BANGKOK: Thailand’s new Prime Minister Srettha Thavisin was named finance minister on Saturday (Sep 2) in a Cabinet that was endorsed by the king, as the real estate tycoon seeks to boost Southeast Asia’s second-largest economy and implement key campaign promises. Thailand’s economy has been faltering due to weaker exportsContinue Reading
South Korea has introduced new destinations to attract more Thai tourists as part of bilateral cooperation to spur tourism in both countries.
This year marks the 65th anniversary since Thai-Korean diplomatic relations were established on Oct 1, 1958. The countries have close economic, social and cultural ties through the soft power of their tourism, food and entertainment industries.
Before the onset of Covid-19 in 2019, around 570,000 Thai tourists headed to South Korea each year. After the easing of Covid-19 restrictions, South Korea expressed its readiness to welcome international tourists under its new “Travel to Korea Begins Again” campaign.
The top five international arrivals to Korea are from the United States, China, Japan, Taiwan and Southeast Asia, with Thailand being the largest tourist market from this region.
Meanwhile, the number of South Korean tourists visiting Thailand during the first seven months of this year was 982,328, the fourth-largest market after Malaysia (2.5 million), China (2.02 million) and India (997,000).
Promoting second-tier cities
Besides popular destinations such as Seoul in the North and Busan in the South, South Korea also wants to promote Chungcheongnamdo (South Chungcheong province) and Chungcheongbukdo (North Chungcheong province) in the central region.
Chungcheong Region and the Korea Thailand Communication Centre (KTCC) recently hosted a familiarisation trip for the Thai Travel Agents Association (TTAA) and media outlets to visit highlights of cultural and historical sites and modern attractions in Daejeon, Sejong, Chungbuk and Chungnam cities.
Kim Jung-soo, manager of Cheongju International Airport, told the Bangkok Post that since T’way Air, a low-cost airline, launched daily direct flights from Cheongju International Airport in Cheongju City, the capital of Chungcheongbukdo, on April 27 to Don Mueang International Airport, about 150-200 Korean tourists now visit Thailand daily.
With the low-cost airline link, he hopes more tourists from Thailand, especially group tours and those looking at medical or wellness tourism, will visit Chungcheong, he said.
“Cheongju International Airport is in the centre of the country, so it has the advantage of being geographically excellent. International arrivals at Cheongju International Airport are increasing steadily because it is also easy to travel from the Chungcheong area to Seoul,” he said.
History, culture come alive
Pattama Raksakiat, general manager of KTCC, said one of the highlights of Chungcheong is the Cheongnamdae Presidential Villa.
The villa was built in 1983 by then-president Chun Doo-hwan, who attended the completion ceremony of Daecheong Dam in 1980 and was captivated by the scenery around Daecheongho Lake. It inspired him to have the villa built in the central region.
Cheongnamdae Villa covers an area of 1,825,000m² and features a main building, golf range, heliport, and fishing area. It has welcomed six presidents over the past 20 years. The residency was opened to the public in 2003. Today the villa is a popular tourist site, receiving more than 13 million visitors in 2022. Tourists will experience not only the presidential facilities but also nature walking trails and an observatory.
Beopjusa Temple on Songnisan Mountain in Chungcheongbukdo is one of Korea’s oldest and greatest Buddhist temples. Its history dates back around 1,500 years.
However, many of the original buildings were destroyed during a war in the 16th century and were rebuilt in 1624. The temple is well-known for its cultural heritage, including the 33-metre-tall gilded bronze Buddha statue, a five-storey wooden pagoda, and Daeungbojeon, one of three major Buddhist halls in Korea. The temple is also a Unesco World Heritage Site.
Ms Pattama said the temple area is beautiful during autumn (October and November) when the leaves of trees change colour to orange and yellow.
