Business: Asian Startups Aren’t Going Global. That’s Because They Don’t Need To Yet

How many unicorn startups do you see frequently making news without ever seeing what they do?

As a Southeast Asian growing up in Australia, I always asked why ASEAN brands don’t go global. So I was awestruck to visit Tokopedia’s HQ, having never heard of them, and realise how massive they were. While my ASEAN friends, including several in the startup space, are mainly Filipino and Singaporean, my interactions (including with Indonesians) had me thinking that ASEAN is becoming integrated enough for something this big to be a regional household name.

So I was suprised to hear (at the time) Tokopedia reps tell me that they prefer consolidating domestically instead of going ASEAN-wide. But I realised how much it makes sense for ASEAN startups. Since then, I’ve seen three key reasons ASEAN startups are staying put.

1. Politico-legal and lingustic diversity. LATAM has two somewhat mutually intelligible primary lingua franca for over 600 million people. The EU comprises 2 major language families mostly concentrated on a single landmass with some mutual intelligibility for 450 million. However ASEAN comprises two archipelago nations, three language families, and low mutual intelligibility, significantly increasing capital costs to expand.
   
   ASEAN’s legal systems are also diverse. While the former colonial powers may have common roots and are now fusing them again (e.g. EU laws), ideological evolutions and events such as Suharto’s “Guided Democracy”, the US-influenced Marcos regime and People Power Revolution, the Thai monarchy, and Vietnam War have all caused ASEAN’s politico-legal systems to diverge. The postcolonial spirit, while a good thing for cultural integrity, has also meant a rejection of some legal commonalities ASEAN countries had as colonies.
2. Different cultures and pain points. Indonesia and the Philippines present unique logistics and infrastructure challenges that may not exist in its ASEAN neighbours (e.g. Malaysia and Thailand, with railways that have been continuously operational since World War II). ASEAN’s strikingly contrasting geography makes cultures, economics, and pain points, heterogenous even within a country. By contrast, Europe’s terrain is largely flat, easy to traverse, and of similar climates, making exchange much easier. A startup would need to diversify its operations enough to reach an outlying region within its own country, let alone another within SEA.
   
   It’s no coincidence that Indonesia, a seismically active archipelago nation with contrasting mountain ranges that make infrastructure expensive to build and maintain, suffers the pain points to breed big e-logistics players such as Ritase and Waresix, which are raising Series B and C rounds before looking beyond their borders.
   
   On the human side, the Philippines is one of the largest labour exporters in the world. By contrast, Malaysia houses approximately 2 million foreign workers. Several Philippine startups target the remittance market, which contributes 10% of the country’s GDP. That’s simply not much of a problem for Malaysians. It’s thus unsurprising to see a Philippine remittance startup partner with a similar service based in fellow labour-exporting country India before scaling or expanding into ASEAN neighbours Indonesia and Vietnam.
3. Pragmatism. Expanding too quickly into international markets has been a pitfall of many companies, especially in complex sectors such as proptech. Even an established super-app like Gojek struggled in its first international foray.
   
   Conversely, domestic markets within Indonesia, the Philippines, and Vietnam are 100 million+ each. It’s unsurprising to see a company like Bukalapak IPO at a $6bn valuation and jump 25% in value with near-zero brand recognition outside Indonesia. Some ASEAN startup pitch decks calculate serviceable addressable markets in the billions of dollars within their country alone; even if they ultimately had international ambitions, such markets would give them strong, stable cash flows to become critical safety nets should expansions fail. It’s proven more than possible to reach unicorn status domestically — as Tokopedia knew.

This is all not to say that a Southeast Asian startup can’t succeed outside its domestic market. If anything, it’s better positioned to succeed in SEA than a company from outside the region expanding. But it would do so by realising how, in such a diverse region, localisation is the name of the game. It’s fitting how Southeast Asia, at a time its entrepreneurs transition from emulating models that succeeded abroad to innovating their own solutions, is showing the world what it means to be “glocal”.