‘Underrated’ Southeast Asia offers far more than super apps

Southeast Asia has entered a golden age. Its internet economy is poised to hit US$300 billion by 2025. The region resembles the case of China more than a decade ago, when ecommerce and internet startups had found solid footing and were taking off.

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But Southeast Asia is marching on its own merit. In its 2019 Southeast Asia Internet Trends report, technology advisory firm North Ridge Partners said the region is the world’s most compelling digital hot spot – another technology miracle after China and India.

On the ground, the population has already embraced technology at an astounding rate, and companies have been leapfrogging the status quo in existing industries to create unprecedented economic opportunities, transforming entire business sectors in the process.

The report estimates that private tech funding in Southeast Asia could hit US$10 billion this year. As we head into 2020, KrAsia spoke with Chris Tran, head of Asia for North Ridge Partners, to find out whether the region can live up to its potential.

In the 2019 Southeast Asia Internet Trends report, you mentioned that Southeast Asian tech companies are building super apps “mirroring” those in China, but the region also has homegrown innovation. What do you mean by that?

There’s a lot of inspiration that entrepreneurs in Southeast Asia can draw from, both from the US and China, and also in other markets within the region. Successful entrepreneurs are those who can import the best business models and make it work for their local markets. Southeast Asia does not necessarily have the much-needed infrastructure. The region is embracing technology much quicker than its Western counterparts because of its mobile-first environment and large, young population.

It took a long time to build Silicon Valley and to get to about 250 unicorns by 2019. If you look at China, depending on when you start calculating, that process was much faster. You had in China many early US-based investors knowing that the country was ready for a digital revolution. China was not just copying. It’s now exporting business models. The super app was not born in the US. It was born in China.

Now Southeast Asian nations are exporting business models to each other.

There is actually a lot of innovation here. For example, in the US, every time when you talk about clean energy, you’ll have political interest groups. In Southeast Asia, a lot of these jurisdictions are very open to new energy because they do not want to be reliant on oil. There’s more compulsion to actually formulate development.

If you look at Singapore, it has a lot of smart parking apps and smart city solutions. Vietnam has no city metro and it has been delayed for a long time. The same thing happened in Indonesia, where the city metro is decades behind schedule. Within that, we have seen a lot of companies offering mobility solutions come to the fore.

My prediction is that you won’t get this sort of fancy future where everything is electronic and everything is 100% automated. What you will get in Southeast Asia is that some of these solutions will be put in place first because the physical infrastructure can’t keep up.

So you’re saying innovation comes from the fact that we have more problems to solve. However, beyond the “super app” that everyone is talking about, what else can the region offer?

We have more problems to solve and we have less baggage. You can say that we have a bigger gap to fill, but that gap isn’t hindered by barriers of existing industry or stakeholders.