Another site is Sudeoka Temple, which is located at the foot of Deoksungsan Mountain in Chungcheongnamdo. The temple also has a long history and is believed to have been built in the 6th century. The temple is also home to Daeungjeon Hall, which is widely praised for its architectural beauty.
Modernised cities
Visitors to Chungcheong should also visit the world’s largest rooftop garden at the Government Complex Sejong, said Ms Pattama, adding that its total length is about 3.6km or about 11 soccer fields.
It features 187 different plant species and has a total of more than a million plants, including herbs, fruit trees, berries and vine tunnels. It is also a good viewpoint to look at Sejong Lake Park.
She said Daejeon is a popular place for shopping. The city is the fifth-largest metropolis in Korea and is known as a city of science and education.
It is home to the Expo Science Park, hot springs and Uineungjeongi Cultural Street. It is also known as a cutting-edge medical tourism city, which can be reached in only 50 minutes from Seoul by high-speed train.
“For those who’ve already visited Seoul and Busan, Korea also has other amazing places for them to discover, especially various cities in the central region,” she said.
‘Phi noi’ still a concern
Wachira Wichaiwatana, vice president of TTAA, said Korea has become a popular destination among Thais since the Covid-19 pandemic.
In the first four months of this year, more than 500,000 Thais flew to Korea compared to before the pandemic, when about 570,000 Thais visited Korea each year.
“With South Korea wanting to promote second-tier cities, it will fit well with those who are not first-time visitors. We also see an opportunity to bring in tour groups from state agencies who may want to visit the Government Complex Sejong, as well as individual visitors looking for something new,” she said.
She said one of her concerns is the phi noi or “little ghosts”, referring to Thai job-seekers who exploit the opportunity to enter South Korea as tourists before slipping away from their group tours to take jobs in the grey economy.
She said the phi noi issue has affected some Thai visitors who may be denied entry to the country. Thai people can travel to Korea without applying for a visa, but they must register and receive Korea Electronic Travel Authorisation before arriving in South Korea.
“Some immigration officials may see Thais who live upcountry as potential illegal workers and deny them entry. We try to solve the issue and also work with the Korea Tourism Organisation [KTO] to fix the problem,” she said.
Surachart Boonviriyalai, managing director of Oscar Holiday Tour & Exhibition Ltd, said the Cheongnamdae Presidential Villa is attractive and will be a popular destination among Thais, while Daejeon City looks modern like Seoul. He believes the second-tier cities will appeal to Thai visitors.
K-culture a highlight
Young-Sook Yoon, Convergence Team director of the Daejeon Tourism Organisation, said Daejeon would like to welcome individuals and business travellers to its cities with activities and attractions.
“We [Daejeon City] are trying to attract more visitors from Asia, such as Thailand, Indonesia and Vietnam. Thailand is the number one tourist market in Korea, and we’d like to revitalise the Thai market, especially now we have daily direct flights from Bangkok to Cheongju,” she said.
She said the KTO plans to host a K-Culture festival and hold B2B meetings in Bangkok this month to promote tourism attractions and activities in second-tier cities.
She recommends a visit to Daecheongho Lake, a man-made reservoir covering an area of 72.8 km². It has scenic views and is a place to observe resident and migratory birds.
Another site is the Yetteo Folk Museum, where visitors can learn about traditional culture and arts in Daejeon.
“We would love to invite Thai tourists to visit us. You will experience another side of K-culture. We also have fun activities and festivals all year round.”
We want to start this letter by saying it’s a privilege to do what we do. Even on days when the news is slow or the work has piled up, there’s not a moment that passes where we’d rather turn our backs on the journalistic pursuit.
So it’s with a heavy heart today that we must announce the suspension of publishing at Southeast Asia Globe, effective at the end of September. This is not a decision made lightly, nor as a reflection of the work of our staff, but rather the painful outcome of intensifying financial challenges unfortunately common to our industry.
We’ll touch on some of those in this letter. But first, we want to say these past 16 years have been a fantastic run.
