It is known that Malaysia — given its strategic geographic position throbbing at the heart of Southeast Asia and its competitive talent pool armed with a largely English-speaking population — is a terrific place to launch one’s startup dreams.

All of these makes Malaysia the ideal location for tech companies to start and use Malaysia as a springboard to expand into the Southeast Asia region.

JF Gauthier, the founder and CEO of Startup Genome mentioned in his keynote presentation during Malaysia Tech Month 2020 that it is important for Malaysian startups to be ambitious and start thinking of going regional from day one of operations to capture a larger market and prepare for global dominance. Knowing this, the Malaysian Digital Economy Corporation (MDEC), has been working tirelessly to provide market access opportunities for Malaysian-based tech companies to expand their business ventures regionally and globally.

Also read: TuringCerts combats fraud with blockchain-powered certificate validation

Since 2017, MDEC has spearheaded various market-access initiatives under the GAIN Programme to catalyse the expansion of Malaysia-based tech companies to become global players.

To date, this programme has formed partnerships with over 200 parties globally and forged over 800 business matching opportunities for local tech companies. All of this has resulted in over US$1 Billion in digital export revenue.

Even through this pandemic-stricken times, MDEC has continued to provide market access support and connect global ecosystem partners virtually. In 2020, MDEC has conducted market access programmes in 10 countries: Philippines, Taiwan, Indonesia, Vietnam, Japan, Russia, Australia, China, Sri Lanka and Thailand.

Indonesia as a fertile ground for expansion

With its enormous digital economy and market potential, it is only fitting for Malaysia-based companies to anchor their plans for regional expansion in a vibrant economy like Indonesia.

In the Temasek-Google report published in 2020, it was predicted that Southeast Asia’s internet sector is poised to grow to over US$300 billion by 2025, with Indonesia accounting for US$44, or 14.6% of the region’s overall internet economy. With such staggering predictions in place, it is impossible for any ASEAN tech company with global ambitions to ignore Indonesia.

“While Malaysia is a great market to start in, Malaysian tech companies need to look outwards to truly soar and grow. Indonesia, being our closest and most populous neighbour with one of the largest digital economies in the world, is an obvious destination,” said Gopi Ganesalingam, VP for Global Growth Acceleration, MDEC.

Over the past few years, MDEC has assisted 60 Malaysian tech companies to expand into Indonesia. We spoke to four of these companies – Moovby, Accendo, Securemetric, and GHL to uncover how they have benefited from this support.

Successes of MDEC’s market access programmes in Indonesia

Having expanded its operations in Indonesia in 2018 after participating in MDEC’s market access programme, Moovby — Malaysia’s first peer-to-peer (P2P) car-sharing platform now operates more than 5,000 vehicles across multiple cities in Indonesia and Malaysia.

In undergoing the programme, Moovby successfully expanded into Indonesia and generated an impressive RM8.9 Million requested bookings to date.

“With MDEC’s help, I was able to connect with the right Indonesian partners that have given me valuable advice to successfully enter the market. This programme was also able to help us cut down the time and cost needed for basic exploration,” said its founder, Nik Muhammad Amin.

Since then, this company has successfully acquired approximately US$500,000 from angel investors and strategic partners, which is expected to gear up its regional expansion even further into other ASEAN countries such as Singapore and Thailand.

On the other hand, Accendo, an HRMS solutions provider, has engaged with three partners that are focused on Indonesia. They have also generated high quality leads over a four-month period, comprising 30% of their total leads during that period.

“MDEC is helping us build our brand in the Indonesian market. As you know, creating a brand is a long-term, multi-pronged approach. This process becomes even harder when we look at the fact that we are an SME with a limited budget, are new in the market, and the pandemic hasn’t made our job easier. So MDEC’s help is one component of the whole approach.” said Shobhit Mathur, CCO of Accendo.

Also read: Solving multiple medtech problems with a single device powered by AI

Meanwhile, Securemetric Berhad, a regional digital security company, invested a 5% stake in Indonesia’s PT Privy Identitas Digital (PrivyID) in January 2020. PrivyID is best known as the first private company in Indonesia to be granted access to the National Identification database for online customer onboarding verification. They are also the certified Certificate Authority by the Ministry of Communication and Informatics.

“We had benefited a lot with stronger market access into those Southeast Asia countries that make us a proud Malaysian Tech exporter,” shared Edward Law, CEO and Executive Director of Securemetric.

With PrivyID’s database of over 4.5 million users and 215 large enterprises including Indonesia’s largest banks and telco companies, prominent fintech startups, as well as several small-medium enterprises, this deal is set to advance Securemetric’s position in the regional ecosystem as one of Southeast Asia’s leading digital security players. “Looking forward for more engagement and work together with MDEC to ensure GAIN CONNEX will continue to shine and further groom more Malaysian Global champions,” Law added.

Meanwhile, GHL, a leading payment service provider and one of Southeast Asia’s top merchant acquirers, was able to approach and collaborate with Indonesia-based merchants after participating in MDEC’s GAIN Connex Programme in June 2020.

