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Deloitte Southeast Asia Innovation Insights

These Southeast Asian startups are helping local communities fight off COVID-19 fallout

Written by Deloitte Southeast Asia Innovation Team Published on     9 mins read

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COVID-19 is still wreaking havoc in some of the world’s vulnerable economies, and startups from those regions are helping local communities fight it off.

For many consumers globally, one of the primary changes resulting from COVID-19 has been the transition to exploring new digital channels to find and buy products and services. For businesses, this change in consumer behavior means adapting to new norms and building commercial resilience. To do so, companies need to stay connected both with their consumers and workers and be part of the community in which they operate.

Workers from the community are the foundation of businesses, particularly small and medium-sized enterprises (SMEs). They help businesses stay afloat despite the disruptions of lockdowns and the acceleration of the digital marketplace. Therefore, it is essential to protect the job economy, and empowering these SMEs with the finances, technology, and knowledge to succeed in this regard can address some of Southeast Asia’s challenges.

For Deloitte’s Southeast Asia Innovation Month 2021, we invited seven startups in Southeast Asia to talk about how they have contributed to their communities over the past 18 months. Notably, each of these startups has leveraged technology to reach new market segments and stay ahead of their competition.

Stepping into the shoes of developing communities 

Communities in developing markets are particularly vulnerable, especially during difficult times. It is necessary to take steps to ensure that basic needs in these communities are cared for. As it stands, bridging the digital divide remains one of the top concerns in developing markets; Southeast Asia is no exception. The region is home to the world’s fastest-growing e-commerce market, and services are increasingly based on digital awareness, literacy, and access. As a result, there is a pressing need to ensure that people and communities are not left behind in an increasingly digital world.

It seems like local innovators are best placed to solve these challenging problems. In Indonesia, a country famous for its “mom-and-pop” shops, B2B marketplace GudangAda ensures that thousands of small- and micro-businesses are not left out from the hustle and bustle of e-commerce, opening doors for them even amidst the Covid-19 pandemic. The company aims to empower the Indonesian supply chain by connecting previously offline retailers to the online market, providing them a true marketplace model with dynamic pricing and stock keeping unit (SKU) to track inventory, solving several pain points along a traditionally inefficient supply chain.

JJ Ang, CFO of GudangAda, discussed how its hybrid approach has helped small retailers get online and increase their digital literacy. “B2B requires that you do a lot of merchant education on the ground. It is key to adopt a human-centric approach combined with technology to help scale up. That means educating our merchants on the advantages of going online and how to increase their revenue.” Gooding’s boots-on-the-ground initiative has led many small businesses to turn the corner, and this, in turn, has propelled the startup into one of the biggest e-commerce marketplaces in a country filled with many competitors.

Digital awareness, literacy, and access are issues not solely exclusive to e-commerce. In the agricultural industry, smallholder farmers are facing challenges not too dissimilar to small, local retailers. As COVID-19 continues to cast a long shadow over the future of Southeast Asia’s food security, paying attention to the challenges of smallholder farmers will be crucial moving forward. The tenuous balance of food security in the region heavily depends on its farmers’ access to basic farming raw materials such as quality feed, seeds, crop protection products, and fertilizers.

However, smallholder farmers are generally not the most technology-savvy workers, and it is imperative to plug them into the digital economy. Thankfully, Thailand is home to several promising agritech startups, and Talad is one of them—their agricultural portal helps ease farmers into the digital age.

Hien Huynh, the co-founder of Talad, emphasized that not every farmer is up to date with the latest technologies. Machinery is often outdated, and even finding reliable workers can be a challenge. Talad’s portal is a one-stop-shop that allows farmers to sell their products online, find reliable workers, and buy and sell spare parts.

With their platform, Talad has shown that the best way to ensure food security is to ensure farmers are equipped with new information and technologies, along with a concentrated effort to engage agricultural communities.

Bringing money to where it’s needed

SMEs are the backbone of Southeast Asia, accounting for 97% of all enterprises and 69% of employment in the region. The success of these companies is ultimately driven by their workers. Therefore, investing in skilled talent and talent enablers, such as innovation and digital technologies, is vital to ensure that an SME continues to thrive. However, resources do not come cheap. Access to finance remains a crucial challenge for many SMEs in Southeast Asia. Compounding these problems, the pandemic has impacted many associated supply chains and increased business volatility and risk.

Thankfully, the pandemic has incentivized both technology companies and traditional financial institutions to collaborate to address these issues. For example, Grab has formed partnerships across the region to provide local SMEs with quick and accessible funding. In addition, an increasing number of fintech companies are allowing SMEs to access funding in these difficult times.

One such fintech startup is Funding Societies, one of Southeast Asia’s most prominent digital financing platforms that provides micro-financing to SMEs in need of credit. With the intent to grow the region’s economy, Funding Societies offers SMEs a new avenue of accessing business financing that is affordable, quick, and convenient. In a sea of credit technology startups, the company differentiates itself by focusing primarily on SMEs and their financial pain points, such as credit, cash-flow issues, and transaction management.

Kelvin Teo, co-founder and group CEO of Funding Societies, explained, “There is a temporary market shock due to the pandemic. However, the overall market structure and demand for digital financing remain strong. Digital lending continues to rise due to the rapid digitalization of SMEs. This increased awareness of digital technologies allows us to reach SMEs more efficiently and gives our investors more confidence in the market. Taking a credit-led approach and enabling smaller companies to thrive will help position us as a primary digital bank for SMEs.”

