Petrochemical/chemical is one of the core industries providing products supporting our day-to-day lives. Currently, 96 per cent of the products we use daily are derived from these industries with their long and fragmented value chains. Due to the industries’ importance, it is vital to understand the challenges and find innovative solutions to address the pain points.

The petrochemical/chemical industry value chain starts all the way from oil and gas extraction, petroleum refining generating fuel products and petrochemical feedstocks, petrochemical plants producing bulk products; all the way downstream through the value chain in producing various plastics and chemicals used for manufacturing of fertilisers, textiles, industrial materials and a wide variety of consumer products such as shampoos, paints etc.

In order for this industry to function, it is essential to have tight coordination between all stakeholders within the value chain. However, with many stakeholders, dynamic supply and demand and a great many moving parts, it is not always easy for the industry to function smoothly.

Currently, the petrochemical industry in Asia is seeing a dynamic shift. After the 2020 crash in global markets due to the pandemic, 2021 saw a surge in demand as consumer spending returned and the need for products to combat COVID-19 drove sales.

This was especially true in Asia, given that the region is currently a key supplier of feedstocks such as naphtha, natural gas and basic petrochemicals like ethylene and propylene, all of which are used to make many of the aforementioned products.

Growth in 2022 was expected to continue based on the success of the previous year, and demand was forecasted to expand. However, demand instead began to wane, and various disruptions changed the flow of materials.

The Ukraine-Russia War has disrupted access to raw inputs, driving up prices and triggering a rise in costs that is filtering down to consumers. Higher prices potentially foreshadow a reduction in consumer spending as consumers may be forced to tighten their belts.

Furthermore, disruptions such as the trucking strikes in South Korea, which triggered shocks to the entire petrochemical value chain, impacting production, inventory, and higher costs, resulting in an inability to fulfil customer demand, are to be increasingly expected and proactively managed. 

These events, amongst others, illustrate the potential risks the petrochemical industry is exposed to and highlight the need for innovative solutions that have the ability to address critical challenges.

In 2022, in response to a slew of crises, chemical and petrochemical groups of South Korea identified several key areas that the industry needs to address in order to improve and stabilise itself. These were as follows:

• Improved and integrated supply chain management and automation
• Digital on-site management
• Production optimisation
• End-to-end solutions and digitisation

A number of companies have started to work on tackling each of these areas. However, a new challenge has now emerged. Despite attempts to implement end-to-end digital solutions, interoperability remains an issue as each corporate attempts to build and own its own systems.

Rather than helping, this creates further fragmentation across processes and companies. Furthermore, because no single actor owns the entirety of their supply chain, these solutions cannot truly be designated as end-to-end.

Also Read: ‘We hope to see more material science, heavy industry firms coming out of SEA to address climate change’

Addressing these challenges, solutions like Smart Tradzt are stepping in to deliver genuine end-to-end capabilities by providing modular, interconnected solutions that solve the industry’s key challenges. The team boasts a wide skillset and deep domain expertise across petroleum, petrochemical, supply chain, commercial excellence, digital trade and ecosystem collaboration.

Smart Tradzt has been working with companies to optimise and connect their processes and supply chains, boasting project experience with Exxon Mobil, Dupont, Siam Cement Chemicals and working with clients such as Petronas, Indian Oil and Cargill. By providing an array of modular solutions, Smart Tradzt has enabled companies to select and connect the solutions they need and seamlessly integrate them with current internal processes.

Smart Tradzt’s digital trade enablement platform is comprised of the following components:

B2B digital trade platform

One of the first challenges within the industries is that most of the sales and purchasing processes are still handled in an outdated way, with relationships and countless man-hours driving decisions. However, with the conventional sales channel disrupted by the COVID-19 pandemic, the adoption of digital trade platforms has accelerated with the increased remote way of working.

Smart Tradzt offers a complete B2B digital trade platform that, by adopting the e-commerce model to industry processes and standards, allows companies to seamlessly handle the entire customer-facing portion of their business with a private marketplace.

