Event Highlights

Unlocking ASEAN’s Entrepreneurial Potential

The Tech For Good Institute co-hosted the 8th ASEAN Economic Community Dialogue: Promoting the Growth of the Digital Start-Up Ecosystem in ASEAN with the ASEAN Secretariat and ASEAN Business Advisory Council on 5 October 2022. This article highlights the first panel session “Unlocking ASEAN’s Entrepreneurial Potential”.

Moderators and panelists:

Kiren Kumar, Deputy Chief Executive Officer, Infocomm Media Development Authority (IMDA) Singapore
Karaniya Dharmasaputra, President Director, OVO
Paula Paw, Co-Chief Executive Officer, Versafleet
Dita Aisyah, Co-Founder & Chief of Business Development Officer, Binar Academy
Sivaram Superamanian, Head, Digital Economy Division, the ASEAN Secretariat

Key Insights from the panel:

1. Proximity to customers is a key ingredient to innovating right.

Digital economy growth in the past five years has focused on enabling consumers to go digital in various applications and services. The business-to-business space is expected to see significant growth as all industries seek to digitalize at scale, which presents a great market opportunity for cloud-based, commercially ready solutions. ASEAN startups are well-positioned to flourish and must be close to the customer to innovate. The emergence of unicorns in the region has demonstrated the importance of customer proximity in innovation. Startups that are adaptable, robust, and resilient while able to diversify quickly will be best positioned to succeed in the diverse set of urban and rural problems faced by each ASEAN country.

2. A range of funding and investment approaches characterize a diverse and innovative ecosystem.

Governments can encourage funding for startups through co-investment matching programs, but entrepreneurs should focus on true viability instead of propping up valuations if the market is sustained through subsidies. Growth should not be pursued at all costs, and entrepreneurs should prioritise responsible innovation and strategic moves while demonstrating strong fundamentals and steady growth towards profitability to attract funding. Investors should balance their focus on profitability with potential long-term impact, which digital economy companies in Southeast Asia are well-positioned to deliver. However, digital startups face unique challenges in fundraising and growth. An example is cash tie-ups for new subsidiaries in other countries as paid-up capital requirements for foreign companies can be high. Such untapped funding can be better employed for local employees, customers, and technology investment.

3. The talent gap is a limiting factor to digital economy growth

In ASEAN countries, lack of access and basic digital literacy is the first barrier to building an inclusive digital economy. Investments in internet connectivity and affordable computers are the first step to address this issue. The digital trend has made technology skills essential for all industries, which requires digital education to be accessible, affordable, and relevant to different career outcomes and industrial needs. Upskilling and reskilling are necessary for all members of the workforce. ASEAN also needs a “talent supercycle” that embraces and supports entrepreneurial and digital talents worldwide to foster a more innovative ecosystem.

4. Public-private partnerships can support both digital startups and the digital economy.

Initiatives like SAP.iO Foundry, Unilever Foundry, and Singapore’s PSA unboXed foster collaboration between larger private sector companies and startups. They help startups learn the language and processes of working with larger companies and facilitate open conversations between the two groups. These conversations have been very helpful as established companies are also seeking startup solutions. Collaboration between the public, private, and civil sectors is equally essential in implementing short and medium-term programs to upskill and reskill both fresh graduates and the existing workforce. The private sector can play an important role in company-led training.

5. Regulatory innovation is needed to ensure responsible innovation.

The speed of innovation and regulatory reform is often mismatched, creating the need for public and private sectors to get aligned on their regulatory concerns and desired outcomes. Self-regulatory organizations and sandboxes can drive innovation and growth while safeguarding markets and society, but prescriptive, process-focused, or rule-based regulation can turn obsolete amid technological advancement. A principle-based or outcome-oriented approach can better engage stakeholders with the purpose of regulation so that regulation and innovation complement rather than contradict each other. To achieve their full potential, ASEAN digital economy companies require better alignment among different jurisdictions’ relations in data protection, cross-border data flows, and artificial intelligence. Shared frameworks can lower compliance costs and foster confidence in ethical and responsible technology development and deployment.

The booming digital economy means that there are both challenges and opportunities for SEA countries to tackle before achieving their full-potential growth. The young, tech-savvy workforce, diverse investment sources, and public-private partnerships in SEA allow digital economy companies to experiment with new technologies and expand their impact scope. However, the talent gap in job allocation and the mismatch between innovation and regulation can hinder such growth. Though there are no ultimate solutions to these challenges, SEA governments and companies are well positioned to address them by implementing digital training and standardizing digital policies across the region.