Since establishing their presence in Indonesia, GHL was able to approach merchants in major cities such as Jakarta, Bekasi, Tanggerang, Depok, and Bogo and have successfully integrated their innovation with Bank BNI, as well as e-wallet partners Gopay, OVO, Dana, and Shopee Pay. These deals have cemented GHL’s presence as a key fintech player in the ASEAN region.

Kevin Lee, CEO at GHL, shared, “GAIN CONNEX has helped GHL to connect with local potential partners for GHL to provide our end to end payment solutions and services. In addition to that, the programme has helped us to understand the local market landscape better.”

Indonesia continues to be a key market for expansion

Despite suffering from the impacts of the global outbreak, Indonesia continues to be a key market for regional tech expansion.

Ganesalingam added, “Our close bilateral trade relations and the extensive network between Malaysia and Indonesia will enable tech companies from both nations to mutually expand into becoming one of the fastest-growing digital regions in the world. This will allow us to grow more local champions and to empower them to go regional and global, elevating Malaysia as a regional powerhouse and being the Heart of Digital ASEAN.”

Backed by MDEC’s strong mission to continue supporting digital innovation, Malaysian tech companies stand a better chance at becoming major global players in the next coming years. Not only that but with Malaysian businesses expanding to Indonesia, this partnership is also poised to yield great benefits for Indonesians, such as the overall improvement of the quality of life through better technologies, jobs growth, and other socio-economic improvements.

Also read: KiWi New Energy: Making green energy available to all

The GAIN market access program is part of MDEC’s three strategic thrusts – empowering Digitally Skilled Malaysians, accelerating Digitally-Powered Businesses and attracting Digital Investments. It is part of their commitment to roll out key digital initiatives announced in Malaysia’s Budget 2021 and to ensure Malaysian society can fully leverage and benefit from 4IR technologies, ensuring shared prosperity for the many and towards realising Malaysia 5.0, as well as establishing the country as the Heart of Digital ASEAN.

For more information on MDEC’s market access programme, visit https://mdec.my/gain

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This article is produced by the e27 team, sponsored by 
MDEC

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Budget airline operator AirAsia Group founder and CEO Tan Sri Tony Fernandes announced that it will soon be launching ride-hailing services, according to local media reports.

This move comes after the company launched a food delivery service in Singapore and the pilot trials for drone delivery service.

Understanding the potential comparison with existing ride-hailing giants such as Grab, Fernandes affirmed that AirAsia can become successful in this sector even with the heavy competition, citing history where the company managed to raise funding quicker than any other airline company.

“I don’t have a big shareholder like Khazanah (Nasional Bhd), okay? If you say that Malaysia Airlines is faster, of course, it is. Like who else? Singapore Airlines? They also have a big shareholder called Temasek. Name me a private airline that has been faster than AirAsia? It’s not easy to raise capital in the aviation business … The reality is, which private airline has received funding quicker than us or done a placement?” Fernandes told The Edge in an exclusive interview.

Also Read: AirAsia, MaGIC partner to introduce drone-based e-commerce delivery in Malaysia

“I’ve got eight years of Grab doing it to learn from. I don’t have to waste all that money, with experimentation, building technology, training drivers, and training the market how to order, they have done it all for me,” he asserted.

The COVID-19 pandemic has undoubtedly caused a hit for the travel and hospitality sectors, which is the primary reason why AirAsia has decided to pivot its services.

Subsequently, AirAsia has also revealed plans to enter the fresh produce delivery market in Singapore where consumers can order imported fish from Japan or short ribs from Korea directly to their homes in Singapore within 48 hours.

Despite the startup making attempts to enter various digital spaces, another Edge report has revealed that the company is posted experience a bigger-than-expected net loss of RM2.44 billion (~US$500 million) for the fourth quarter ended Dec 31, 2020 (4QFY20).

Commenting on the future prospects, AirAsia responded, “It is notable, however, that the Philippines doubled its passengers carried whilst Indonesia multiplied its number of passengers carried by 11 times quarter-on-quarter. This is a testament that for areas where travel restrictions are lifted, there is a solid domestic rebound for air travel,”.

“Even if borders remain closed, the group is well-prepared to rely solely on domestic operations alone this year,” it added.

Countries such as Singapore have also begun to prepare a comeback for their travel and tourism industry by collaborating with both local and global startups. These collaborations aim to create a safer travel and tourism experience for tourists in the post-pandemic era.

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Image Credit: Macau Photo Agency

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Nongsa D-Town held a virtual grand launch on March 2nd, 2021. Opening statements for the event were officiated by Airlangga Hartarto, Indonesia’s Coordinating Minister for Economic Affairs, and Chan Chun Sing, Singapore’s Minister of Trade and Industry. The event was then subsequently split into three “fireside chats” — themed discussions, each featuring their own array of panellists and moderated by E27 co-founder Thaddeus Koh.

Speakers for each fireside chat hailed from all stakeholders involved with the development of D-Town, including government officials as well as current tenants at Nongsa, providing a glimpse of what Nongsa Digital Park (NDP), the initial tech office campus at Nongsa D-Town, has blossomed into so far since it started operation in 2018, and what the future may hold with the Nongsa D-Town masterplan to create a vibrant regional tech hub that represents a digital bridge between Singapore and Indonesia.