The platform overcomes major B2B e-commerce pain points for the industry by moving away from price transparency through a list pricing mechanism, similar to what Alibaba uses, and instead providing the ability to enable real-time quotations with customised price offers and availability checking based on customers’ unique requirements.

This results in seamless dynamic negotiation with customers, with no sales intervention. Therefore, providing commercial operations efficiency and greater customer experience.  

Smart Tradzt ultimately believes that customers would, in fact, prefer public marketplaces, enabling them to conveniently source and choose suppliers offering the best options for their businesses. This would change the dynamics within these industries in important ways, and Smart Tradzt has already deployed such a solution for the Malaysian agricultural market.

This solution enables a many-to-many e-commerce marketplace that connects the industry and B2B/B2C buyers in a farm-to-table fashion. It is envisioned that the chemical and petrochemical industries will eventually adopt such digital channels with a hybrid of private and public marketplaces.

Dynamic pricing and commercial decision optimisation

Price volatility, reflecting the industry’s supply and demand situation, is a common feature of the commodity industry, where prices are often referenced to a commodity price index, such as Platts and ICIS, which is a proxy of the market price. Therefore, formula pricing is often used for price-risk management.

The current misconception in the industry is that nothing can be done to improve formula pricing because it is indicated by industry-level supply and demand. Furthermore, outside a few progressive digital leaders, most petrochemical companies are still under the illusion that enterprise resource planning solutions, such as SAP, are sufficient to manage their pricing.

Smart Tradzt provides its proprietary solution to optimise the pricing mechanism, taking into account pricing power, deal terms, market conditions, the supply situation and historical price realisation. This results in a science-based pricing approach which is also used to gain insights into customer price sensitivity and evaluate the demand to generate price guidance for both conventional and digital sales channels. This enables dynamic pricing to improve the company’s profitability and streamline the process.

Also Read: New climate-tech venture builder Wavemaker Impact targets to raise US$25M for Fund 1

Another major pain point addressed by Smart Tradzt is enabling structured real-time negotiation by identifying negotiation tactics which protect the supplier’s margin and automatically generate counter offers to the customer’s requested discounts.

This minimises the typical issue of unwarranted discounts by sales personnel and can also enable companies to identify who their most valuable customers are, helping to strategically prioritise sales to customers with higher margins during commercial negotiation and improving support for customer value pricing approaches. These capabilities have enabled petrochemical companies to benefit significantly from their digital transformation, typically generating ROI equivalent to two or five per cent of sales.

Supply chain/value chain management and ecosystem collaboration

The supply chain has been in the spotlight in recent years due to disruptions caused by various factors such as climate change, geopolitical tensions, and many more, all highlighting the risks around the severity of supply chain disruption to global trade.

Today’s supply networks are rigid, built for the world of yesteryear with its highly stable and predictable business environments. Therefore, lacking the ability to respond to the variety of global events resulted in shortages, congestion, damage to brand reputation, and direct losses of revenue.  

There is an urgent need for solutions not only to mitigate supply risks today but also to transition towards more transparent supply chains that are ready for future disruptions, as well as enabling newer ways of reducing costs through digitised ecosystem collaboration and value chain management. Smart Tradzt’s solution is positioned to address these challenges and capture supply chain cost-saving opportunities.

The platform enables end-to-end supply chain visibility, order status tracking, and disruption management and provides more accurate ETA predictions with AI. With their experience in this space, they have built a solution which not only evaluates options to handle shipment delays, assesses the impact of supply disruption and reprioritises customer order fulfilment based on customer segmentation but enables optimised costs through bulk shipment co-loading, load consolidation and multiple other solutions to temporary supply disruptions. Underpinning these capabilities is the ability to comprehensively model end-to-end costs and deal profitability. 

As petrochemical companies seek growth beyond their domestic markets, the ability to tap into high-growth regions and smoothen cross-border trade becomes increasingly crucial. With Smart Tradzt’s end-to-end digital platform, it is now possible to efficiently collaborate across ecosystem partners in a trusted manner.

By enabling better availability of trade finance (e.g. letters of credit) to overseas customers using blockchain bill of ladings, and facilitating customs clearance, growth in cross-border trade can be enhanced.

