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Deloitte Insights Series | Embracing ASEANomics in a post-pandemic world

Written by Duleesha Kulasooriya and Richard Mackender Published on 

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The forces to be reckoned with In Southeast Asia in a post-pandemic era are ambitious startups.

Southeast Asia is made up of different countries, languages, cultures, and norms, but there are emerging trends that are common across these boundaries. The COVID-19 pandemic has changed many realities, but these forces of change remain important, relevant, and profound. What are they, and do they represent a sustainable way forward for economic development in Southeast Asia post-pandemic?

Good ideas and models of success are in high demand as everyone is trying to think ahead for ways to battle a pandemic-induced recession. As the world looks to Japan’s Abenomics to understand how to jumpstart a stagnating economy, and anticipates the outcomes of China’s Xinomics for continued phenomenal growth, Southeast Asia presents a different and important approach.

Being more ’ground-up’ and less ‘top-down’, a new breed of entrepreneurs, investors, and changemakers are showing the way for a better, more sustainable, and socially-inclusive form of economic development in the region. Is this ASEANomics in action?

Entrepreneurs are the changemakers

Before the COVID-19 pandemic, life in Southeast Asia was already being transformed with the rapid adoption and propagation of digital solutions in every imaginable industry. The introduction of platforms like Grab and Gojek had opened up many income-generating opportunities through the gig economy, and through efficiencies made available by merchant tools, including payment solutions. These platforms created enabling situations for uninitiated users to learn about and embrace digitalization.

For instance, telehealth solutions, like Halodoc in Indonesia or Doctor Anywhere from Singapore have opened up new ways for governments and societies to consider how essential services like healthcare are provided and received, in a manner befitting of local cultural norms and budgets.

Technology, for all its technical brilliance, remains a human-centric experience. The presence of entrepreneurs across the region is very important as they can experiment with and adapt technologies for their digitally-untapped societies, turning the hope of technology into a feasible reality to benefit the societies.

Those with the means rise to the occasion

The important changes that entrepreneurs introduce to their societies are not just about technology and modernity, but also about the impact on systems and thinking in business and society. Southeast Asia faces massive plastic waste problems and existential threats such as sinking cities.

Impassioned individuals have stepped up to champion new solutions to mitigate these issues.

Kevin Kumala co-founded Avani Eco in Bali, Indonesia, that produces an alternative biodegradable “plastic” bag made of cassava root, replacing close to 80 tonnes of single-use plastics between 2016 and 2018. Kotchakorn Voraakhom reimagined the Bangkok cityscape with the new Chulalongkorn University Centenary Park that can contain up to one million gallons of floodwater—a suitable flood mitigation measure for the often-flooding, low-lying capital city.

The immediate pathway to scale for both Kevin Kumala and Kotchakorn Voraakhom may be challenging, but they have certainly made their point by doing what they think is right, and being unafraid to aspire to do better for the world.

The story of startup Warung Pintar, established in 2017, is a feel-good one.

Its founding story is inspiring and they have done a fantastic job in bringing to life the idea of micro-retail digitalization. Instead of evicting a warung (mom-and-pop store) which was operating in a property slated for development, venture capital company East Ventures in Indonesia saw an opportunity to uplift an entire section of traditional micro-entrepreneurs who run these stores by providing digital tools that will improve business processes and customer experience.

Read more: The race to digitize neighborhood stores in India and Indonesia (Part 1 of 2)

East Ventures’ own associates started Warung Pintar to achieve this. The Jakarta-based startup has since transformed over 14,500 warungs to date. For the individual micro-entrepreneurs, they have seen earnings for their warungs increase by an average of 41%. On a systems level, Warung Pintar has shown us a way to professionalize a persistently informal sector.

Ambitious startups are the forces to be reckoned with

More important than the size and scale of the market is the size and scale of startups’ ambition—and this can grow, evolve, and inspire beyond physical constraints. Although the high degree of fragmentation across cultures, language, and nationalities can naturally limit the scalability of a single endeavor in Southeast Asia, this fact may not necessarily lead to dampened ambitions.

A fine example is Ruangguru from Indonesia. What started out as a company providing a private tuition matching platform for students and teachers has now evolved into one of the most illustrious unicorn startups in the whole region, offering a range of edtech services for curriculum tutoring, massive open online courses, and corporate training programs.

Throughout the COVID-19 pandemic, the company continued to make strides in new and meaningful directions, including expanding its Vietnam presence through the brand Kien Guru, and launching its Thailand presence under the brand StartDee.

The value in Ruangguru’s success lies not just in public recognition or the scale of their operations, but also in their ability to affect widespread norms, provoke policy responses, open up new markets, and invite new entrants and competitors. Ambitious startups like Ruanguru give us a preview of a better future; something that governments in the region need to consider as they plan for future “basic” infrastructure needs like 5G networks

The upside for large-scale digital transformation is how important provisions of education, healthcare, and even jobs are being made accessible and this is potentially far-reaching, but the transformation also presents challenges of digital divides. Societies must bridge these gaps for all citizens in the region to be part of the new realities.

Learning from the ASEAN Way

Global trends, like those brought about by the COVID-19 pandemic, sustainability and digitalization, affect all of us, just differently. The diversity inherent in Southeast Asia makes a one-size-fits-all approach difficult to operationalize in the region, which is why looking at how businesses and governments across the ten member states of the Association of Southeast Asian Nations (ASEAN) operate and cooperate may be an interesting way to consider resilience in a pluralistic world.

Passionate entrepreneurs and ambitious startups have ushered Southeast Asia governments and people into the new digital world order, and they remain an important source of imagination, resourcefulness, and empathy. This may just be where the best ideas can be found—where the future norms of hyper localization, mass personalization, and even consensus-building can be effectively embraced with superior tools, suitable execution, done in collaboration with willing and supportive stakeholders.

 

Richard Mackender leads Deloitte Southeast Asia (SEA) Innovation, a cross-function, cross-country unit dedicated to driving innovation as a long-term value creator across Deloitte’s Southeast Asia operations.

Duleesha Kulasooriya is the Executive Director of the Deloitte Center for the Edge (Asia Pacific), a management research institute exploring the edges of business and technology. He is based out of Singapore.

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