We embarked on this journey in 2007 with the idea of bringing an international style publication to Cambodia, and we achieved our aim. From high quality stories and reporting on Southeast Asia and Cambodia showcasing world class photography and design, we made a commitment to turn out a premium, 100-page magazine every month. We maintained that commitment for 12 years without interruption, expanding to new markets and distributing the magazine in eight countries throughout the region by 2014.
With the rise of digital publishing and social media paired against the mounting costs of print and distributing magazines, we closed out the print version of Globe with our December 2018 edition. We then turned our attention to building the Globe you know today as a digital platform. From the start, we had embarked with a mission of sharing stories from around the region that promote a more informed, inclusive and sustainable future to a readership that cherishes well-written and designed articles. Looking back, we believe we’ve stayed true to those principles while honouring the standards we set at our founding.
Since moving the publication online, we’ve seen tremendous growth of our audience. Readers come to our website every month from more than 100 countries – something that would have been impossible to achieve in print. The shift to a digital-only publication model coincided with the launch of our membership programme and other services to boost revenue and fill the holes left by the loss of print-based advertising revenues.
The building out of the subscription model and some of these other paid services, also coincided with the onset of the Covd-19 pandemic, presenting an important means of adapting to the new realities of the media market. But it also side-tracked us from focusing on the publication as we urgently worked to create new income and stay afloat. Upon reflection, this juncture was a critical moment in the Globe’s arc.
Though we succeeded in diversifying the business side of our operations to create incomes that funded our journalism, this diversification also led to a larger team and increased costs. The shift diverted important resources away from nurturing the publication and, ultimately, growing the membership model. This most certainly was not the only factor leading to today’s announcement, but it was an important one along the way.
Beyond the challenges faced during the Covid-19 pandemic and the trajectory we set from its consequences, the current reality is that it has become increasingly difficult to pay competitive salaries, making it impossible to grow. We’re one of the few publications that has remained financially and editorially independent in a difficult market and challenging media environment. With that, we’ve never relied on big donors or large grants, instead focusing on the support of our readers through memberships while providing services to clients through our parent company, Globe Media Asia.
While ultimately we failed to make the Globe sustainable, this important fact has allowed us to keep our reporting both independent and uninfluenced.
We’re proud of this fact, but without some level of financing and readily available capital, the resources needed to secure the Globe as a sustainable venture are untenable, at least for now. The current economic outlook projects a situation where we continue to flounder and the entire organisation fails.
Our accomplishments would not have been possible without the hard work and dedication of this collective team
The decision to cut Globe was extremely difficult for us to make. We take some consolation in knowing that at any given moment in the past 16 years, we were passionate and proud of our work. We believe we’ve educated, enlightened, inspired and hopefully made a tangible impact through the stories we’ve shared. This is true mostly because we’ve worked with so many amazing people over the years, both as regular members of our staff but also as freelancers and contributors, friends and allies.
Our accomplishments would not have been possible without the hard work and dedication of this collective team. We want to thank each and every one of you out there and will be sharing a special post dedicated to you later this month.
Our collective body of work won’t be going away, and Globe will not be entirely shutting down. We will keep the website open and available – without a paywall – as we believe these stories have lasting value and meaning. For our paid subscribers, there should be no further charges made to your account. If you have any questions, please do get in touch with us by email or phone.
Going through our archives, we hope you’ll find our reporting has helped to set the record on a time and place throughout the years. We’ll be re-sharing some of our favourite articles over the next few weeks and still have a number of exciting original pieces that we’ll be publishing throughout September. That includes more episodes of our Anakut podcast about Cambodia’s future, as well as dispatches from the country’s forests and increasingly closed political realm.