Also Read: On a mission to reform and simplify cross-border supply chains

This combination of solutions, in addition to the other services that Smart Tradzt offers, allows Smart Tradzt’s customers to streamline their B2B processes, resolve multiple industry challenges and begin to realise the benefits of true end-to-end digitisation, commercial excellence and supply chain management.

CK Chung, CEO of Smart Tradzt says, “We see a shift away from the traditional digital areas of focus within plant/factory optimisation, customer relationship management (CRM) and supply chain planning (SCP), towards digital sales channels, commercial decision optimisation, and supply chain resilience (SCR). At Smart Tradzt, we are addressing these shifts by providing a future-ready, end-to-end platform that enables process transformation and leverages the synergy across different solution components to deliver process efficiency, holistic profit optimisation and more.

“We also support chemical companies’ strategic positioning to differentiate their commodity chemical and speciality chemical business and grow their overseas market effectively. In essence, petrochemical companies of the future would be competing on an ‘ecosystem by ecosystem’ and ‘value chain by value chain’ basis, while at the same time, tapping into opportunistic collaboration with other co-producers for win-win propositions.”

With the world rapidly adapting to a variety of changes and challenges, we are seeing that the chemical and petrochemical industries are no exception. As the industry contributes massively to so many of the products utilised in our daily lives, it is imperative that optimisation and cost-saving steps are taken, thereby also improving operations and downstream costs.

The call for improvement has been heard, and companies like Smart Tradzt are presenting corporates with solutions that speed up the journey towards full end-to-end digitisation and resolution of the challenges currently faced by the industry.

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Think blockchain is just a fad? Once upon a time, Bill Gates thought consumers wouldn’t embrace the internet. In fact, he later had to revise his book “The Road Ahead” to talk more about the internet.

In 1995, Newsweek even published a column piece by Clifford Stoll predicting that the internet would just be a passing fad.

As someone who became a tech journalist in 1996 by joining the pioneering IT newspaper in the Philippines, Metropolitan Computer Times, I can tell you that many smart people didn’t believe the internet would take off.

CEOs, tech luminaries, and experts were saying in the 90s and 00s that the internet wouldn’t replace physical stores, put newspapers out of business, or entice people to watch movies and TV shows online, and so on.

Digital champions and critics

It was hard being a digital champion back then, and funny enough, it still isn’t a piece of cake now. As this article hilariously points out, the 1990s were a transition period from the analogue world to the brave new world of the internet:

“Those of us who are old enough to remember the world before we became completely dependent on the internet could never have predicted what life would be like now. Some of the things the internet has enabled us to do—wireless video chats with friends halfway around the globe, ordering food to be delivered to our door at the click of a few buttons, virtual support groups for every possible interest or ailment—were the stuff of imaginary, far-futuristic worlds, surely not realistic to expect in our lifetimes. (I mean, I figured we’d have flying cars before we’d have computers we could fit in our pockets, yet here we are.)

“The 1990s were this weird in-between phase where the tech geeks were all about the .com world, and tech-reluctant normies were all, ‘Gretchen, stop trying to make the internet happen. It’s not going to happen.’ Once the internet started becoming popular, some people did try to predict how it would all turn out.”

Social media sceptics

That happened during Web1 and was repeated during the advent of Web2 when sceptics said social media was just a fad. It wasn’t that long ago when many people scoffed at the idea of companies creating Facebook pages and posting these weird things called tweets. 

Now, for better or worse, we take social media for granted. And Web2 has thoroughly changed how we work and play, just as the first iteration of the web did.

Also Read: Web3, wallets, and winning the next culture revolution in Southeast Asia

Enter Web3, which now promises to decentralise the web, put the power back in the hands of users, and reward creators for their hard work. And just as you would expect, sceptics again say Web3 will just be a fad. 

Fad and FUD

Along with the fad accusations are the FUD. Particularly now that we’re in a bear market for crypto. How many times have pundits predicted that the crypto bubble has burst? And how many times have they been proven wrong? Just like those who predicted that the internet was just a fad. Or that social media was just a fad.

