In Q3 2022, growth in the tech industry – for startups and established players alike – is hitting the brakes, as venture capital (VC) investments dropped down to pandemic onset levels.
Asia is also affected by this slowdown, which is a result of the following factors:
- Unfriendly policies of central banks
- Developed economies’ attempt to stem post-COVID-19 inflation, resulting in a strong US dollar
- Russia-Ukraine conflict
- Fluctuations in food and energy prices
The trend seen in the ASEAN is only slightly different: fast stream of deals and investments leading up to 2022, a slowing down, and retrenchment by tech giants.
Previously, VC investments experienced steady growth since the mid-2010s, reaching over US$66 billion by mid-2022, according to the ASEAN Investment Report 2022.
These investments helped produce over 40 ‘unicorns’, or startups valued at more than US$1 billion.
Despite the fall in investments, ASEAN economic growth is seen to be more than 5% in 2022 and 2023, outdoing China for the first time.
International investors still view ASEAN as a high-growth potential and less-known Asian market (as opposed to Japan, South Korea, China and India). Meanwhile, ASEAN-based private equity and VC firms are emerging as sources of funding for startups and cross-border activities.
Another strong aspect of the region is its steadily growing digital economy. According to a report by the most recent e-Economy report by Google, Temasek and Bain & Company, the “ASEAN 6” – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – digital economy is eyed to hit US$200 billion in gross merchandise value in 2022.
Policy development is necessary for the ASEAN to become a top innovation hub in the coming years.
