Even with market disruptions and unexpected global events, the Southeast Asia economy continues to grow at a rate of 4% to 5% per year over the next ten years, with Vietnam leading the charge at a rate of 5% to 7%, according to a joint report by Bain & Company and Monk’s Hill Ventures’ Angsana Council.
The most notable improvement in the region since the Asia Crisis of 1997 is the considerable increase in macroeconomic stability. ASEAN has had significant and consistent development since 1991, with per capita income tripling from USD 1,900 in 1991 to USD 4,700 in 2020. Contributing elements include stable government policies, a surge in entrepreneurial activity, favourable demographics, and a generally benign international climate.
Emerging tech disruptors in Southeast Asia are another contributing factor to the region’s success. Tech-enabled disruptors (TED) have direct and indirect effects on six of the seven traditional economic drivers. The report has also observed that the majority of Southeast Asian governments are actively fostering the rise of TEDs through the implementation of advantageous policies, legislation, and infrastructure development in critical sectors of tech-enabled disruption. Government investment in 5G, incubator programmes and innovation grants have all contributed to driving the region’s economy forward.
The rise of digital consumerism
During the COVID-19 pandemic, digital connectivity in Asia was critical in overcoming the challenges traditional trade faced as a result of lockdowns and restrictive work practices. According to Nikkei Asia, the pandemic significantly impacted Southeast Asia’s digital economy, with over 70 million people becoming online consumers for the first time during the global health crisis.
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The rapid expansion of digital consumption in the region has been fueled in part by a large population of young digital natives and the growing acceptance of smartphone-accessible financial technology (fintech) services, which enable millions of consumers to make digital payments. Services such as Buy Now Pay Later (BNPL) also contributed, making purchases, particularly of larger ticket items, more accessible for many consumers.
A study indicated that eCommerce marketplaces account for 51% of online spending among Southeast Asians, while alternative eCommerce platforms such as business messaging and live-shopping account for 22% of online spending. As more consumers seek engagement, there has been a demand for content creation.
Creators are working in brand and retail channels, making it crucial for organisations to develop efficient marketing strategies using live and pre-recorded video content on platforms such as TikTok, Facebook, and Instagram. They also have to work more closely with influencers to create more revenue.
It is undeniable that marketers must connect with potential customers through video, as social media remains an important medium for consumers to evaluate products. From 2020 to 2022, social media videos will account for over half of all internet discovery, with a compound annual growth rate of 70%. As customers shift across platforms and brands develop integrated channel strategies, social media videos serve as a connecting thread throughout the purchase funnel.
The adoption of metaverse-related technology
In the gaming industry, titles such as Minecraft, Axie Infinity, Active Environments, and Decentraland combine computer-simulated worlds, mixed reality (MR), virtual reality (VR), and augmented reality (AR) to create an immersive experience for the gamer. Tech giants like Microsoft are utilising metaverse elements in their upcoming Mesh for Microsoft Teams feature to allow people to participate in virtual meetings using MR applications.
The experience of metaverse-related technologies such as augmented reality, virtual reality, virtual worlds, cryptocurrencies, and non-fungible tokens (NFTs) will continue to grow from 2D apps to immersive virtual 3D experiences.
Southeast Asia is on the path to accessing virtual reality for corporate purposes such as training and development, virtual working, and hosting social events in virtual worlds in the next 10-15 years. Compared to China, the United States, and Japan, the region has a higher penetration of eWallets, cryptocurrencies, and NFTs, with over 70% of the population utilising at least one metaverse-related technology in the past year.
For instance, Malaysia and Singapore are at the forefront of internet banking adoption. The region’s strong penetration of fintech and use of web3-based technologies is driven by a huge unbanked population and, to a lesser degree, the old financial infrastructure requiring modernisation. Cryptocurrencies and NFTs offer considerable income-generation prospects that many in the region are eager to embrace.
Despite the macroeconomic outlook and anticipated industry-wide “belt-tightening”, firms should continue to invest and expand in Southeast Asia. The structural fundamentals of the Southeast Asia economy are unparalleled in comparison to other regions. Savvy businesses should take the chance to establish a regional presence and expand their market presence.
The demand for integrated shopping experiences that seamlessly merge online and offline services will continue to rise, further proving that tech disruptors in Southeast Asia are crucial for the region to grow and generate revenue in the upcoming years.