It happens whenever a new technology emerges, just like what’s happening now to the blockchain. You will have many sceptics saying it won’t take off, that it’s too technical for consumers, that society isn’t ready for it, and so on.

And, yes, we’re still in the early days of Web3. But it will continue to evolve, become easier for consumers to use, and reach critical mass. I think people have just forgotten how clunky email clients were during the early days or how primitive the first websites were.

Things will improve. We’ll continue to build Web3 and make it better.

As a digital champion from Web1 onwards and a gamer since I was a kid, I firmly believe blockchain gaming will be the entry point for the mass adoption of Web3. Just look at how the huge success of the blockchain game Axie Infinity and play-to-earn encouraged many gamers to learn crypto and create their own wallets. 

All gamers need is the right incentive. After all, for years, we’ve worked hard to level up our characters, complete missions, and finish games. All for the sake of virtual items and virtual currency. What more now that we can earn NFTs (non-fungible tokens) and cryptocurrencies that have real-world value?

So, no, blockchain isn’t a fad. But maybe being a sceptic is.

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For the past two years, the world has been busy handling cases of global health, COVID-19. There are so many adjustments to the regulation like people start working remotely, and children study from their homes with online classes. We are forced to live with technology and the surrounding internet.

Over these years, the technology industry has been on the rise. Every day a new tech startup comes up. Many experts predict that this year, we can recover our economy since the new industry is growing rapidly and the COVID-19 cases are also slowing down. 

But unfortunately, another problem comes, there is some conflict in western countries between Russia and Ukraine that is affecting the world’s economy and is now starting to become chaotic. Technology stocks began to decline drastically, technology companies are also making a lot of staff reductions. Some countries are increasing their interest rate and their inflation level.

Also Read: How to tackle cybersecurity threats during the holidays

Everyone started to plan their money wisely and cut some budget for something unnecessary. But, most tech companies have a challenge when they need to be more efficient, and at the same time, they need to be more protective of their data.

A study from Check Point Research (CPR) reported that the second quarter of 2022 saw an all-time peak, where global cyber-attacks increased by 32 per cent. The average weekly attacks per organisation reached a peak of 1.2K attacks.

So, what should this tech company need to do during the economic crisis?

What happens to cybersecurity?

The Economic crash has brought so many impacts, especially to the technology industry. As we can see, most tech companies lay off their employees to save their budget. Their stock prices are also going down during this time. In some cases, cyberattacks also worsen these tech companies.

Of course, cyberattacks make the company’s image look even worse. Cyberattackers can inject fake price quotes in data feeds, publish some fake news through reliable news organisations, or create numerous non-existent sell orders to cause stock prices to plummet and cause a market crash. 

The FBI has found that cybercrime has increased fourfold since the COVID-19 outbreak began. At their conference online, launched by the Aspen Institute, FBI assistant director Tonya Ugoretz said the FBI’s Cyber ​​Crime Complaints Centre (IC3) said she receives up to 4,000 complaints a day.

We need to be more serious to prevent these cyberattacks from occurring to our company during this critical time. Start from educating our employees with cyber awareness, and installing complete cyber protection.

Stay protected during the crisis with three steps

In this economic crash, people are very cautious about how they spend their money. On the other hand, cybersecurity is a must to have, but the cost is so expensive. We also need to pay for the software, management, and other details.

But the question is, can we ensure cyber safety with a minimum budget? When there is an issue, someone will always try to look for the solution. And yes, there are three steps that we can do to protect our company during this downturn.

Use an all-in-one console

It is the most effective way to reduce costs without sacrificing cybersecurity performance. Organisations often purchase different kinds of software directly from different vendors or multiple resellers, which usually results in a higher final price. A recession can be a good time to rethink your technology stack and identify key partners who can support multiple initiatives in an all-in-one console.

Simplifying the management of your tool set frees up time, money, and resources to focus on other projects.

Use automation

Many companies continue to struggle with digital transformation and building automation pipelines. Key industries such as energy and construction have a long way to go in replacing manual bottlenecks with digital energy, which will be a major source of growth for companies taking the plunge.

Also Read: How much does cybersecurity cost and how to budget for it?

