In light of the global economic slump, many investors are currently trying to establish where to invest their time and skills and are actively seeking recession-proof industries in Asia and beyond. According to the International Monetary Fund (IMF), a recession in 2023 is expected, with Managing Director Kristalina Georgieva stating, “It’s going to be a tough ’22, but maybe even a tougher 2023”. 

Although no recession-proof industries exist, there are some that are more resistant and in high demand regardless of local or global financial turmoil. We examine the top three recession-proof industries in Southeast Asia and provide some information on the future of the region’s burgeoning tech and startup scene.

Factors that are leading the world into a recession

Instead of optimistic forecasts at the end of the world pandemic and the eagerly anticipated resurgence of the global economy, the first quarter of 2022 was afflicted by sprouting inflation, lingering Covid 19 restrictions, and the war in Ukraine.

Why VC funding in Southeast Asia might reduce in 2023

Globalisation has ensured that no local financial market remains untouched by these negative influences. Despite its previously insular status, Southeast Asian countries are not immune from political instability, wars, and geo-economic turmoil in other parts of the world. 

Countries relying heavily on revenue from tourism struggled during the pandemic, which had a knock-on effect on many industry sectors and the general population. In 2019, tourism contributed around a third of Cambodia’s GDP 2019, compared to Thailand’s 21.9%. The global Increase in energy prices overflowed, causing soaring costs in construction, agriculture, and manufacturing sectors, threatening job security and investments.

According to economists, one of the best ways for those impacted by job losses to overcome this is by making a career change to an industry in a high-demand sector, such as healthtech, edtech, or cybersecurity. 

Healthtech

Healthtech is the fastest-growing vertical in the technology and innovation startup landscape. It encompasses any product or service that can be delivered or consumed outside a hospital or physician’s office and includes hospital and practice management software. The healthcare technology sector is booming in Southeast Asia, with many of the region’s startups at the forefront of this surge in internet-based healthcare services. Due to their increasingly tech-savvy populations and the quick pace of technological innovation, Singapore and Indonesia are now leading the ASEAN region in healthtech.  

The global pandemic demonstrated the necessity for further digitisation of almost all areas of human activity, especially in healthcare, which served as both the last line of defence and at the same time, a very delicate frontline. Reducing the number of direct contact hours with patients by using digital healthcare services proved crucial for relieving the hospital system and protecting patients and healthcare workers from contracting COVID-19. 

The applications of Healthtech are wide-ranging and include telehealth, digitalisation in diagnosis, testing, counselling, informing and organising both patients and medical staff. There are still enormous opportunities and scope for the development of this relatively young branch of health services. The global digital health market will be worth USD $660 billion by 2025, a highly sought-after area for employment and a wise investment opportunity for those hoping to make money.

Edtech 

Due to lockdowns and reduced capacity of indoor classrooms during the pandemic, many educational institutions and businesses were forced to embrace new ways of delivering learning and educational programmes, which increased edtech’s appeal.

The ASEAN region offers enormous potential for edtech companies and startups due to the relatively young population in many countries who are open to embracing the digital resources at their disposal. With the United Nations estimating the population in Southeast Asia to be approximately 681 million people, the region offers an enormous, mostly untapped market for any tech startup wishing to set up an edtech company.

Cybersecurity

Every company in the world could potentially be affected by cyber crimes making cybersecurity a basic need for every startup. The World Economic Forum Global Risks 2015 report ranked cyber attacks alongside unemployment and climate change as one of the top, most significant long-term risks worldwide. 

According to Fortinet’s recent regional survey, the “2022 Cybersecurity Skills Gap Report”, which gathered opinions from 110 corporate-level employees in Singapore, Thailand, the Philippines, Malaysia, Indonesia and Hong Kong, 72% of the organisations experienced more than one security incident, while 41% said security breaches cost them more than USD $1 million. Unfortunately, this technological sector also suffers from a severe lack of skills. 

Those considering investing would be wise to focus on the more recession-proof industries in Southeast Asia and prepare for the recession 2023 is likely to bring. By funding the more resilient, recession-proof industries in Asia and globally, investors and tech startup owners stand a chance of surviving the current economic downturn and may even thrive. 

While there is no such thing as entirely recession-proof industries, industries such as healthtech, edtech, and cybersecurity are more likely to provide a higher return on investment as they are increasingly necessary in our rapidly digitalising world.