Looking past the end of September, we’ll still be publishing new articles here and there, and will be investing some of our energies into relaunching our website focus-cambodia.com, where we plan to expand our coverage and take a more homed in and multimedia approach to covering Cambodia as it enters a new era. We’ll also be releasing a print version of Focus Cambodia magazine in early 2024. Finally, you can expect us to continue sharing updates through this newsletter, which we hope to build out as more of a micro-publication for our 50,000-plus subscribers.
As for Globe, we hope this is not the end, but it’s certainly goodbye for now as we go back to the drawing board in search of a business model that works. We’ve learned a lot over the past few years and are open to any and all conversations with those who might be interested in working together or taking over the publication.
In the meantime, our inbox is open, so please feel free to drop us a line. We’d love to hear from you. And before we go, we’d like to say thank you again to all of our readers, partners and amazing teammates and colleagues from over the years. We could not have come this far without you.
Like Creative Technology, many other Singapore brands have similar stories that should be written, filling the current gap in local literature on homegrown brands.
In fact, the Singapore story of how the country got to where it is today, an economic powerhouse that is a hub for many sectors, can be told through the grit and gumption of local enterprises – why they started, challenges confronted, failures faced, and breakthroughs in business
For instance, how did DBS bank, set up to finance the country’s fledgling industries and grow new ones, get involved in the development of Plaza Singapura and Raffles City, and eventually acquire POSB to become Southeast Asia’s largest bank?
How did Singapore Airlines become a great way to fly, earning global accolades such as the best airline in the world awards for consecutive years?
There were many stumbles and sacrifices along the way for each enterprise to scale such heights, and many interesting lessons learnt that should be shared. These stories of success and failures will only strengthen the Singapore brand, encouraging the belief that a small nation can dream big. This will also encourage more entrepreneurial efforts.
Similarly, when we decided to write and publish a book on local household brand FairPrice Group (FairPrice), which runs the ubiquitous NTUC FairPrice supermarkets, among other things, we discovered that it is more than just a supermarket.
The stories that were shared for the book are instrumental in not only understanding the 50-year-old consumer cooperative but Singapore as well.
Younger brands also deserve the spotlight, such as fashion label Charles and Keith, which was founded in 1996 by a pair of brothers with S$100,000 and is now present in more than 30 countries; F&B empire BreadTalk Group whose pork floss buns have gone round the world; or consumer electronics company Prism that is seeking to make premium technology accessible to all.
These stories of local brands not only enrich our sense of history or heritage, but also shape Singapore – creating a unique brand story for the country that is more than just about destination tourism (attractions and food) or the efficiency of governance, which are now well-known traits of the nation.
Ultimately, these stories are a good reminder – contrary to popular belief and even lament – that Singapore has strong local brands that have made a mark at home and abroad. But if nobody writes their stories, who will know?
Sue-Ann Chia is co-founder of content agency The Nutgraf, and co-editor of the book The Price of Being Fair – The FairPrice Group Story.
SINGAPORE: Canadian Prime Minister Justin Trudeau will make a two-day visit to Singapore next week, Prime Minister Lee Hsien Loong’s office said on Wednesday (Aug 30). Mr Trudeau’s working visit to Singapore will be from Sep 7 to Sep 8, Mr Lee’s press secretary said in response to media queries. MrContinue Reading
India, which accounts for 40 per cent of global rice exports, has curbed shipments, lifting prices to 15-year highs. Australia’s wheat output estimates are being revised lower by analysts for the first time in four years as key growing areas have had insufficient rain in August. “Wheat production is goingContinue Reading
Getty ImagesA new UN report estimates that hundreds of thousands of people from around the world have been trafficked to Southeast Asia to run online scams.
At least 120,000 people in Myanmar, and another 100,000 in Cambodia, have been forced into working these scams.
Most victims are men from Asia, but some have come from further afield such as Africa and Latin America.
While the problem has existed for years, the UN report is the first comprehensive study of its scale.
As pandemic-related shutdowns saw millions of people stuck in their homes and spending more time online, they became ready targets for the masterminds of online fraud schemes, according to the report.