An automation cybersecurity system will help the company get better protection and cut more budget. If previously they needed to check their system manually, now there is another company that can help them to detect it and will directly give a response. This technology may not be 100% AI, but at least it helps people in their job.

Focus on how to defence

The optimism and cash flow generated by growth markets are perfect for risky investments that create an aggressive advantage. But a recession is a good time to get back to basics and focus on defence. Security awareness training has consistently proven to be one of the most cost-effective strategies for reducing cybersecurity risks and mitigating potential consequences.

In fact, a company’s people (not technology) are its most vulnerable resource, and 80 per cent of successful cyberattacks are due to social engineering attacks.

It’s just a matter of time until we receive the attacks. What we can do now is think about protecting our company with trusted cybersecurity and using the budget effectively.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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In the 4.0 era, it is no secret that technology has the power to disrupt industries and change the world for good. But great technology has to start somewhere.

“Seeds to discovery lies in the simple things around us,” said Dr Kihoko Tokue who comes with a background in the field of behavioural science, and is the Managing Director of Leave a Nest Singapore, in a recent interview with e27.

Leave a Nest was founded by a group of visionaries that included 15 graduate students in Japan in 2001, who set out on a path to solve real global challenges with Science. Today, the company has a global presence with subsidiaries in Singapore, Malaysia, the UK, and the US. 

The ethos of Leave a Nest lies in the thought of “turning everyday wonder into scientific adventure” for education.

To add to that, Dr Tokue believes that observations lead to inquiry and questions that may eventually lead to great ideas and that some life-changing technologies come from a need to answer a question or solve a problem.

Also read: Looking back and moving forward: Leave a Nest at 20

A great example of this is the discovery of electricity. 2,500 years ago, a Greek mathematician and philosopher named Thales discovered the basic principle of static electricity when he rubbed a rod made of amber. Thales observed that due to static electricity caused by friction, matters like solidified amber could attract tiny objects such as dust and specks. Through observation and experimentation, 16th century mathematicians were able to figure out the difference between magnetism and electricity, ultimately leading to the modern day application of electricity.

In line with this idea of encouraging observations that lead to questions and eventually to innovation, Leave a Nest has launched the ONE Earth Programme. The programme seeks to nurture and strengthen the curiosity and inquisitive mind that is already present in children, with the goal of helping ignite their curiosity in their surroundings which prepares them for a future of innovation and solving problems.

The NEST methodology and the ONE Earth Programme

Dr Tokue strongly believes in and promotes a unique NEST methodology of education. “NEST stands for Nature, Engineering, Science and Technology. When we try to organise our learnings from nature, it becomes Science and when we apply efficient applications to Science it becomes engineering and technology. Our emphasis is the importance of understanding the foundation of science and technology, which comes from nature and engineering,” she explained

“We want future generations to embrace the foundation and root of things so they will not become a mere user of science and technology,” she added. 

In 2020, Dr Tokue came up with the idea of the ONE Earth programme. Born out of the need for an online nature education (ONE) programme during the pandemic, ONE Earth was born. “We were looking at online parties due to the pandemic and subsequent movement restrictions. Plus, we thought having an online programme, it will be easier to tap into the city youth living in urban places like Singapore and Tokyo,” she said. 

The programme couldn’t have come at a better time when the world was gradually realising the importance of sustainability and our dependence on Mother Nature. Now, in 2022, as the pandemic is nearing its end, ONE Earth is evolving into a hybrid programme in that there are online as well as onsite versions.

Also read: Deep tech startups gain multi-pronged support from Leave a Nest

“Being out in actual nature can never be replicated even with VR,” believes Dr Tokue. “However, not all of us can actually go out there due to multiple reasons- it can be lack of resources, health issues and so on. Hence, the online version gives everyone an opportunity to be a part of this programme,” she explained. One of the key elements of the programme is for the young generation to understand that human beings are very much a part of nature. At the core, we are animals too- just more evolved.

