How ASEAN’s digital economy can stay strong even as Covid-19 wreaks havoc

Renowned value investors like Baron Rothschild would say that the best times to buy are when markets are facing a great deal of uncertainty.

To be fair, though, the contrarian 18th century investor wasn’t dealing with anything like what we are seeing now: A global pandemic that has simultaneously caused a widespread loss of human life and a global economic drain.

The flags of Association of Southeast Asia Nations (ASEAN) members in the ASEAN headquarters at Jalan Sisingamangaraja No.70A, South Jakarta, Indonesia.

But if you believe that the international race to develop a Covid-19 vaccine will be successful over the next 12 to 18 months, then you may also believe that the global economy can rebound relatively quickly. However, the surviving businesses, particularly in the tech industry, will look very different compared to the ones we had known before the pandemic.

Interestingly, the International Monetary Fund says that only emerging Asian economies will see positive GDP growth in 2020 (albeit by a mere 1%). Most other places in the world will not be so lucky. From a tech investor’s standpoint, this implies something interesting about the population and consumer behavior in the collective ASEAN market.

So despite all the chaos and fear, here’s why I think now is a wonderful time to be making tech investments in the region.

Millennials to help the economy bounce back

Once a slowly developing region, ASEAN is fast becoming a sweet spot for investors and businesses globally – and for good reason. Home to over 660 million people (approximately 8.5% of the world’s population), it boasts a US$6.5 trillion economy that’s fueled by rapid population growth, increasingly tech-savvy consumers, and a budding digital economy.

Currently, the ASEAN population is young, literate, and urbanized, with roughly half of the region living in urban areas and with a median age of 30.2 years old.

Contrast this with those in Western European countries that have been hit hard by the pandemic: Spain, Italy, France, and the UK. Not only do they rank in the top 25 countries with the largest percentage of adults over 65, but they also clocked in among the top 10 most visited countries in 2019.

With Covid-19 threatening a large chunk of their populations and actually wiping out a key economic sector (tourism), it will be inevitably harder for these European countries to bounce back, in comparison to ASEAN nations that have high domestic demands and young workforces to fall back on.

Lessons old and new

The pandemic and the resulting movement restrictions imposed by most countries have brought old lessons into focus, as cash flow became every entrepreneur’s single most important metric seemingly overnight. This was something that industry stakeholders had touted in the occasional think piece in 2019, but now, it’s become a tenet for every founder.

Many agile entrepreneurs and businesses are actually embracing the paradigm shift. As consumers turn to the internet while stuck at home, startups that are able to are pivoting and repurposing key aspects of their businesses, and in some extreme cases, are even undergoing complete and rapid change.

In Indonesia, movement restrictions have already affected 34 million people in the Greater Jakarta area, and it is looking very likely in the coming weeks that more provinces and municipal authorities will activate their own lockdowns.

These restrictions further emphasize the importance of public necessities such as healthcare, education, logistics, and agriculture – sectors that savvy VCs and angel investors would do well to support in the post-pandemic era, especially as more rural parts of Indonesia begin shutting down in the weeks that follow.

Prioritizing public necessities

Recalibrating to stay the course