Introducing Nongsa D-Town

D-Town is a proposed digital hub built on the Indonesian island of Batam, situated a mere 40 minutes off the coast of Singapore. Nicknamed “The Digital Bridge between Singapore and Indonesia”, D-Town grew out of the existing tech ecosystem at NDP and the creative community that is spawned from Infinite Studio’s animation and film studio that has been in Nongsa for over a decade. Nongsa D-Town is designed with the tech and creative industries in mind with the intention to grow a digital ecosystem filled with regional talent between Indonesia and Singapore.

Also read: Here are 5 reasons to expand your business to the Philippines

Every element in D-Town was designed for the express purpose of building a vibrant community of digital talent who can work, live, and play, within 62-hectares of developed space.

The vision behind Nongsa D-Town

A common point of discussion throughout the webinar was the apparent tech talent gaps in Singapore. Being a small nation-state, Singapore’s small population alone is unable to meet the demands of its booming economy despite its technological and economic advantages, which larger populations like Indonesia are able to supplement.

Wilson Tan, the co-founder of the Webimp group, a bespoke IT solutions firm that set up shop at Nongsa three years ago, described the role businesses based in Nongsa have in bridging this talent gap during the event’s third fireside chat.

Also read: Making smart manufacturing a cost-efficient reality for SMEs

“In an entrepreneurship perspective, it doesn’t make sense for Singapore to keep treating Indonesia as a ‘factory,’ in the sense that local workers remain as programmers who only do work. At Webimp, we promote organically and train our local technical talent for the opportunity to become senior programmers and engineers so that they can fill the apparent gap.”

This kind of on-the-job training is exactly why the Indonesian government is so eager to support the project. An exchange of talent and technology between Singapore and Indonesia seems inevitable at a place like NDP, where tech talent from the two countries are able to collaborate with each other.

“Nongsa presents an opportunity to upskill our younger workforce for the digital economy,” said Tommy Suryopratomo, Indonesian ambassador to the Republic of Singapore, at the first fireside chat of the webinar.

How D-Town serves as a digital bridge between Singapore and Indonesia

Indonesia is a young country with a deep talent pool. Roughly 60% of the country’s 257 million people are within the productive age range of between 15-64 years old. It is not surprising, then, those hopes are high for Indonesian youth working for tech companies and startups at Nongsa to eventually bring back their newfound knowledge to their hometowns and villages across the archipelago.

This arrangement is a win-win situation for both employer and prospective employee as an operation in Nongsa also serves as a springboard for international, especially Singaporean, companies who want to expand into the Indonesian market.

Another overarching topic discussed during the grand launch is the geographical advantage of establishing a tech team in Nongsa for Singaporean companies or other multinational organizations. Batam’s close proximity to Singapore allows it to serve as a springboard for Singaporean companies, as the 40-minute commute between the two islands makes it possible for an executive or entrepreneur working in Singapore to visit the tech team in Nongsa and return home within a single day.

Also read: Innovating medical devices towards better dental patient care

Indonesia’s current tech capital in Indonesia is Jakarta, but NDP is an ideal bridge for Indonesian tech talent who desire to work for overseas companies due to said proximity to Singapore. Simultaneously, the increased flow of talent to Nongsa-based Singaporean companies solves Singapore’s finite tech talent gap.

NDP builds on Infinite Studio’s decade-long presence in Batam, which has been a success and a sort of “microcosm,” to quote Mike Wiluan, President Director of Nongsa D-Town, of what the settlement will look like in the future.

The future of D-Town

When asked about the estimated completion date, Marco Bardelli, Boardmember and Senior Director of NDP, and Andrew Wee, Director of Design at Surbana Jurong, predicted that the entire Nongsa D-Town would take 10 years to finish, with Phase 1 of development coming to a close in 2023. At that point, around 8000 tech and creative talents will be based in NDP in addition to the roughly 1000 currently living and working there.

As D-Town opens for business to the outside world, the incentives for companies on both sides of the Singapore strait to set up shop on Batam will continue to grow.

Interested in learning more? Watch the full Nongsa D-Town Virtual Grand Launch through this playlist on YouTube.

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This article is produced by the e27 team, sponsored by 
Nongsa D-Town

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

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Data is at the centre of banking and financial activities and will be even more in the future. Data related to the knowledge of the clients, such as individuals or legal entities are, definitely strategic.

That’s why the ecosystem (regulators, banks and providers) are considering the mean of optimising the data collection processes and, at the same time, the partnership with market KYC initiatives known as the ‘Utilities Services’ and e-KYC all around the world.

The existence of data governance, a strong internal process, and specific tools to serve a single vision of third party data –used on the client onboarding and during the KYC reviews– must go through the construction of an industrial and centralised approach to digital data processing.

Indeed, offers from data providers are still highly segmented. Banks are forced to use several solutions to cover the regulatory requirements and meet the needs of their business lines. Consequently, the huge number of utility providers and market solutions may result in higher costs for banks processing, rather than reducing them.

