Shaping ASEAN digital startups’ growth for good

By Ming Tan, Founding Executive Director, Tech For Good Institute

Over 30 years ago, the vision of ASEAN as a single market took shape. ASEAN leaders understood that free flow of goods, services, investments, capital, and talent would not only strengthen competitiveness and economic development for the region as it integrated into the global economy, but also progress development goals.

Today, ASEAN is one of the fastest growing digital economies in the world. With approximately 125,000 new users coming into the internet every day, the ASEAN digital economy is ripe with commercial opportunity. However, ASEAN is not just a market of consumers. We want to nurture a thriving ecosystem of producers, creators, traders, clients, customers, and consumers.

And as with the decades-old vision of economic integration for ASEAN, the digital economy can do more than drive economic growth. Digital technologies and the companies developing and deploying them have the potential to advance sustainable, equitable and inclusive growth for Southeast Asia.

Startups as catalysts for fit-for-purpose solutions

Last October, the Tech for Good Institute co-organised the 8th ASEAN Economic Community Dialogue with the ASEAN Secretariat and the ASEAN Business Advisory Council on “Promoting the Growth of the Digital Startup Ecosystem in ASEAN”. At the event, Pak Bernardino Vega, Chair of ASEAN Business Advisory Council Indonesia highlighted the particular challenge of growing the digital economy in ASEAN: bringing fit-for-purpose solutions to meet the immediate needs of developing countries, where over 90% of companies are micro, small and medium sized enterprises. The future of our economies lies in our ability to encourage new business models while supporting the digital pivot for traditional businesses.

This challenge is also an opportunity. Technology may enable and scale solutions, but innovation requires first identifying the right problems to solve, and then fostering adoption of solutions. The latter requires trust to shift mindsets. Digital startups embedded within the markets they serve are best placed to do all of the above. They identify needs and gaps in the market, and develop context-sensitive products and services. Platform companies, in particular, recognise that supporting MSMEs benefits all. Grab, for example, has run Small Business Booster Programs across Southeast Asia to help MSMEs adopt digital solutions and expand their online visibility.

Importance of ecosystem support

Digital startups may take root within conducive local contexts, but also need regional and global connectedness to thrive. The “Framework for Promoting the Growth of Digital Startups in ASEAN,” recently endorsed by the ASEAN Digital Ministers, will go a long way in nurturing an enabling, sustainable, and inclusive startup ecosystem across ASEAN Member States. As digital economy companies often rely on scale for their business models to be viable, the six key pillars identified in the framework – talent, education, funding, connectedness, legal environment, and infrastructure – are all vital enablers for a thriving digital startup ecosystem. The Framework also complements the landmark Regional Comprehensive Economic Partnership (RCEP) Agreement which came into force in 2022, which seeks to further investments in the vibrant and growing startup scene in ASEAN by providing an expanded regional market, bolstering protection of intellectual property and enhancing rules in services and e-commerce.

Innovation yields more innovation

We cannot underestimate the impact of having local startups dedicated to applying digital solutions to problems at home, for markets that reflect our communities. The Tech for Good Institute’s Platform Economy report found that the alumni of first generation tech platforms such as Grab, SEA, and Ovo, have since gone on to create and lead over 1,000 startups in the region. These second generation startups will focus on new problems, bring fresh ideas, generate new jobs and invest in human capital to develop new offerings and services that will compete with the first-generation digital companies. As more startups scale, the ecosystem matures. This paves the way for subsequent generations of startups in Southeast Asia.

Advancing Tech for Good, for Southeast Asia

At the Tech For Good Institute, we believe that digital startups have a transformative role to play. A recent poll we conducted showed that over 70% of respondents believed that technology should be used to drive transformative impact at scale, while solving complex societal problems. Digital technology has demonstrated its ability to transform whole sectors at speed and scale. Its general enabling technologies and new business models play a key role in facilitating all other transitions we need to realise within this decade, For example, Grab, once considered as a digital startup, now provides digital financial services, helping those with no collateral develop credit risk models to allow them to secure financing from banks and other lenders. Other digital startups are underpinning completely new industries that are addressing global challenges such as climate change. Carbon markets, for example, rely on trusted and verifiable data. Companies such as Jejak.In, based in Indonesia, leverages artificial intelligence and light detection and ranging (LiDAR) sensors to monitor over 10 million trees and provide real time data for the management of carbon credits.

In his opening remarks at the 8th ASEAN Economic Community Dialogue, His Excellency Satvinder Singh, Deputy Secretary General of the ASEAN Economic Community challenged digital startups “to solve social problems, meet the needs of people, and work toward developing sustainable solutions for the future.” The “Framework for Promoting the Growth of Digital Startups in ASEAN” will not only boost ASEAN’s global competitiveness, but will also foster an innovation ecosystem to advance “tech for good”.