And while criminal gangs have traditionally preyed on less-educated people desperate to make a quick buck, they are now targeting victims with professional jobs, who often have graduate or even post-graduate degrees.
Many of these places where people are forced into cybercrime are in jurisdictions where governance and the rule of law are weak, and authority is contested, the report said.
“In continuing to call for justice for those who have been defrauded through online criminality, we must not forget that this complex phenomenon has two sets of victims,” said the UN High Commissioner for Human Rights Volker Türk.
The UN estimates that these scams centres generate billions of US dollars in revenue per year.
Various media outlets including the BBC have spoken extensively to people who have fallen victim to these criminal networks.
Often, they are lured by ads promising easy work and extravagant perks, then tricked into travelling to Cambodia, Myanmar and Thailand.
Once they arrive, they are held prisoner and forced to work in online scam centres. Those who do not comply face threats to their safety. Many have been subject to torture and inhuman treatment.
Some networks also target people seeking love and romance – in what’s often known as “pig-butchering” scams. In a tragic case last year, a 25-year-old Malaysian was tortured to death after he went to Bangkok to meet a “girlfriend” he had only spoken to online.
Instead, he was trafficked to Myanmar and forced to work for companies involved in online scams. In one of his last calls to his parents, he said he had been beaten up for allegedly faking illness. He died after being in intensive care for a month.
Existing regulations in many Southeast Asian countries often fall short of international standards and have “in large part” failed to respond adequately to how online scam operations have evolved since the pandemic, the UN said.
Pia Oberoi, a senior advisor on migration at the UN Human Rights Office, said many more cases have gone unreported because the victims face “stigma and shame” for the work they have been tricked into doing.
The report added that an appropriate response should “not merely [involve] addressing organised crime or enforcing border controls”, but should provide protection and justice for these victims of trafficking.
Mr Türk called for governments to be resolute in cracking down on these criminal networks.
“All affected states need to summon the political will to strengthen human rights and improve governance and the rule of law, including through serious and sustained efforts to tackle corruption,” he said.
Southeast Asian countries urged to ‘break the cycle of impunity’ that allows criminals to thrive
PUBLISHED : 29 Aug 2023 at 20:51
Hundreds of thousands of people are being trafficked by criminal gangs and forced to work in scam centres and other illegal online operations that have sprung up across Southeast Asia in recent years, the United Nations said in a report on Tuesday.
The report cited “credible sources” estimating that at least 120,000 people across Myanmar and around 100,000 in Cambodia may be trapped in scam operations, with other criminal-owned enterprises in Laos, the Philippines and Thailand ranging from crypto-fraud to online gambling.
“People who are coerced into working in these scamming operations endure inhumane treatment while being forced to carry out crimes. They are victims. They are not criminals,” said Volker Turk, the UN High Commissioner for Human Rights.
Cambodian police spokesperson Chhay Kim Khoeun said he had not seen the UN report but questioned the number.
“I don’t know how to respond, where did they get the (100,000) number from? Have they investigated? Where did they get the data? Foreigners are just saying things.”
Myanmar’s military-run government did not respond to requests for comment.
The UN Human Rights Office report was one of the most detailed of the phenomenon that has emerged since the Covid pandemic, fuelled by closure of casinos that prompted moves into less regulated areas in Southeast Asia.
The fast-growing scams centres are generating billions of U.S. dollars in revenue each year, the report said.
“Faced with new operational realities, criminal actors increasingly targeted migrants in vulnerable situations … for recruitment into criminal operations, under the pretence of offering them real jobs,” the report said.
It said most of the trafficking victims were from other Southeast Asian countries as well as China, Taiwan and Hong Kong, but some were recruited from as far away as Africa and Latin America.
The UN rights office called on regional governments to strengthen rule of law and tackle corruption to “break the cycle of impunity” that allows criminal enterprises to thrive.