Also Read: Blockchain-based e-KYC platform claims the throne at Binar Academy and Tokopedia’s Hack of Thrones

Mergers between the same data providers and utilities have begun to take place with the aim to extend the offer over all the value chain and ultimately to address a wide range of clients. Data aggregators can become a serious competitor to utilities because they provide the tech flexibility via APIs, which frees banks from the constraints of interfacing with several data providers and promoting e-KYC digital process.

Several banks have established collaboration or investment links with the best external data and documents providers in the market while maintaining high-level internal expertise. Currently, there is no universal third-party data sharing model approved by markets, regulators and banks.

Some banks no longer wish to be the intermediaries and have already turned to a strategy of mix-sourcing through appropriate partnerships with data providers in Europe, the US and Asia. The consolidation between the various market providers, which has accelerated for almost three years now, will have to lead to conglomerates by large geographical areas.

Despite the good start to the consolidation process to serve a wider data value chain and extended geographical coverage, there is still a lot to be done to be able to share data –to standardise it and to make it reliable. A niche that can favour new players in the e-KYC aggregator utilities with better offers at the business and technical levels.

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In mid-March 2020, Bitcoin price shot up beyond US$61,000. Just when the world thought the US$50,000 was the highest point the digital currency could breach, it zoomed past an unprecedented number and stunned many.

Based on research by Japan-based exchange bitFlyer, there is compelling enough reason to believe that “the last run-up in price was mainly driven by US investors.” The US still accounts for the overwhelming majority of activities and interest in Bitcoin.

According to the bitFlyer study, 30 per cent of people in the US consider Bitcoin and other cryptocurrencies as attractive investments in 2021. Stocks remain the most preferred investment option among Americans, but Bitcoin and crypto are already considered as the fourth most popular investment. These assets are twice more popular than gold.

Moreover, around a fifth of Americans say that they are currently using or have already used cryptocurrencies in the past. Also, more than three-quarters of people in the US say that they know about cryptocurrencies and have a positive perception of these assets as investments.

Digital currency interest in Southeast Asia

In contrast to the US situation, Bitcoin and other cryptocurrencies did not immediately get a warm welcome in Southeast Asia. In 2017, Singapore issued a warning and expressed uneasiness with the rise of Bitcoin. In the same year, Vietnam banned the use of bitcoin and other cryptocurrencies as methods of payment. Also in 2017, Indonesia declared Bitcoin payment as illegal.

Things have changed over the years, though. Many countries in the ASEAN bloc have already enacted policies and legislation that somehow legitimise the use of digital currencies. Most countries still do not consider Bitcoin and crypto as legal tender, but they have adopted rules that legalise digital currency in other forms of financial transactions.

Also Read: Tesla is now accepting bitcoin. Are crypto payments the future of business?

Notably, in a Statista survey, two ASEAN countries rank second and third among countries with the highest rates of cryptocurrency adoption. These are Vietnam and the Philippines, which have 21 per cent and 20 per cent of their respective populations saying that they have used or owned digital assets in the past year. The survey polled 1,000 to 4,000 respondents in each country.

These numbers for Vietnam and the Philippines, two of the most promising economies in Southeast Asia, compared to the 20 per cent of respondents in the US who say that they have used or are currently using cryptocurrencies according to bitFlyer’s study. “Seventy-six percent of people in the US that have heard about crypto have a positive perception about cryptocurrencies as an investment … Our research shows that the current (crypto) market sentiment amongst American investors is very bullish,” writes the bitFlyer study.

Other Southeast Asian countries also rank relatively high on the list. Thailand is fifth (17.6 per cent), while Indonesia, Malaysia, and Singapore are tenth (13 per cent), twelfth (12.3 per cent), and twenty-third (9.6 per cent) respectively.

With these many people admitting to having some experience in owning and using digital currency, it is not a stretch to think that Southeast Asia will soon have a significant impact on digital currency similar to what the US has.

The potential Southeast Asian impact

With a population of 655 million, the impact of the ASEAN bloc on digital currencies cannot be understated. The region has a massive digital economy estimated to be worth US$100 billion in 2020 and is expected to surge to US$300 billion by 2025. Countries in the ASEAN bloc also have some of the biggest internet-connected populations in the world. A report from Google approximates Southeast Asia’s number of internet users at around 400 million.

The question is this: Will a good portion of these 400 million adopt digital currency use? The answer is likely affirmative. According to bitFlyer’s study, the reasons for people’s interest in crypto assets are the same for almost everyone.

In its comparison between the US (where there is high interest in crypto) and Japan (with relatively low interest), the study noted similar answers to the question “what drives people’s positive perception about cryptos?”

Also Read: Tesla is now accepting bitcoin. Are crypto payments the future of business?

The reasons include the growing value of crypto assets, positive news about them, asset decentralisation and democratisation, and most notably the high-profile expression of interest or support by large institutions in these assets. These reasons are similar to what any Southeast Asian would likely say if asked why they want to obtain or use digital currencies.