In the early 1980s, Harvard University biologist Edward O. Wilson proposed a theory called biophilia. This theory supported the idea that human beings are instinctively drawn toward their natural surroundings. However, most 21st century parents might question this theory, as they watch their kids express a clear preference for being in front of a screen for hours over playing outside. As such, Dr Tokue explains that she advocates nature but in no way shuns the power of technology. Instead, she encourages combining the power of technology and the potential of nature together. 

“I hope ONE Earth can be the first point of contact for the younger generation with nature- whether they are open to come onsite or join us from the comfort of their homes. As long as they have this opportunity to explore their options and feed their curiosity towards nature, our job is done,” said Dr Tokue.

Keen focus on micro-organisms, fermentation, and robotics

The programme focuses on three main topics: micro-organisms, fermentation, and robotics. Lectures as well as hands-on experiences on these subjects will be conducted to give students insights into how these subjects apply in our day-to-day lives. For example: how microorganisms can be used in the cosmetics industry or how robotics is changing the world slowly.

“Our focus is to orient their approach towards a more scientific one while showing them how nature inspires initial ideas that may lead to innovation,” shared Dr Tokue.

There is a dire need for workshops and programmes that remind kids and teenagers about observing the beauty of the nature and surroundings around us. This is where the Leave a Nest’s ONE Earth programme comes in.

Also read: Seeding ideas, nurturing explorations with Leave a Nest Grant

Welcoming 13 to 15-year-olds, the ONE Earth programme focuses on first-hand experience and output for learning. The programme is developed to help build the exploration and observation mindset in the younger generation. By joining the workshop, participating students will learn about scientific approaches and different forms of knowledge about each topic. Leave a Nest limits the size of participants to cultivate close communication and care for each student. There will be 1 teaching assistant per 4 students.

Interested participants can either join individual workshops or can choose to join all three in sequence or at a later time. Each workshop has a maximum capacity of 16 pax.

With the ONE Earth programme, Leave a Nest seeks to nurture future leaders that are not afraid to ask questions and repeatedly look for solutions for real-world problems by leveraging knowledge and harnessing the power of inquiring minds that may one day turn into a knowledge of Science and Technology.

Learn more about the programme here and register here. 

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This article is produced by the e27 team, sponsored by Leave a Nest

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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The world economy is reeling under the combined impact of geopolitical risks, rising inflation and interest rate hikes. This is visible in the depressed GDP growth rates and the wild fluctuations of volatile and nervous stock exchanges. At the end of H1 2022, the S&P 500 was down 21 per cent from the peak, with valuations touching 16.6x, a 30 per cent correction from the 23.6x peak we saw in 2021.

With COVID-19 still mutating and erupting sporadically and political turmoil in many regions, the markets remain muted and listless. Charting the dynamics of the global economy, and in particular, the Southeast Asia region, is a detailed report I did for Kickstart Ventures, a corporate venture capital firm that invests in early- to early-growth stage tech startups globally.

 

In March 2020, when the market realised the immense magnitude and possible repercussions of the mysterious virus, it plummeted by 34 per cent, eroding a vast amount of investor funds and sentiment. The steep plunge was relatively short-lived, as the market rebounded, taking the S&P 500 less than five months to retrace its recent high.

The current market deviation, now in its ninth month, from its high in January 2022 is showing little sign of easing with the Fed rigorously imposing dramatic interest rate hikes to curtail inflation.

VC funds pivot

Amidst this dismal scenario, growth has not stalled in the SEA region. Relatively less affected by the pandemic, the region’s agility and resilience have continued to attract investments that have enabled it to surge ahead.

Even as the pace of startup fundraising decelerates, the smart money hasn’t abandoned the region completely. While China-focused funding dries up, funds have been channelled into the SEA region. 

SEA VCs are still very upbeat about the region’s positive demographics and ability to grow. Among the prominent VCs which have raised larger funds in 2022 are Sequoia (US$850M), Elevation Capital (US$670M), Jungle Ventures (US$600M), East Ventures (US$550M), Insignia Ventures Partners (US$516M) and Wavemakers Partners (US$136M).

SEA levels rising

In 2022, VC fund flow across the world has lost a bit of pressure but is still going strong in the SEA region. After crunching the figures, data suggests that while the average monthly deal value has dropped to US$1.6B in 2022, the deal count has risen 16 per cent YOY to an average of 102 deals per month.

