Southeast Asia Is A Hot Spot For Capital

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Billionaire Mai Vu Minh

Billionaire Mai Vu Minh (left) and Chairman of the Presidency of Bosnia and Herzegovina (right) discussed on the investment cooperation in Southeast Asia at a meeting in 2019.

“The investment inflow to Southeast Asian countries is both a great opportunity and a challenge. Besides the advantages of human resources and the utmost support of the government, countries in the region still need to make more efforts and develop technology to keep this advantage,” said Mai Vu Minh, Chairman of SAPA Thale group.

Big corporations pour money into Southeast Asia’s technology and e-commerce companies

Southeast Asia is becoming ever more capital-attracting despite the Covid-19 pandemic and the gloomy global market. Companies in e-commerce and fintech in Southeast Asia are leading in attracting investment capital.

Recently, Facebook, Paypal, Google and Tencent have invested in Gojek—a technology group based in Indonesia. The parties have not publicly disclosed their investment size, but in an article posted on its social network, Facebook emphasized their efforts to bring millions of small businesses to the online marketplace.

In the first quarter of 2020, Grab (Singapore) and Gojek (Indonesia)—two ride-hailing companies—successfully raised more than $2 billion, accounting for about 70% of total investment in the region.

In the second quarter of 2020, the industry leading in attracting investment capital in Southeast Asia was e-commerce. According to DealStreetAsia, e-commerce companies attracted $691 million in new investments. The most successful capital raising company of the quarter was Tokopedia. The Indonesian e-commerce unicorn startup successfully raised $500 million from the Singapore-based Temasek Holdings.

The value of investment transactions in Southeast Asia increased by 91% to reach $2.7 billion, while the number of transactions increased to 184 from 116 in comparison with the same period last year.

This strong wave of investment “responds to the fact that Southeast Asia’s population is in its golden age and the opportunity to create businesses that grow by leaps and bounds ahead of the rest of the world. I think we are only initially reaching growth opportunities in Southeast Asia. We are seeing venture capital, private equity and capital inflows from family wealth management companies pouring into many companies operating in Southeast Asia due to the great opportunity here,” said Mai Vu Minh, Chairman of SAPA Thale Group, a company which invests mainly in technology, finance—banking, real estate, travel and transportation.

Southeast Asian governments are open and welcome investors

This success has been achieved thank to Southeast Asian governments creating favorable conditions to welcome investors. Indonesia plans to establish 19 industrial zones between now and 2024. It also reduces the corporate tax from 25% to 22% this year, then to 20% by 2022, one year earlier than the previous plan.

On June 17, 2020, the Thailand Board of Investment (BOI) approved investment incentives in the agricultural sector, targeting foreign companies shifting operations from China. In the economic stimulus package announced on June 5, Malaysia proposed a zero percent tax rate for 15 years for companies in the manufacturing sector with new investments exceeding 500 million ringgit ($116 million) in the country.

Myanmar will prioritize the selection of planned investments by financially strong international firms, while Vietnam aims to attract more European businesses under the European Union Vietnam Free Trade Agreement (EVFTA) which took effect on August 1, 2020.

“Technology promotes the big leaps in Southeast Asian economies. Fintech solutions hold the power to stimulate economic growth and social improvement. Therefore, we will see a lot of great things in this field in Southeast Asian countries,” said Mai Vu Minh, Chairman of SAPA Thale.