Investors urged to rethink Southeast Asia's tech potential

In the rapidly shifting landscape of global capital markets, Southeast Asia (SEA) is emerging as a significant hub of innovation and growth.

Georg Chmiel, a Malaysian-based serial entrepreneur and a Board Member of the World Digital Chamber, is advocating for a reevaluation of investor perspectives towards SEA markets to recognise their true potential.

Comparative analyses between SEA and Western markets have revealed significant disparities in company valuations, with SEA companies often substantially undervalued. Despite Western economies having higher GDP per capita, SEA markets demonstrate noteworthy growth and superior metrics in several tech-related areas. For instance, Malaysia leads with 33.59 million internet users at the start of 2024, representing a 97.4% internet penetration rate, according to DataReportal: Global Digital Insights. Additionally, Malaysia had 28.68 million social media users in January 2024, amounting to 83.1 percent of the population.

"Southeast Asia is not catching up with the West; it is setting new benchmarks in digital connectivity and social media integration," said Chmiel. “The fact that these markets are still discounted is a glaring oversight that investors need to address.”

The technological strides in SEA are equally noteworthy, with advances in proptech, eCommerce, logistics, and other sectors often surpassing their Western counterparts. Platforms such as superapps, which combine multiple services into a single application, exemplify SEA's ability to leapfrog traditional tech development stages. China's rapid advancements in digital technology, artificial intelligence, and quantum computing further underscore the potential within emerging markets, including SEA.

"SEA is not just an emerging market; it's a tech frontier that is redefining how we think about digital ecosystems," Chmiel remarked. “Investors who overlook this region are missing out on one of the most exciting growth stories of our time.”

Chmiel also underscored the inefficacy of a one-size-fits-all approach, pointing out that global tech giants have faced challenges in SEA when employing strategies without understanding local market nuances. Uber's defeat in China and Southeast Asia serves as a prime example.

"A successful strategy in SEA involves a deep understanding of local dynamics. Companies that tailor their approaches to fit regional demands are the ones that thrive," stated Chmiel.

Chmiel calls for setting aside colonial-era models and outdated notions. Instead, he stresses that every sector of a nation's economy and every business operating within it should be assessed according to its own strengths, competitive landscape, and core values. Recognising the unique prospects and technological innovations of emerging markets is crucial for investors and stakeholders to avoid missing out on substantial growth potential, particularly in the tech sector.

"The old labels of 'developing' and 'developed' are no longer relevant," said Chmiel. “SEA is a region of innovation and growth, and it's high time we recognise it as such.”

The terms "emerging" and "established," or "developing" and "developed," are increasingly outdated, according to Chmiel. Western countries risk complacency by relying on being deemed established. Ignoring the rapid advancements and substantial user bases in regions like SEA could prove to be a strategic misstep for investors. With more than half of the world's internet users residing in Asia, including 10 percent in Southeast Asia alone, the potential for growth and innovation is immense.

"The SEA tech scene is not a frontier to be tamed or a market trying to catch up with the West," Chmiel emphasised. “It is a unique, vibrant, and rapidly advancing region with its own strengths and opportunities.”

By shifting the narrative and recognising the unique characteristics and opportunities of SEA, a more accurate and equitable understanding of global tech landscapes can be fostered. Embracing this perspective could benefit investors and drive innovation and growth worldwide, Chmiel concluded.