“When you look at this Bitcoin rally that we’ve been seeing over the last couple of weeks and months, really there are two elements driving it. One is the continuous entry of institutional players,” says PwC’s Global Crypto Leader Henri Arslanian.

The growing and well-publicised interest of large corporations and organisations facilitates a bandwagon effect that convinces many to get involved with digital currencies.

By now, Bitcoin prices are gradually dropping after peaking at US$61,283 on March 13, 2021. There have been no steep decreases yet, but the trend points to a slow fall with some occasional marginal increases. According to Cryptocurrencies and Financial Market Strategist Aayush Jindal, “there is a key bearish trend line forming with resistance near US$57,500 on the hourly chart of the BTC/USD pair.”

This could indicate the moderation of interest in bitcoins for now, mostly in the United States. The same trend can be observed in ether price.

If Southeast Asian businesses, investors, and individuals were to start showing significant activity in support of digital currencies, they can easily make up for the diminishing interest in the United States. They can easily influence the perceived value of bitcoin, ether, and various other digital currencies.

Biting into American dominance

In a piece for CoinTelegraph, former SEC Legal Specialist and Florida International University School of Law Adjunct Professor Marc Powers expressed his worries over the possibility of other countries overtaking the US when it comes to digital currencies.

Also Read: Why Bitcoin is set to boom in a post-COVID-19 era

“What most politicians and regulators in the US fail to appreciate is that while we stifle blockchain advancement and the use of cryptocurrencies for capital formation, there are other countries and jurisdictions which welcome and embrace it. In failing to adapt, the US faces the real risk that this new technology will be ‘owned’ by other countries,” Powers wrote.

This point makes a lot of sense, as Southeast Asia is quickly becoming one of the major players in the blockchain and digital currency markets. As early as 2017, Singapore already gained the renown of being one of the world’s biggest ICO capitals. With tweaked policies and laws on dealing with digital assets, Singapore has been attracting more ICOs and crypto investments. Indonesia is already in the process of creating legal frameworks to facilitate blockchain and crypto innovations.

Additionally, Thailand passed cryptocurrency laws in 2018 to take advantage of blockchain-powered solutions for cross-border transactions. The Philippines is also making headways into digital currency adoption as it pioneered the use of blockchain for treasury bond distribution.

Meanwhile, Vietnam passed Resolution No. 17/NQ-CP to facilitate the country’s development of its e-government system while establishing a legal framework for blockchain use.

Slow but steady progress

Digital currency dominance may be a tall order for Southeast Asia, but it is not an impossibility. The openness and dynamism of the Southeast Asian market make it an agile player in modern technological and economical developments.

At the very least, the region is expected to become a formidable force in the decentralised digital currency market, especially with the perceived Asian digital currency leader making it clear that its state-backed digital currency does not intend to follow the footsteps of bitcoin and other decentralised and largely unregulated digital assets.

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Singapore-based Monk’s Hill Ventures has partnered with talent platform Glints to launch the Southeast Asia Tech Talent Compensation report.

The report scoured through more than 1,000 data points and interviews with over 20 founders to uncover the latest trends in building teams, attracting, and compensating tech roles in Singapore, Indonesia, and Vietnam.

It also encompasses the wider tech talent landscape in Southeast Asia, and the motivations and drivers of both startups and their employees.

Also Read: How foodpanda CTO approaches hiring and retaining the best tech talent

The report found while compensation packages for both tech and non-tech roles within the region have increased, it remains an attractive market for securing experienced and diverse talent to building quality tech teams.

Here are the main takeaways:

Talent crunch

There’s a talent crunch regionally — particularly in Singapore — for engineering and product manager roles. The US and China tech companies entering the region — including TikTok, Tencent, Alibaba, and Zoom — are more likely to pay above-market rates for tech talent or, in some cases, write blank cheques for high performers.

Cash is king

Cash is still king, though things are changing. Fewer than 32 per cent of participants reported being compensated in equity. However, the report revealed that some founders are spending time educating their teams on the benefits of equity.

Technical triumphs

Technical roles are still the most in-demand and highly remunerated across the region. Technical roles (product, data science, engineering) earned 54 per cent more than non-technical roles (marketing, operations, sales, finance).

Specialisation pays

The differences in base salary between product and data science roles over non-technical roles were one to two times higher than for engineering. This suggests that while engineering skills are becoming more common across the region, specialised product and data science skills remain hard to come by.

Vietnamese growth

Salary differences for senior roles relative to junior roles were the highest in Vietnam for both tech and non-tech talent compared to Singapore and Indonesia, suggesting strong potential for upward salary growth within the Vietnamese tech sector.

Following the big boys

Besides big tech companies, some startups are now offering annual wage supplements (AWS), bonuses, restricted stock units (RSU), or employee stock ownership plans (ESOP).

Remote-first

Remote work is here to stay. Most founders have adjusted to the new normal, implementing staggered work schedules in the office or 100 per cent work-from-home policies. The report revealed the emergence of founders building completely remote teams and being more flexible on where to source the best talent.

Leverage SEA

A regionally-distributed talent strategy is a winning strategy. Given the wide range of salaries across SEA, many startups are shifting towards a strategy of regionally-distributed teams to take advantage of skill sets and compensation benchmarks across the region.

