diversity in the market in terms of culture, politics, and religion highlights a need for tech companies to localise to prime their offerings for adoption by consumers.

A key consideration for tech companies during product localisation is the regulatory environment. This ensures that all your company’s offerings comply with the relevant requirements such that they can be launched and reach consumers. As a successful business involves more than just the product it sells, tech firms will also benefit from paying attention to the aspects of business management, such as financial compliance. This ensures they get an accurate picture of their financial health and can strategise with the right business data. Taking the time to understand the local market and ensure compliance with regulations will help firms to avoid costly delays or penalties and increase their chances of success. Help from professional advisors, such as KPMG in Singapore, can be useful in guiding your business through navigating the complexities of the regulatory landscape. With the right approach, tech companies can succeed in Southeast Asia.

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