The US Secretary of State Antony Blinken made his first visit to Southeast Asia, landing in Jakarta, Indonesia, to meet with President Joko Widodo. It was part of a four-day tour to strengthen ties between the United States and the Association of Southeast Asian Nations (ASEAN). According to Channel News Asia, the two leaders discussed infrastructure development, the COVID-19 pandemic, human rights issues, and climate change.

Blinken’s trip will reverberate throughout the entire region and across many sectors, especially in the tech startup scene, because of the policies he was outlining. Startups play an important role in fiscal growth by creating jobs, generating competition, disrupting industries, and innovating solutions.

Last year, the value of tech startup funding amounted to $8.2 billion USD. Currently, global and US investors in Southeast Asia are backing startups in the hope of reaping big returns once those companies get listed on foreign exchange markets, such as the New York Stock Exchange (NYSE).

The COVID-19 crisis and the digital transformation of ASEAN have altered business formation and operations. In addition, the US-China trade war in 2018 affected global markets, leading to a slowdown in startup investments worldwide.

Southeast Asian nations had mixed outcomes from the economic battle, with many suffering due to the uncertainty in financial markets while others benefitted from the relocation of industries and companies out of China and into their countries. Even so, investors continued supporting the region, with US investments made in Asia-Pacific (APAC) valued at $969.65 billion USD in 2020.

Here is what the arrival of Secretary Blinken in Indonesia will mean for the tech startup scene in Southeast Asia:

More opportunities for startups

ASEAN startups should benefit from the plan to set up a US Indo-Pacific economic framework to facilitate trade, set digital economy standards, combat climate change, boost infrastructure, and address other mutual issues. Novel challenges require disruptive technologies– a reason tech startups often thrive.

For example, the most significant financial technology (fintech) market segment will be digital payments, which is likely to have 443.9 million users by 2025 if current trends continue. This will encourage tech companies to form in that sector, innovating user-friendly solutions.

Investment boom

The presence of Secretary Blinken signals America’s support for Southeast Asian development, encouraging investors to consider funding startups in the region. As Channel News Asia reported, Indonesian Foreign Minister Retno Marsudi said that the US commitment to his country was “very noticeable”.

While the US-China trade war hurt investor confidence globally, it also created an opportunity for greater investment in up-and-coming startups. Furthermore, a partnership between ASEAN and the US opens up valuable opportunities for trade and the exchange of ideas, including funding and mentorship from more established technology companies in America.

Increased job opportunities

In 2020, trade between the US and ASEAN totalled an estimated $362.2 billion USD. The US Department of Commerce reported that the trade partnership with Southeast Asian countries supported 656,000 jobs. With the entire region shifting to a digital economy, tech startups can grow and work with America to address tech talent shortages and fix challenges affecting their societies.

The US-China tension

The US and China continue fighting for supremacy around the world, with Asia being one of their battlegrounds. ASEAN is America’s fourth-largest trading bloc, representing a market with over 600 million people and a Gross Domestic Product (GDP) of over $3 trillion USD. China has intensified its naval and military activities in the South China Sea, affecting global trade routes and complicating sovereignty over untapped underwater gas and oil deposits.

On the other hand, ASEAN receives 40% of investment from the Regional Comprehensive Economic Partnership (RCEP) group, a free trade agreement with nations from APAC. As one of the RCEP members, China has invested heavily in Southeast Asia in the last decade, especially in infrastructure projects. These confusing battles put the region’s stability into question and hurt foreign investments.

Addressing the COVID-19 pandemic

Finally, both the US and China have used vaccine diplomacy to increase their influence in Southeast Asia. While the morality of this approach is questionable, supplying vaccines still resolves a major problem in ASEAN. These pandemic responses keep people healthy, support economic activities, and encourage investment—vital for startups.

The arrival of Secretary Blinken in Indonesia sends an important message to the region at a time when US-China tensions are rising. Teaming up with ASEAN would help decouple America from China, reducing the US over-reliance on the country for semiconductor production and ensuring a more secure supply chain for its technology needs.

US investors in Southeast Asia are in a unique position as they see the region’s potential and understand the challenges posed by China. Regardless of the complications, they will likely continue investing in tech startups.