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Ripple, a leading provider of enterprise blockchain solutions for global payments, announced today it has agreed to acquire 40 per cent of Tranglo, a Malaysian cross-border payments firm.

As per a press note, the partnership will allow Ripple to meet “growing customer demand” in the region and expand the reach of on-demand liquidity (ODL), which uses the digital asset XRP to send money instantly and reduce working capital needs.

Furthermore, Tranglo will play a critical role in supporting Ripple’s existing corridors, such as the Philippines, and introducing new ODL corridors within its current network.

Completion of this transaction is subject to regulatory approval and customary closing conditions and is expected to occur in 2021.

As Ripple broadens its footprint in the region, RippleNet customers using ODL will also be able to leverage the blockchain firm’s Line of Credit to free up working capital and scale cross-border payments into more markets than ever before.

Also Read: TNG Fintech faces lawsuit from minority shareholder in Tranglo

Tranglo will continue to provide and expand its current payment services to make cross-border transactions faster, cheaper and more secure for its customers.

Southeast Asia’s payments landscape is highly fragmented. Each country comes with its own unique process and payments infrastructure — the lack of a standard integration for regional cross-border payments currently requires expensive workarounds.

This partnership will see both companies combine their in-depth local expertise to address the challenges associated with cross-border payments.

Last week, Ripple appointed Brooks Entwistle as Managing Director for Southeast Asia.

According to Asheesh Birla, General Manager of RippleNet, Tranglo’s payments infrastructure, coupled with its unparalleled customer service, makes it an ideal partner to support its expansion of ODL starting with the Southeast Asia region.

Upon completion of the deal, Amir Sarhangi, VP of Product and Delivery at Ripple, and Entwistle will join Tranglo’s board of directors.

TNG Fintech Group, which acquired Tranglo in 2018 in a US$28-million deal, will remain the majority shareholder.

Ripple allows users to send money globally using blockchain. By joining Ripple’s global network (RippleNet), financial institutions can process their customers’ payments anywhere in the world instantly, reliably and cost-effectively. Banks and payment providers can use the digital asset XRP to further reduce their costs and access new markets.

With offices in San Francisco, Washington D.C., New York, London, Mumbai, Singapore, São Paulo, Reykjavik and Dubai, Ripple has more than 300 customers around the world.

Founded in 2008, Tranglo is a cross-border payment hub providing business payment, foreign remittance and mobile payment solutions.

Its global network spans more than 100 countries, 2,500 mobile operators, 1,300 banks/wallets and 130,000 cash pickup points.

It has offices in Kuala Lumpur, Singapore, Jakarta, Dubai and London.

In January 202, Tranglo announced a collaboration to facilitate cross-border remittances to users of Alipay, who will be able to receive quick and secure money transfers within the app.

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Image Credit: Ripple

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2020 was the year no one could have predicted. While Southeast Asian businesses of all sizes faced challenges, startups and SMEs have undoubtedly been hit the hardest. Research shows that ISMEs are the economic backbone of Southeast Asia, employing 72 per cent of Singapore’s workforce and many are now grappling with the economic, business and social impact of the pandemic.

Yet, if there’s one thing that’s become clear, it’s that Singapore has an abundance of resilient businesses that have spent the last twelve months innovating and pivoting, with many SMEs targeting new audiences and overhauling their marketing strategies to reflect evolving consumer behaviour.

As we are going through the first half of 2021, knowing how best to prepare can feel overwhelming. Here, I delve into how SMEs can get their digital ducks in a row for success in 2021 and beyond.

Migrating to a digitised approach

In a bid to support its growing local SMEs, the Singapore government introduced an e-commerce booster package in 2020. In partnership with online marketplaces Lazada Singapore, Qoo10, Shopee and Amazon, the package provides manpower support to facilitate 90 per cent of the cost for retailers to adopt e-commerce platforms.

SMEs have the opportunity to diversify and digitise their brick and mortar businesses by uncovering a new way to reach local customers. In signing up for the package, SMEs can tap into any of the four online partnered marketplaces to sell their products while also gaining access to services offered by the platforms. This includes content development, product listing, channel management, fulfilment services and advertising.

Beyond providing financial assistance, this package can help SMEs understand and apply digital marketing as well as improve proficiency in implementing effective digital campaigns. These skills enable SMEs to build long-term capabilities and generate greater consumer awareness of their brands and products.

Also Read: Human capital is the biggest enabler of digital transformation. Here’s how to enhance it

Developing a fool-proof marketing strategy

While SME leaders aren’t able to predict what will happen in the future, they can take learnings from 2020 and apply them to their new year marketing strategies. Begin by setting aside a day in the first quarter for a strategy meeting including the sales, customer service and marketing teams.

With the overarching goal of marketing, customer service and sales to build awareness, customer rapport and build trust, these teams must collaborate to achieve objectives in the year ahead. Not only will this session provide a fantastic opportunity to align the team on goals for 2021 but it also serves as a great excuse for team bonding.