Global investors have always been drawn to Southeast Asia’s growth story, as one of the world’s fastest developing economies and home to a relatively youthful population of 600 million.
This year’s Asean Summit chair, Indonesia, pitched that the region would continue its role as an epicentre for expansion. Even amid the backdrop of a challenging external environment – from the Russia-Ukraine war, to rising inflation and interest rate escalation – there is still substance behind the Southeast Asian story.
East Ventures, a venture capital (VC) firm based in the region, raised a total of $835 million in the past year across various strategies, achieving in May the first and final close of its debut Growth Plus fund, at $250 million. The vehicle aims to support innovators within the company’s ecosystem of portfolio companies that demonstrate strong potential.
“The successful fundraise shows that with the right strategy, management team and mandate, capital is still available,” Roderick Purwana, managing partner at East Ventures, told FinanceAsia.
The East Ventures team is experiencing promising traction across its portfolio – 60% of its growth-stage start-ups have delivered a positive earnings before interest, taxes, depreciation and amortisation (Ebitda) or are in the process of doing so; and more than 40% have a secured a cash runway beyond 2025. At the end of May, the company had invested in more than 20 start-ups so far this year, across sectors ranging from waste management and mental health, to digital mortgages.
In total, the firm has $1.5 billion in assets under management (AUM) across 12 funds that are active across Japan and Southeast Asia. In the latter, it has invested in over 300 companies and was an early backer of Indonesian start-ups, Traveloka and Tokopedia, which merged with GoJek, in 2021.
The firm sees particular opportunity in Indonesia and is among the most active in the market, even though Purwana admits that pace of activity has slowed due to market sentiment.
Money continues to flow into Southeast Asia, as evidenced by the accumulation of $10.4 billion in the region’s start-up ecosystem, in 2022. According to Cento Ventures’ recent Tech Investment report, last year marked the strongest performance of the market for three years on record. In spite of a global slowdown, it finished up on par with pre-pandemic investment levels.
“Southeast Asia will face or is already facing a correction, but the ramifications of this are not as profound as those being experienced by other emerging regions like Latin America and India,” Dmitry Levit, partner at Cento Ventures, told FA from Singapore.
“It remains to be seen whether this contraction is justified by the return to a pre-2022 baseline, or overdone, as a result of investor panic; but as a firm, we take the view that when valuations are low enough, we should invest in such a market.”
Financing the future
Levit and his VC peers remain focussed on digital financial services. It is the fintech sector that they view as key for Southeast Asia, having accounted for 46% of overall liquidity in 2022, according to the firm’s report.
The Cento Ventures team has capitalised on this opportunity through recent investment in Indonesia’s Finfra, which provides embedded finance solutions; and Philippine cross-border payments start-up, Aqwire.
In May, Singapore-based fintech start-up, Jenfi, secured one of the highest fundraising milestones across the region to date, raising $6.6 million in a pre-series B round led by Japan-headquartered Headline Asia. The round also saw participation from existing investors, such as Monk’s Hill Ventures.
“The opportunity in Southeast Asia – especially across traditional working capital and SME loans – is huge. Banks tend to deprioritise this segment as it is riskier, so participation opens up to technology companies like Jenfi, to act as alternative lenders and to offer something that is differentiated but also commercially viable,” said Susli Lie, partner at Monk’s Hill Ventures. She is also the co-founder of ErudiFi, a tech-enabled education financing company.
Jenfi co-founder and CEO, Jeffrey Liu, attributes the firm’s recent successful fundraise to experience. With a background in finance, he founded GuavaPass in 2015, before setting up Jenfi in 2019, alongside Justin Louie. His endeavours in the start-up segment have seen him replicate the process every one to two years.
“I always thought it was a numbers game, but as I’ve built track-record, I’ve realised that it’s more important to focus on quality conversations and connections,” Liu said.
