Very quickly, the outbreak of Covid-19 seems to turn the world upside down. Supply chains were disrupted; international logistics halted; governments imposed travel restrictions; and tourists disappeared.
Recessionary fears are resurfacing and Southeast Asia’s GDP growth rate specifically is expected to decline by 3.4% in 2020 as per ADB estimates.
People start to worry about the future development prospects of Southeast Asia. However, do not forget that many fundamentals of Southeast Asian countries will not change – no matter how long Covid-19 pandemic lasts.
Let’s take a look at some of these key indicators:
Majority of Indonesians will continue to live on densely populated Java island:
The population of Java Island is 149 million, which is 57% of Indonesia. Only 8 countries in the world (including Indonesia) have more people than Java. The huge population base implies huge consumer demand and huge development potential of the region.
The government’s (not postponed) plan to move the capital will not fundamentally change the demographics of Indonesia.
Singapore will still be the tech regional hub for the region:
51% of announced VC deals in Southeast Asia in the 2010s were made in Singapore, and many startups in other countries register their holding companies in Singapore.
Singapore’s startup ecosystem is quite developed and Singapore is offering opportunities for global startups to land here to capture regional growing opportunities and to maintain its competitiveness in the world.
Malaysia will still be a relatively developed country in the region:
Malaysia’s GDP per capita is US$11k, which is 10% higher than that of China, making the country a good testing ground to adopt models from China. This is buoyed by better infrastructure & income level compared to most, and a good trilingual talent base.
It will take Vietnam 21 years to catch up with Malaysia’s current level in GDP per capita if the former grows at 7% per year.
Philippines will continue to have a really young population:
The median age of the Philippine population is 23.7. This makes the Philippines the youngest major country in Southeast Asia. It is a very good indicator for future production and consumption. It will take years to change that demographic.
Vietnam parents will still send their kids to the best universities:
In obsession with their children’s education, Vietnamese parents rival the Chinese. There are 100k engineering graduates entering the workforce each year, which has greatly promoted social development and technological progress.
The Vietnamese students also make up more than half of the Southeast Asian students in the US, the rich talent base has laid the foundation for the future development of Vietnam.
So are you more optimistic now?
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].