For most businesses, digital marketing has become pivotal to success and this is expected to grow this year. Online shopping is the new normal and competition is fierce so SMEs must proactively plan to offer a premium customer experience.

In line with this, use the early months of 2021 to ensure your website, apps and enterprise technology are in optimal condition to provide a polished user experience.

Tapping into innovative tech

As competition continues to increase, SMEs should be adopting innovative technology solutions, specifically artificial intelligence (AI), to help cut through a crowded market. AI technology is not only growing in speed and processing power but in its application, too.

Analysis from Quantcast and Forbes Insights revealed that of 500 marketers, 52 per cent had seen an increase in sales, while 51 per cent had seen an increase in customer retention since introducing AI capabilities to their ecosystem.

There are a few core areas AI can be embedded into digital strategies for small businesses, including marketing and social management, such as managing the company’s social channels, conversational marketing, for example, chatbots, and remarketing, enabling greater insight into audiences and traffic.

Using AI in this way can create more personalised digital experiences, tailoring products and messaging to the right audience and enabling greater insight into customers, both new and old. These insights and recommendations delivered by AI give marketers the power to more accurately adapt their strategies in order to deliver cost-effective and targeted strategies.

Also Read: 5 ways that will help SMEs scale even amidst a pandemic

In a market that is constantly evolving and transforming, it’s never been more important for SMEs to get their digital ducks in a row – this could be the difference between success and failure. The unpredictable events of the last year have prompted a significant change in consumer buying behaviour, and in our new, socially distanced world, digital has become the channel of choice for connecting with businesses.

With a new year comes new opportunities, and in 2021, small businesses should relish the chance to migrate to a digitised approach, revise their marketing strategies and tap into innovative technologies to pave the way to success this year and beyond.

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Despite being a major driver of growth for ASEAN economies, the majority of small and micro enterprises continue to exist outside of the formal economy.

The economic fallout of COVID-19 continues to highlight the impact of out-dated or non-existent support systems for these businesses, including basic financial instruments like insurance and access to credit. Solving that gap requires urgent attention.

There are many ways to define small businesses, but here I’m referring to those micro-enterprises with less than US$150,000 in revenue per year. In the ASEAN region, these businesses make up roughly 90 per cent of the small business community and contribute between 30 and 53 per cent of their country’s overall GDP, according to the International Federation of Accountants (IFAC).

They are heavily concentrated in rural areas, with only 13 to 22 per cent based in major cities such as Jakarta and Manila. Many also struggle with growth due to significant cash flow challenges and access to more suppliers.

Bringing SMEs into the formal economy

For decades, these small-medium enterprises or warungs in Indonesia have been forced to exist outside formal financial systems that were never designed to be inclusive. While many small business owners do not want to be recognised to avoid declaring income or paying taxes.

For the vast majority, however, it is the absence of a meaningful financial infrastructure that prevents these cash-based businesses from participating. Avoiding it, however, poses certain challenges; challenges that have been exacerbated by the pandemic, and challenges that outweigh the perceived savings.

Also Read: How fintech in Asia is enabling and making education affordable for everyone

For example, they typically struggle to gain access to basic financial products like insurance to protect their business, or credit that can help their businesses grow. In fact, while there are more than 60 million SMEs in Indonesia, only 12 per cent are eligible to receive financing or bank loans.

Operating outside of the formal economy also means that SMEs are unable to receive government subsidies or take advantage of stimulus programs when required, as seen during the pandemic.

Expanding the scope of small businesses

Working with various supplier-partners, I have observed that small and micro businesses are often limited in their scope to the surrounding geographic area when they transact primarily in cash. This requires their customers and suppliers to make physical visits to their stores or business premises.

Handling physical currency, however, can be costly, as well as inefficient. Without a financial identity or credit history, small businesses often have to pay exorbitant interest rates on loans and other financial products from informal sources.

Simplified access to basic financial services can be a vital catalyst for small business owners to recover from the fallout of this pandemic. This is where non-bank technology or Fintechs can play a vital role by analysing alternative data-sources, building new credit-scoring models and expanding financial access without bias.

Pandemic changed consumer behaviour

The need for small and micro businesses to adopt digital financial solutions has also accelerated significantly in a relatively short period of time. In my conversations with suppliers, they see an urgent need for mobile-applications that can digitise procurement and inventory management across their retailer networks.

According to research conducted by Kantar, cash transactions have declined from accounting for 48 per cent of all purchases prior to the pandemic to 37 per cent today.

The pandemic has also dramatically accelerated the adoption of digital tools and technologies among their customers. In the past 12 months online buying and selling related search engine inquiries have increased five-fold, with more than 54 per cent and 56 per cent of new digital consumers located outside of major cities in Indonesia and the Philippines, respectively, according to a 2020 study conducted by Bain & Company.

Also Read: How fintech is making credit more accessible for Southeast Asian SMEs

The study also found that monthly active users for select mobile apps have increased by 53 per cent, 43 per cent and 73 per cent in Indonesia, the Philippines and Vietnam, respectively. The technology adoption rates seen in the last 12 months as a result of the pandemic could have otherwise taken another 5-10 years. With this new paradigm, remaining outside of the formal economy is no longer viable.