“From start to finish, Jenfi’s pre-Series B capital raise took six months. We had a shortlist of funds that we wanted to talk to from day one, and the fact that investors were already aware of us supported entry into real deal conversations,” he added.
To date, Liu’s firm has raised $40.2 million, which includes $15.2 million in equity, but he thinks it is unlikely that the Jenfi team will fundraise again, before 2024. While he shared that the firm had managed to shield from some of the market challenges during this recent round, unfortunately, this is not the case for the majority of other start-up peers.
Jenfi’s business enables digital native companies – including e-commerce or software-as-a-service (Saas) firms – to scale their ambitions by funding their growth and marketing expansion plans. So far, they have deployed $30 million across 600-plus companies.
“We’ve noticed in the last six months that the VC-backed companies we aim to support are in more challenging positions, in the sense that they have less of a cash runway. We’re hearing that it’s a lot harder for them to secure capital and that there are delays in their overall fundraising processes,” he explained.
Going for growth or pursuing profitability?
This perspective is shared by Lie, whose Southeast Asian VC firm has invested in early-stage technology companies since its foundation in 2014. Reports indicate that Monk’s Hill Ventures has raised at least $380 million across three funds and it has invested in over 40 fast-growing technology companies in Southeast Asia, including Singapore logistics company, NinjaVan; and Indonesian rural e-commerce start-up, Dagangan.
“In this market environment, we see that later-stage deals are taking longer to complete, which means that there is even more of an imperative to ensure as long a cash runway as possible,” she shared.
Before the current cycle, Lie saw deals close in as little as a couple of weeks to a month, but she cautions that this is not the norm. In this environment, she believes that start-ups need cash on balance sheet to support funding for at least 12-months of activity.
“Where our portfolio companies are concerned, the collapse of Silicon Valley Bank (SVB) made indirect impact by way of sentiment. The bank had always been a pioneer in terms of its product offerings and for its activity to be curtailed without anyone else stepping in to take on the whole business, this will alter the flow of capital throughout the entire ecosystem,” said Lie.
“There are fewer investors that are actively deploying compared to the past. For those that are, they want to take a bit more time to conduct due diligence and get to know prospective investments better. Fewer months of runway translates to weaker negotiation power,” she added.
A clear path to profitability is also imperative in this part of a cycle. With it, access to capital remains open; without it, Cento Ventures’ Levit believes that start-ups are exposed to very steep valuation discounts.
Southeast Asia’s top tech companies, Grab and GoTo, which listed in 2021 and 2022 respectively, have yet to show investors that they can stem the red ink. However, this factor is not unique to the region.
“This isn’t a Southeast Asia-specific problem; we see it happening globally, as well. For high-growth tech companies, the path to profitability is a long one,” said Niklas Amundsson, partner at the Hong Kong office of placement agent, Monument Group.
Levit’s perspective indicates that by going for growth, a start-up downplays its push for profitability. However, Purwana believes that both elements are of equal importance and can progress in tandem.
“Sometimes, people think that it’s a question of deciding on growth or profitability, but it shouldn’t be either-or. Ultimately, any company must work to ensure profitability – whether one year, five years or 10 years into existence. They have to be able to turn a profit eventually,” he shared.
Curiosity and caution
As investors seek exposure to start-ups that can sustain growth momentum and pursue profitability, they are keeping an eye on developments in the generative artificial intelligence (AI) space.
KPMG’s 1Q23 Venture Pulse report highlighted investor interest in AI as being relatively robust in Asia. In particular, the sector drew attention during the first quarter of 2023 on the back of the global buzz generated by ChatGPT.
“AI start-ups that can demonstrate potential at industrial scale or in terms of commercial application and adoption – especially in the areas of advanced manufacturing, transportation, energy management, health tech and process optimisation and productivity – will attract investment dollars,” said Irene Chu, partner and head of the New Economy and Life Sciences division at the Hong Kong base of KPMG China.
