(extracted from View from Asia, fDi intelligence, Financial Times, London, June 2020)

In 2019, Asia was the world’s shining showcase. There was its rising regional 5.2% GDP, investment stock, urbanisation, consumer middle class, 650 million digital-savvy young Asians and digitalisation. With Covid19, will the tech sector still perform well in weakened Asia? And how will Asia tech start-ups fare?

The fundamentals of sound economic and innovation underpinnings are still present. However, there is some interim damage. These include a smaller regional GDP growth (ADB projects a 2.2% in 2020 and 6.2% rebound in 2021), estimates), ever-growing middle class consumption with Asia representing 66% of the global middle-class population and 59% of middle-class consumption by 2030 (OECD) and rich capital markets. In addition, ADB also identified other innovation drivers like education systems, innovative entrepreneurship, conducive institutions and vibrant cities . These factors auger well for the tech sector.

As of April 2019, McKinsey reported that Asia produced more than one-third (119) of the world’s 331 ‘unicorns’ (startups valued at more than US$1b), from which 91 companies are China, 13 in India, six in South Korea and four in Indonesia.

The world’s most digitally advanced countries include China, Japan, South Korea and Singapore, largely due to their governments; supportive policies.

China’s Ministry of Finance in 2019 has required local governments to lower the requirements for startups of applying for entrepreneurship guaranteed loans and bear the interest subsidies, as part of the country’s inclusive finance special funds management.

In Japan, a joint project of JETRO and the Japanese Ministry of Economy, Trade, and Industry (METI), J-Startup , was launched in 2018 to push for the overseas development of local startups.

South Korea‘s Ministry for SMEs and startups has been created with the mission to promote business growth, fostering business startups and supporting micro enterprises.

Besides the Smart Nation initiative launched by the Singapore government, Enterprise Singapore has also provided Startup SG Founder grants for technology startups.

Ironically, Covid19 has nudged more companies and citizens to go digital with travel and Work At Home restrictions. This has already benefited some tech and e-commerce companies. So long as the fundamentals of recovering GDP, middle class consumption, 650 million tech-savvy young audience and digitisation remain sound, Asia’s tech startups should see continued growth from 2022 onwards, post-Covid19. Will tech startups lead Asia’s recovery? No one knows, as it depends on the extent of the impact on consumption, investment and net exports. At this point, government expenditure seems to be the sole GDP hero in public finance.

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