Singapore’s recent granting of an “in-principle” approval for Australian exchange Independent Reserve to offer digital payment token services in the city-state comes amid a booming market for digital assets in Southeast Asia.
Over the course of the past three years, the region has been a magnet for cryptocurrency providers, fintech innovators and veteran investors. The total value of crypto and blockchain deals was US$0.9 billion in 2020 alone, double that of 2017, while the number of deals done reached 710, approximately 70% higher over the same time period.
Increased macroeconomic stability, an emerging consumer class and advancements in its digital infrastructure are key underpinnings and have positioned Southeast Asia well to capture opportunities in the nascent digital asset market. These advances have not happened by chance — they were carefully planned for and implemented, to bring about the progress we see today.
Setting up for success
The socio-economic benefits of digital technologies require strong fundamentals such as good governance and policy coherence for them to be fully realized. Through fostering a stable operating environment and strong legal framework, Singapore, for instance, has firmly established itself as a leading hub for innovation, technology and entrepreneurship.
Businesses looking to capture the opportunities presented by Southeast Asia’s rise can readily leverage the city state as a robust platform to deepen their presence in the region and beyond. Grants such as Startup SG Equity offer US$220 million funding for deep tech projects while the Singapore Blockchain Innovation Programme (SBIP) provides up to US$8.9 million capital support for blockchain technology research.
On the governmental level, Singapore is also actively pursuing public-private partnerships, aimed at advancing blockchain innovation and strengthening the country’s fintech ecosystem. Project Ubin is one of such collaborative projects, where the government worked with more than 40 industry players from Singapore and around the world, to explore the use of blockchain and distributed ledger technology (DLT) for clearing and settlement of payments and securities.
Building a robust talent factory
Investment in human capital development, especially in a fast-changing market environment, is critical not only in ensuring a region’s workforce stays relevant and competitive, but also in cementing its positioning as a premier business hub. To that end, countries in Southeast Asia have been proactive and aggressive in their pursuit of blockchain mastery for their workforce, future-proofing them through comprehensive training programmes and certifications courses, expanded national curriculums and industry-university engagements.
The Malaysian government, for one, has partnered with NEM Foundation to establish the NEM Blockchain Centre (NBC) — a learning center, incubator, and accelerator for organisations looking to understand and explore blockchain technology and its applications for their industries. In the Philippines, UnionBank’s Blockchain Institute has introduced a six-month program aimed at equipping developers with blockchain coding skills in addition to educating them about the technology’s use cases. While in Thailand, a collaboration between the country’s Chulalongkorn University and blockchain network, Tezos, has led to the creation of the country’s first blockchain education and research program, with syllabus designed to focus on the concepts and fundamentals of advanced computer science, as well as the Tezos’ blockchain platform.
Laying the foundations for the Southeast Asia of tomorrow
Digital connectivity is not only an essential component of economies and societies, it is also a key driver of smart and future cities. A lack of digital infrastructure including basic internet accessibility would mean a continual struggle for businesses to scale and grow, and a hindrance on countries’ ability to create value in the new economy.
In fronting the worldwide drive towards digitization, Southeast Asian countries such as Brunei, Malaysia, Singapore, Thailand, Philippines, Vietnam and Indonesia today boast high internet penetration rates of over 70% — as compared to 40% collectively in 2015 — enabling them to compete effectively in the global economy, and to partake in the growth story of the digital asset market.
Having skin in the game
A whole-of-nation digital transformation wouldn’t be complete without the various stakeholders — businesses, individuals and governments — coming together to develop and participate in the developmental process. In fronting the worldwide drive towards digitization, policy makers in Southeast Asia have not only demonstrated their receptiveness to blockchain-led solutions, but also their willingness to dabble into new technologies.
Beyond putting in place the right policies and infrastructure, countries such as Cambodia have introduced a central bank-backed digital currency — the Bakong — that utilizes blockchain technology to enable a more seamless payments system. In Malaysia, the Ministry of Education has successfully rolled out E-Skrol, a blockchain-based application, aimed at verifying the authenticity of Malaysian educational degrees in the country.
Digital assets going mainstream: The time is now
From progessive economic and social reforms to developments in the financial sector and capital markets, Southeast Asia has indeed undergone enormous transformations and come a long way. Yet, despite the progress made, the region is just warming up to cryptocurrencies and digital assets. While there have been many success stories of thriving digital native and blockchain-based businesses in Southeast Asia, there is still significant room to fully leverage the benefits that digital transformation can bring to the region.
Policymakers have a huge role to play in making the right decisions that will continue to sustain growth in the medium-to-long term. With many Southeast Asian regulators already seen to be making the effort to understand the disruption, and to work with the digital markets to advance cryptocurrency standards and strengthen market infrastructures, the future of cryptocurrencies and digital assets is a bright one for Southeast Asia.