She underlined that in light of the current tech talent shortage across Asia, the use of AI to improve productivity is more relevant and encouraged, than ever. But with curiosity, comes caution.
“We are excited about the prospect of generative AI as a transformative technology, but we are also cautious around its capabilities and potential negative ramifications,” said Purwana.
East Ventures has been active in the AI space since August last year, when it invested in the seed round of Bahasa.ai, which aspires to build a natural language processing and understanding engine for the Indonesian language. Since ChatGPT has come onto the scene, it has not completed any new investments in the generative AI space, but the segment is one that remains closely watched.
Levit views the space as the “next wave” – an area of tech that every company will need to consider moving forwards: “I have a feeling we will have to fight long and hard against the false dichotomy around AI-based versus non-AI-based businesses, similar to what we first saw with mobile phones; the offline to online transition; and B2B and B2C. The narrative will be stronger than substance in the short-term, but substance will be stronger than narrative in the long-run.”
To unlock its full potential, the region’s tech industry will need to find a new route to innovation, Purwana suggested.
While some view Southeast Asia as a pioneer in the tech space, he feels that “Southeast Asia will have to grow beyond being a ‘copycat market’ for tech, which is a significant gap to address”.
However, he shared that it is reassuring to look at China.
“In the early days of its developing tech sector, China turned to the US for inspiration and duplication. But today, this is no longer the case, especially in fintech sector. In this arena, China is probably more advanced than the US,” Purwana added.
Perhaps one of the best illustrations of this point, is China’s success in leapfrogging the use of credit and debit cards to drive a digital payments revolution, via digital wallets and QR codes. Alibaba (through Alipay) and Tencent (through WeChat Pay) are two of the first-movers to gain status in one of the world’s largest and truly digital economies.
Hong Kong’s offer of the missing puzzle piece
The prospects for Southeast Asia’s start-up scene remain bullish. However, the money being deployed into VC funds largely comes from high-net-worth individuals (HNWIs) and family offices. Asia’s deepest pockets – the institutional investor community – have yet to dip their toes in the start-up scene in a meaningful way, Amundsson noted.
For him, the vital, missing component is: the exit. Many of the region’s top tech companies prefer a US versus domestic listing, as the region lacks an obvious, successful IPO route for up-and-coming technology companies. However, Amundsson does see some opportunity in Hong Kong, which he considers to be further ahead of its Southeast Asian peers in this regard, and continues to advance the development of an attractive and liquid capital market.
On March 31st, new listing rules for specialist technology companies came into play in the special administrative region (SAR). The Chapter 18C regime extends to start-ups active in new economy industries such as AI, alternative energy and agritech. While this is set to attract more listings from outside the China region, analysts expect this only to materialise in the next three to five years.
“I am excited about the new 18C regime launched in Hong Kong because it covers sectors that are going to be transformative, with the potential to solve some of the most challenging problems we face, around climate change, food security and clean energy. Despite the slowdown in IPO activity globally, the new regime offers an attractive platform for those innovative Southeast Asian start-ups that aspire to solve these global issues,” Chu said.
However, while the market capitalisation threshold remains high, it might be some time before these companies list. It also remains to be seen whether Hong Kong’s bourse provides a realistic and viable route for Southeast Asia’s start-up community.
As Asean focusses on finding its next epicentre of growth, the region’s technology sector offers perhaps the greatest opportunity for investors, as it continues to navigate short-term challenges like the collapse of SVB and works to address concerns around the development of next-generation AI.
Reviewing the region’s potential, Lie concluded, “Most of emerging Southeast Asia is moving away from manufacturing towards the service industries, and this is where we’re going to see the adoption of technology that really drives growt
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GENEVA: Hundreds of thousands of people are being coerced in Southeast Asia by criminal gangs into carrying out online scams, often under the threat of torture, the United Nations said Tuesday (Aug 29). Many have been trafficked into working in online criminality and face serious violations such as torture orContinue Reading