Many SMEs may be struggling with finances, but low-wage workers continue to bear the brunt of the pandemic. Workers across industries are facing salary reductions and job cuts. According to the International Labor Organization, pandemic-induced job losses will continue to drag Southeast Asia’s economy down well into 2022. Even though high-demand and low-wage jobs like delivery services remain essential, workers work long hours and get by with modest pay. It is an incredibly turbulent time for those already living paycheck to paycheck or without alternative sources of income.

To ease the challenges faced by low-wage workers, Nano Technologies’ VUI app gives Vietnamese workers access to their wages at any time, contributing to greater financial liquidity. It removes the uncertainty of payslips and connects blue-collar workers to their employers through instant messaging.

Dzung Dang, co-founder of Nano Technologies, hopes to provide the next generation of payroll technology. Besides cutting down on manual work and risks associated with managing payroll, the VUI app also helps workers learn basic concepts of personal financial management.

By also fronting wage advances, which employers then pay back later, Nano Technologies offers low-wage workers priceless peace of mind.

The future of technology and business

Technology is an indispensable pillar for the future of work. Businesses are shaping and rethinking processes to better serve the needs of their clients. Take the real estate industry, for instance: the pandemic is throwing up roadblocks for landlords, tenants, sellers, and buyers alike.

Home-seekers find it challenging to find the perfect home, with restrictions on house visits and a lack of precise property data. However, the rapid increase in virtual home viewings in Singapore over the past few months reveals just how quickly the adoption of digital solutions has accelerated due to the outbreak.

Proptech startup 99.co strives to build a trusted property marketplace in Southeast Asia using technology and intelligent algorithms. Deputy CEO, Wasudewan, explained how acquiring and integrating technology and data providers like SRX into their operations has helped serve their consumers better. He emphasized that digitalization will remain a top priority for the real estate industry, leveraging new and creative technologies. To this end, 99.co’s platform is packed with features: price analysis data for accurate property quotations, intelligent filters, and integrated virtual viewing, all seamlessly integrated to meet evolving customer needs.

Digitalization has heavily impacted brick-and-mortar businesses as well. For many retail businesses, moving online has been a lifesaver. Although e-commerce giants like Shopee and Lazada have greatly benefitted from this shift, new consumer behaviors are already pushing the next wave of online selling. E-commerce live-streaming is shaping the future of retail, driving higher customer engagement than ever before. Merchants in the Philippines lead the region in live selling, with 60% of businesses using the channel to attract buyers.

Kumu, a Philippine-based online live-streaming platform, connects Filipinos worldwide while empowering thousands of content creators. An economic engine for Filipino creative talent, Kumu’s live-streaming app encompasses many features, including gamified productions that involve the audience as part of the show. Additionally, it enables live commerce, where viewers can discover and purchase products in real-time, and virtual and animated gifts that creators can then easily convert into cash.

With over two million monthly active users, Rexy Dorado, president and co-founder of Kumu, shares the secret behind Kumu’s success thus far, “The Philippines being one of the most social media active countries globally was a big accelerator. We want to add enough value to our creators, and at the same time, build a safe community and maximize their chances of having sustainable incomes.”

Kumu also proves that streaming can be a viable full-time job for many—given the success stories of gamers who earn sustainable incomes through streaming. Rexy mentioned that much of the traction was driven by the game show concepts. People realize that they can earn a full-time income by being themselves, alongside partnerships with communities and brands. “What’s exciting is not the numbers but the stories behind the growth of the community. Theater performers and live musicians whose income was significantly impacted by the lack of live performances during the pandemic are finding a home on our platform.”

If Kumu’s success is any indication, perhaps the future of e-commerce will lie close to the streaming industry.

Drones have also been enjoying increased popularity due to COVID-19. Not only are they proving helpful in e-commerce logistics and delivery, they are also being used for infrastructure surveillance, disaster management, security, field mapping, and crop spraying. In Indonesia, drone medics even help to make no-contact deliveries to COVID-19 patients.

Kamarul A Muhamed, founder and group CEO of Aerodyne Group, shared how the Malaysian-based enterprise solutions provider helped bridge productivity gaps through drone technology and the integration of artificial intelligence. The company’s Agrimor platform, an on-demand drone precision service that enables data-driven agriculture, helps farmers increase crop yields and profitability. Looking ahead, Aerodyne hopes to introduce the next generation of drones in 2022. Being AI-driven and equipped with collaborative swarm systems geared for mission optimization, these drones will have broader applications in industries such as security, smart city solutions, and agriculture.

With more businesses starting to realize the potential of drones, Aerodyne Group has pilot projects in place with plans to expand. The company is targeting neighboring countries such as Indonesia and Thailand, where agriculture still employs farming methods that are still labor-intensive and have a high environmental impact.

Forging ahead 

In an age where disruption is increasingly becoming a fact of life, listening to the needs of local communities opens up a world of possibilities for new ventures & business models. And as COVID-19 continues to rewrite the rules for lives and businesses alike, collaboration, innovation and resilience will be crucial to survival. Companies that view the pandemic as a catalyst for change and stay connected to their workers and consumers will continue to grow stronger and pull ahead of the competition.

 

About the authors: This piece is co-authored by Richard Mackender, Tan Shuo Yan, Lim Shu Jun, and Andrea Lim. Richard Mackender leads the Deloitte Southeast Asia Innovation team, a cross-function, cross-country unit dedicated to driving innovation as a long-term value creator across Deloitte’s Southeast Asia operations.

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