This implies that while deal sizes are getting smaller, more deals are actually getting done, suggesting a larger proportion of earlier-stage deals. To put this fact into perspective, the average of US$1.6B per month deal value in 2022 is still a 2x increase over the 2020 figure of US$800M.

Also Read: How to navigate through the vast opportunities in the finance industry

At Kickstart, we have seen H1 2022 deal flow count to be steady at 318 deals, vis-a-vis the same period last year. The 2020 deal flow was the largest with 745 deals, with 2021 coming in second at 678 deals. If current trends hold, 2022 will likely track the deal count of 2021, which is remarkable given the multiple headwinds the world and the region are now witnessing.

Leading the growth wave and attracting a large quantum of funding are three potentially high-growth areas that have not only weathered the pressures of the pandemic but have displayed substantial growth and future potential.

3-D growth areas

The pandemic revolutionised the world, forcing people to re-align their priorities. Gauging the emerging needs, the focus is now on digitisation, decarbonisation, and decentralisation. These 3 “Ds” are now the key thrust areas that are set to register three-dimensional growth in the years ahead. 

Digitisation

Businesses and consumers have realised the immense value of going digital. This is reflected in a Google study, which estimates the SEA digital economy to be worth US$170B in 2021, which is expected to grow to US$360B by 2025. Attracted by the convenience, variety and payment options, e-commerce as behaviour is likely to persist and snowball.

Here in the Philippines alone, we estimate digital penetration (defined as the value of the digital economy divided by GDP) to be only four per cent, compared to Indonesia at six per cent, underlining tremendous growth potential given similar demographics. This digital economy is mainly driven by e-commerce, transport and food, online travel, and online media. 

Decarbonisation 

Numerous nations and media are pivoting attention on the adverse impact of climate change. According to the UN, 90 per cent of disasters are related to climate-change effects, costing the global economy US$520B, and pushing 26 million people into poverty.

The Philippines, too, because of its geographical location, is acutely experiencing climate change, bearing the brunt of around 20 typhoons yearly. In parallel with the escalated ESG spending, there are numerous startups focused on tackling the decarbonisation problem in an attempt to mitigate the long-term challenge of climate change.

Decentralisation

In the arena of decentralisation, blockchain is possibly the biggest innovation that is here to stay. The tarnished image of cryptocurrency and its recent meltdown has made people wary of blockchain products, too.

Also Read: What the fall of Terra Luna and the Asian financial crisis have in common

However, blockchain is a versatile solution with applications in digital identity, smart contracts, land titling, real-time payments, etc. Despite its volatility and speculative nature, commercially feasible and robust blockchain-based products and services are sure to become the preferred choice of tomorrow.

Our view

We have identified these three “Ds” as this generation’s thrust areas because a large quantum of development and innovation is concentrated in these business spheres, attracting both investment and talent.

While tracking trends in the SEA region, we saw that deal flow across the region remained largely the same compared to previous periods, as e-commerce and fintech account for the lion’s share of deals. The two sectors combined contributed 42 per cent of the deal count and 57 per cent of aggregate deal value during the 2nd quarter of 2022. B2C commerce, e-commerce enablers, B2C and C2C commerce combined to account for 64 per cent of e-commerce deals. In the fintech space, wealth tech, e-payments, and lending combined to account for more than 90 per cent of fintech deals.

The challenges of the pandemic gave a strong impetus to companies in the e-commerce, fintech, and healthcare domain. E-commerce grew sharply and tapered off slightly after 2021, while fintech grew slower but inched up steeply after 2021. Healthcare, on the other hand, grew rapidly in 2020, although it lost a little steam in 2021, the sector grew five per cent in the first half of this year.

While global markets, both public and private, undergo a correction, SEA will fare better than the rest as smart investors continue to be keen on the 3 “D” catalysts of the SEA growth story. With SEA estimated to grow 5.0 per cent and 5.2 per cent during the same period and with the Philippines seen to grow >6.3 per cent for both years, we believe that the SEA growth will stay resilient given the structural tailwinds.

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