Over the years the startup ecosystem has grown in to fill an important space in modern-day economies. With the hold of traditional companies on markets decreasing, an increased access to technology in current times has meant that more and more people are actively becoming a part of how new age technologies are being used to serve human purposes. A startup lifecycle, as opposed to a traditional company, is often fairly tumultuous till it reaches a point where it can sustain itself financially without running to funding cohorts and VCs every time there is a cash crunch. For every single startup that becomes successful and perhaps even finds a presence in your smartphone, there are many that never see the light of the day.
But startups today have also begun playing a different, albeit equally important, role. In many parts of the world startups and their efficacy oriented working principles have helped create jobs where many big companies and public institutions have been falling short. Startups accelerate a country’s growth, create a culture where many entrepreneurs can leverage technology that leads to the creation of better services and in turn to job growth. Silicon Valley, for example, has become a hub not only for the smart and the brightest collectively utilizing technology to create multi-million dollar companies but today their presence in the markets provides job seekers an opportunity beyond the traditional job options available at local companies or large conglomerates. The pace and nature of jobs created by startups often prove vital for the country in its efforts to push for the creation of more.
Today, although places like Silicon Valley are synonymous to the best that the world has to offer. With its access to proper education and maturing markets, many tout southeast Asia to catapult itself into the global scene. Up until now, technologically advanced and literate countries with favorable funding conditions and accessible VCs have been the startups’ favorites. Many are beginning to notice the signs and are shifting their focus towards Southeast Asia.
There have been signs that are hinting towards a rise in such potential. The growing integration of the various ASEAN markets has meant that today there is a significant rise in how easily goods and talent can find their way to neighboring markets. The linking of emergent and mature markets like Singapore with labor-intensive ones like Vietnam and Cambodia has meant that talent flow has eased while many new regions of consumer markets are slowly coming into the fold of mainstream business focus. This is in part also supported by regional interventions which have helped the talent base in the region to develop skills and become productive in the current times.
The skilling aspect is key in ensuring the continuous growth of startups. In parallel, countries like Singapore and Indonesia have begun investing heavily in their infrastructure and market reforms that enable startups to kickstart their journey. The eight Unicorn startups in ASEAN come from these two countries while many more are expected to join the club by the end of the decade. This while other countries like Thailand, Malaysia, the Philippines, and Vietnam are ramping up investments to create a thriving startup ecosystem. Fuelled by the boom in internet economy in ASEAN, the region also recently signed an E-commerce pact that sought to strengthen infrastructure and opportunity sharing between member states, according to the ASEAN Agreement on Electronic Commerce.
Given the ASEAN countries’ economic potential, the existence of a booming startup ecosystem is one of the many first steps that would enable the region to successfully spread the benefits that accrue, and also contribute to its growth. By creating a favorable business condition, ensuring access to trained and skilled talent, and providing an incentive for regional entrepreneurs to take the risk can greatly benefit SE Asia when it comes to accelerating the rate at which they grow and are able to create more jobs. For a collective labor market that is projected to reach levels of other giants like India and China, the criticality of such measures to be in place to ensure that job seekers get absorbed into the formal economy is quite high. But herein lies the biggest challenge facing the entire region.
One of the most important barriers in doing so is the access to talent.
When it comes to the workforce, ASEAN collectively is one of the best in numbers, although regional disparities still exist. While countries like Vietnam and Cambodia have growing labor markets (and as a result face increasing urbanization) other economies such as Singapore and Thailand depend on foreign workers. Even access to proper markets varies across the region. But a lot of such geographical barriers have been overcome through trade deals that are marked to ease labor flow and improve trade relations.
As per a Jonhson Cornell study, access to talent and proper markets still remains a big barrier. When it comes to trade, the region trades very little internally: only about 24 percent of Southeast Asia’s trade occurs between ASEAN nations, and the remaining trade is with parties outside the region such as the United States, China, and the European Union. Most such markets still remain unavailable to many countries within ASEAN and even these too have been under rising protectionism that’s made external; dependence volatile. When it comes to talent, the region isn’t any better suited. The gap in tech talent is one the largest in the world, according to a report by Adecco.
Although newer jobs are being created, many go unfilled as there’s still significant portions of the labor market who are yet to receive skills that make them productive in an increasingly tech-driven business world. Addressing these problems would be key in how ASEAN is able to create a startup culture that in turn can contribute to job growth.