The Association of Southeast Asian Nations (ASEAN), is a mixed economy with 600 million workers, the world’s third-largest labour market topped only by India and China. Two of its member states, Vietnam and Malaysia, are experiencing growth that is placing them at the forefront of the Association’s partner countries. Indonesia, with its growing connectedness and momentum towards future industrialisation trends, is also becoming an attractive site for investors. The co-mingling of high tech with manufacturing, and a growing middle class throughout the region, mean Southeast Asia investment trends for 2021 look diverse and promising. 

As the end of the year approaches and Venture Capitalists are preparing investment budgets for 2021, this region should be high on their hit list. 


With a shift from its former status as a command economy towards an increasingly market economy, increased government investment, and its proximity to China, Vietnam is becoming a more appealing prospect for global investors. The U.S.-China trade war shifted manufacturing sites owned by the US towards Vietnam and away from China, and it became the fastest-growing economy in Southeast Asia in 2019-2020. Government investment in financial infrastructure such as ebanking has combined to create a rich investment climate for this nation.

We explore why Vietnam is the next big market for Southeast Asia


Automation in the manufacturing sector is likely to shape Malaysia’s industrial profile. Like Indonesia’s 4.0 Roadmap, the growing success of tech will most likely include sectors such as the Internet of Things (IoT), Electric Vehicles (EV’s) and artificial intelligence (AI). The semiconductor industry in Malaysia has slowed in 2020 due to COVID cautionary measures, yet it might experience a boom again to furnish supplies for Malaysia’s expanding tech sector.

Additionally, healthcare and medical tourism are likely to see continued growth as Malaysia becomes a regional leader in medical device manufacturing and low-cost medical procedures. High-tech medical devices such as stents and x-ray equipment are increasing as an export sector while medical tourism in Malaysia is also thriving, in part due to affordable regional airfares. Although Singapore and Thailand are global destinations among those seeking medical procedures, Malaysia is emerging as a regional hub, dwarfing Singapore’s medical costs for cardiac bypass surgery by one-third, for instance.

Lastly, the digital economy in Malaysia, like in much of Southeast Asia, is set to grow; eCommerce is on track to account for 20% of Malaysia’s GDP by the end of 2020. Even though the sustainability of Malaysia’s middle class remains precarious, digital trends are likely to expand in the country as Southeast Asia becomes increasingly connected. Moreover, as the manufacturing industry reaches its fourth industrialisation, eCommerce will play an increasingly prominent role in the consumer economy. This is spurred on by students who are utilising online applications during the COVID-19 pandemic to upgrade their skills in tech-related fields such as coding and data science.


With a youthful workforce, 60% of whom are under 40 years old, Indonesia is rapidly becoming an attractive investment location. It also boasts upwards of 136 million workers and a burgeoning middle class. A mix of manufacturing with automation, and eCommerce and Halal food and beverage (F&B) products are likely to become highlights of this nation’s investment future.

Like many economies in Southeast Asia, Indonesia’s government is extending growth opportunities for foreign investors while growing its infrastructure. Indonesia’s specific program, 4.0 Roadmap (2018), a reference to the projected fourth industrial revolution, is expected to automate manufacturing by utilising smart technology. While Indonesia’s industrial sector, after a brief boom in the early 2000s, has been in decline and was largely relegated to Java and Banten, 4.0 Roadmap will allow investors to bring capital into research and development (R&D) that may streamline the economy. Moreover, the technologisation of Indonesia should bring such innovations as wearable technology and the Internet of Things (IoT) to Indonesia’s industrial and consumer sectors. 

Indonesia also has a growing middle class of 70 million consumers. As a majority-Muslim country, highlights of the Indonesian consumer sector include government-required Halal cosmetic, food and beverage and pharmaceuticals. These items are increasing in demand as a greater portion of its consumer base seeks out products informed by Islamic ethics and hygiene. Halal F&B products alone reached $214 billion USD, or 10%, of global demand for Halal products, in 2018.

Again, infrastructure improvements and better connectivity, as well as government-induced responsiveness to Muslim norms, make for a promising investment climate in Indonesia.

Although COVID has altered the financial landscape of Southeast Asia, ASEAN countries appear poised to take advantage of new opportunities presented by the pandemic while also continuing to accelerate the interdependence of their various sectors. As digitalisation occurs, VCs can confidently tweak their investment budgets for 2021 to target this region. The growing middle class in countries such as Malaysia and Indonesia, along with the burgeoning urban tech sectors that fuel them, make Southeast Asia investment trends for 2021 a rich area for investors to keep an eye on in the coming year.