Southeast Asia in 2020: The force is with us

While most of us work our way through holiday shopping lists, pack our bags to go off on vacations, and spend time with family and friends, it’s also worthwhile to remember that in just a few hours, we will ring in a new decade.

Photo credit: Rakchai / 123RF

2020 has a certain boldness to it, not just the numerical configuration with a double “two” and the zeroes that follow, but also the hope that lies within it. A new decade – a chance to learn from the past and start afresh, to commit to building a better world and, in the case of businesses, building companies that will make a difference.

But before we strip off the old and don a new look, let’s glance back at 2019.

The internet economy has far outpaced our expectations

Southeast Asia is a large and fast-growing market. But how large is it and how fast is it growing?

We all know the statistics by now: It’s a region with a population of about 650 million people, a rising middle class with increasing discretionary spending power each year, and a gross domestic product of roughly US$2.3 trillion, which arguably is bigger than India, Brazil, or Russia’s.

While this is common knowledge, it is the speed that is surprising. The pace of growth in almost every segment of the digital economy has been so rapid that the well-researched Google, Temasek, and Bain & Company report must revise its forecast numbers.

Being on the ground, we witnessed at the micro level many promising startups outgrowing their business plans. We have seen that tech-enabled logistics players are delivering more parcels, handling more cargo, and tripling their volume year over year. In fintech, we saw similarly strong traction in major segments such as payments, lending, and wealth management, whether in the form of transactions, loan origination, or asset under management. And ecommerce players continue to break records and hit new highs during events such as 11.11.

All this data points to the fact that consumers are just doing more and more online.

The pendulum swings back

2019 also saw a significant turning point for many entrepreneurs, where the broad focus is now switching back toward long-term profitability. Many people have been questioning whether the current generation of tech startups in Southeast Asia (and globally) could ever make money. I believe such skepticism is healthy and keeps our sanity in check, especially after a decade of “growing at all costs.”

The more appropriate question to ask is, “What does it take and how do you get there?” Entrepreneurs are now putting in more thought into having the right business fundamentals in place and tightening their execution to better address the “what” and “how.” Then, the question of “when” naturally falls into the timeframe. I believe once the what, how, and when are more realistically baked, investors will adjust their mindsets, expectations, and actions equally.

It is no longer about top-line growth and revenue numbers. Founders now have these as top priorities:

• How do we scale meaningfully and in a manner that is sustainable?
• How do we grow both top and bottom line?
• Who should be the right partners in this journey?

Rise of the techno socialist

Increasingly, founders and businesses are thinking of ways to have an impact beyond just the commercial side of things. In Southeast Asia, this has led to the rise of the techno socialist – those who think beyond profits into the broader, holistic impact that their businesses have on society.

What can you expect from 2020?

Wrapping up and looking ahead