Suppliers can bridge the gap between SMBs and digital infrastructure

By utilising digital tools, small and medium enterprises can now gain access to a range of vital business resources, such as accounting, financing, inventory management, eKYC, payment solutions, and insurance products.

With the right partnerships, I expect suppliers to these micro-businesses to contribute to building the ecosystem that enables businesses in their networks to further leverage these solutions to create shared value.

While working with Suppliers across markets like Indonesia, it is clear fintech can help business owners using data-driven insights and analytics to offer onboarding solutions that integrate ID verification and KYC, provide access to financing, allow businesses to establish a financial identity, and focus on growth.

The ability to automate these services and manage it online between stakeholders will ensure more of such supplier-retailer networks will benefit from digital transformation. And many fintech are already leading the way via powerful digital platforms that use creative solutions to analyse hard-to-get data-sets, provide visibility on funding and order requirements, and streamline the procurement process.

Today, SME-focused digital-lenders, for example, use AI to analyse a wider base of operational data to build a robust risk assessment that enables small business owners to access non-collateral-based working capital and build a credit profile. The same fintech also offer distribution channels for the business to avail deferred payment facilities, and make timely payments through reliable online and offline channels.

All of these resources ultimately lower the cost of doing business for small and micro enterprises, while enabling access to a broader customer base. As the cost of starting businesses goes down dramatically, I expect to see three to five times growth in the number of micro-businesses and SMEs in general.

Also Read: Here are 13 useful fintech solutions that are perfect for SMEs

Collaboration is critical to success

For SMEs, fintech is fast becoming a critical partner to survival but success. SMEs are able to increase their sales by more than 40-50 per cent when they can borrow from Fintech- based lenders. Last year SMEs received 55 per cent of all loan capital distributed by Indonesia’s fintech sector, or IDR54.71 trillion, suggesting they are more willing to work with fintech platforms than traditional financial institutions.

While traditional financial institutions have approval rates for small businesses in the low teens, financial technology providers can have approval rates that are two to three times higher. Of course, no fintech alone can satisfy the needs of a growing digital economy. Collaboration within the fintech ecosystem, between fintech solution providers and banks, and with the public sector is critical.

With the pandemic serving as a catalyst for businesses to move online, remaining outside of the formal economy is no longer viable. That is why we must work together to ensure that the crucial SME sector — especially those that operate outside of major cities — have the tools to not just participate but meaningfully contribute to the GDP of increasingly digital economies for years to come.

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B Capital Group, a global VC firm that counts Facebook co-founder Eduardo Saverin among its founders, announced the close of a new US$415-million fund on a new investment category within the firm even as it plans to expand its investment activity in India and Indonesia.

Named Elevate, the category will provide follow-on capital to high-performing, later-stage companies in B Capital’s portfolio.

This marks B Capital’s first fund formally dedicated to late-growth and late-stage investing and is the next step in its mission to be able to support companies across their life cycles, from early stages to IPO.

With its new fund, the firm has now reached US$1.9 billion in assets under management (AUM).

Also Read: B Capital launches US$126M Ascent Fund II targeting seed, Series A startups

The VC firm also announced today it will formally launch in China. The Chinese unit will be headed by General Partner Daisy Cai, who will oversee a team investing in early and growth-stage local technology companies.

The new entity will be based out of Hong Kong.

Since its launch in 2015, B Capital has launched offices across the United States and Asia and invested in over 60 early and growth-stage companies driving digital innovation across global industries.

Co-founder Raj Ganguly noted the opportunities within China’s developing B2B technology market. “If the last two decades in China were about the rise of the consumer internet, the next two decades will be about digital transformation in traditional industries: healthcare, banking, insurance and industrials.”

“Of the ten largest companies in China, only Huawei truly provides enterprise-scale technology solutions. We believe now is the right time to enter China because the next marquee name in enterprise technology is being developed right now. We are excited to find the next Salesforce or Oracle in China, and we already have a number of companies in our sights that have this type of potential,” he added.

Also Read: Venturing into China: The challenges and key success factors of localisation

Newly-appointed General Partner Cai will lead a team of nearly a dozen investor-experts. Cai joins B Capital Group from SoftBank Vision Fund, where she was a Partner. She also counts Goldman Sachs and Baidu Ventures among her former companies.

“The B Capital China team will look to invest in data-driven and software-defined businesses that will empower the country’s rapid digital transformation. Healthcare is another strategic focus as B Capital has a track record of successful investing and helping startups with go-to-market and commercialisation,” she noted.

In parallel with entering into China, B Capital Group expansion of investment resources in India and Indonesia comes as it seeks to partake in the growth of what it claims are two of the fastest-growing technology hubs in Asia.

In Indonesia, the company most recently led a US$20m Series A for e-commerce platform Ula and a US$53m Series B for personal finance platform Payfazz.

It has also backed major Indian startups like SME fintech Khatabook, logistics startup BlackBuck, scooter and bike-sharing venture Bounce, and Bizongo, a B2B marketplace for packaging materials.

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Image Credit: B Capital

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