Growth with a Vision: Entrepreneurship in Southeast Asia
As we explored Southeast Asia, from Singapore to Bangkok to Saigon and beyond, in each new city we visited we were amazed with the prominent evidence of growth: cranes, construction crews, condo for-sale signs “Starting at $10m Baht!”, busy streets of scooters, Tuk-Tuks, Lexus and Hyundai SUVs, a Bentley parked on the sidewalk next to a woman selling stick meat from her mobile stand, stylish coffee shops and edgy bars that could dazzle any metropolitan traveler. I could share scene after scene of the fast-paced growth we experienced and modern, international style development juxtaposed with the old ways of life, historic architecture, and the roof lines, sidewalk shrines, scent of durian, and potent flavors that uniquely characterize this part of the world. Many of these details unify the countries of the ASEAN (Association of Southeast Asian Nations) region, but each has its own distinctive culture, government, currency, landscape, challenges and strengths.
Phnom Penh, Cambodia
Seven months ago we set out on this journey, our business development trip around the world, to explore fast growing urban centers primarily in the East to learn more about their people, economies and entrepreneurship ecosystems. We began our trip in China, the largest economy and power center in Asia and then made our way into Southeast Asia. Our goal was to test our thesis that the growing cities of SE Asia are poised at the precipice of vast potential for impact and opportunity. We made the commitment to step beyond the data to go experience the region in person, spending months exploring, learning, and talking with the people who are living the daily realities of these cities.
We were looking for growth and the energy of transformation, and we were seeking others who share the intention to drive this momentum toward addressing social and environmental issues. As we traveled, we did indeed see the evidence of growth at every turn. Beyond cranes and new condos, we found young people attached to their mobile phones zipping to corporate jobs in shiny new metro trains, we found the inescapable presence of H&M and Louis Vuitton, monuments to rising consumerism. AND we found those who are innovating to improve sustainability and peoples’ lives, defining new ways to manage waste, or purify water. We found platform developers for clean energy and peer to peer impact investment. We found experienced business leaders throughout ASEAN who are guiding young businesses toward growth and cultivating an environment of support for entrepreneurs.
Tower projects under construction in Kuala Lumpur, Malaysia
A little background on the where and what of ASEAN. The association is made up of Singapore, Malaysia, Thailand, Indonesia, Philippines, Laos, Cambodia, Brunei, Myanmar, and Vietnam. These countries have a combined population that is about twice that of the U.S. The association was founded in 1967 with the objective to collaborate for peace, stability, growth and sustainability in the region as a whole. Including the adoption of economic trade agreements to facilitate growth and establish a role in the global economy. This intergovernmental group is known for solving issues through a methodology known as the ASEAN Way, which is a consensus-based, non-conflicting way of addressing problems.
Saigon, Vietnam
While each country in ASEAN is very different, there is much evidence on the ground of economic collaboration. Business conversations in one country often cross borders when it comes to expansion plans, partnerships, capital sources and access to talent. Singapore is the economic leader of the region and is the banking center. This is easy to see when you stroll the streets of downtown Singapore and each office tower shows the name of a major bank, Bank of China, Bank of Singapore, Capitaland, JP Morgan and many more, not to mention the floods of blue shirted or black skirted professionals descending on the bars along the Quay at happy hour to casually sip pints of local Tiger beer for a whopping $12 Singapore dollars a pop. Singapore’s sound regulatory foundation and influence as a financial center ensures its relevance regardless of which country you’re in. If you discuss business in ASEAN, Singapore will come up.
GDP growth in the ASEAN region is expected to maintain a solid pace for 2019 of 4.8% with exceptional growth anticipated in Cambodia 6.7%, Vietnam 6.6%, and the Philippines 6.3% (FocusEconomics consensus forecast May 2019). Growth rates in ASEAN over the past five years significantly outperform developed economies, the world average, and other emerging markets. To put this in context, the anticipated growth for the U.S. in 2019 is 2.3% (IMF: World Economic Outlook April 2019).
Urbanization is a key driver of growth in ASEAN, and on a global scale. Cities generate over half of the world’s overall production. In Southeast Asia, Manila and Hanoi command a stellar rank, showing up in the world’s top 20 cities by economic performance index (Brookings Global Metro Monitor). Again, for comparison, New York and London don’t show up on this list. This information may come as a surprise, but things are changing quickly. Fast growing cities in emerging markets have transformed at a rate that challenges Americans and Westerners to question their assumptions and recognize the significance and opportunity present in these dynamic places.
Bangkok, Thailand
Our exploration of urbanization-driven growth in ASEAN specifically targeted the activity of entrepreneurs. Total early stage entrepreneurial activity is robust in ASEAN at 19%, and is higher than the level in the U.S. at 15% (GEM). Overall growth, burgeoning youth populations, and increasing urban middle class consumers combine to create an environment rich with opportunity for entrepreneurs. We were inspired by many young impact focused entrepreneurs taking pride in helping their communities. We saw a strong contingency of homegrown talent motivated to make a difference, encountered many repatriating highly educated diaspora, and saw businesses from the concept stage through to scaling up for major growth. The entrepreneurship ecosystem varies from one country to the next but in each of the six countries we visited we were able to establish partnerships with dedicated leaders, identify promising entrepreneurs to support, and create alignment with investors working to build networks of impact opportunities. There was a clear sense of the ecosystem establishing a solid foundation in the community and the need for additional capacity development, as well as seed capital to facilitate growth.
Picture sharing your vision over a boardroom table with business leaders and ecosystem players from different cultures and backgrounds, half a world away from home. Picture each speaker in turn beginning to realize that their passions are shared across the table, that their visions align. When you shake hands at the end of the meeting and also offer a wai (hands in prayer position with head bow), everyone has come to see this shared vision and agreed to work together toward a better future. This is the foundation we’re excited to build from. More info on our next steps will be coming soon.
By Lisa Hanson