During her visit to Vietnam, Amanda Murphy, HSBC Asia-Pacific’s Head of Wholesale Banking, South and Southeast Asia, and Ahmed Yeganeh, HSBC Vietnam’s Country Head of Wholesale Banking, shared their insights on the potential and opportunities for the digital economy in the region and Vietnam, highlighting the intelligent strategies that digital businesses should adopt to sustain their growth.
Amanda Murphy, HSBC Asia-Pacific’s Head of Wholesale Banking, South and Southeast Asia.
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 Ahmed Yeganeh, HSBC Vietnam’s Country Head of Wholesale Banking.
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ASEAN’s digital market is blooming…
Despite going through what some call a ‘funding winter’, Southeast Asia remains the world’s fastest-growing digital economy: its digital economy grew by 12 per cent last year and is projected to hit a compound annual growth rate (CAGR) of 16 per cent to be worth close to USD 1 trillion by 2030. This potential is driven in part by ASEAN’s population of 700 million people, who are largely young, educated, tech-savvy, and have a rising middle-class consumer base.
In discussions with clients, most recently at HSBC’s Global Investment Conference in April, HSBC has seen ASEAN becoming an increasingly attractive market for investors. This was reflected in a recent HSBC survey of businesses operating in ASEAN, with 74 per cent indicating plans to increase their investment in the region in 2024.
The region’s digitalisation drive has been spurred on and supported by government initiatives from Singapore to Indonesia, Vietnam, Thailand, the Philippines, and Malaysia. A new USD 1.3 billion government-backed fund was announced at the ASEAN-Australia Special Summit in Melbourne in early March, providing loans, guarantees, equity, and insurance for projects that promote the ASEAN-Australia trade corridor.
All of this has combined to create a wealth of opportunities for digital businesses. E-commerce, digital financial services, healthtech, greentech, electric vehicle ecosystems, and artificial intelligence are especially promising prospects.
… and Vietnam
Zooming in on Vietnam, it was the fastest-growing digital economy in ASEAN in 2022, 2023, and is projected to remain so through to 2025. It is also expected to have 67.3 million smartphone users by 2026, representing 96.9 per cent of internet users. Vietnam has become a leading market for the digital industry for businesses based both inside and outside the country.
The growth of Vietnam’s digital economy continues to impress. Last year it contributed 16.5 per cent of GDP, with more than 1,500 Vietnamese digital technology firms earning revenue from international markets, up over 7 per cent from 2022.
In HSBC’s recent survey, 60 per cent of businesses operating in Vietnam said they plan to invest in technology and digitalisation for their operations, with a focus on digital payments, e-commerce, and artificial intelligence. These companies recognise that embracing and enhancing their digital offerings will help them meet rising customer expectations for convenience and improve operational efficiency.
Against this backdrop, access to capital has become a lifeline for innovative companies. Consequently, HSBC has been ramping up its services to digital businesses, which includes the launch of the USD 1 billion ASEAN Sustainability Fund. The fund aims to provide financing to sustainable, revenue-generating digital ventures that may not yet meet traditional financial metrics.
HSBC understands that profitability can be a lagging indicator of a company’s potential at an early stage, so we take a long-term view of assessing growth potential by looking at operating metrics, growth plans, and customer acquisition strategies.
Intelligent strategies
To sustain their growth, digital businesses need to focus on controlling costs and increasing revenue. They should also reassess their approach to fundraising to manage their cost of capital and secure a runway for the long term.
Increasing collaboration with partners in other markets also enables businesses to expand their reach across borders, or develop capabilities without large upfront investments. Choosing the right partners can also enhance a company’s credibility, making it more attractive to customers and – especially relevant in the current environment – more compelling to prospective investors.
Regional initiatives are also aligned with the goals set out in the ASEAN Digital Masterplan 2025, which was endorsed by the ASEAN Digital Ministers Meeting earlier this year.
As ASEAN’s digital economy expands, cross-border e-commerce will create further growth opportunities for digital and traditional businesses alike. Making it easy for customers to pay businesses via their digital platforms is likely to be a key revenue driver in the years ahead.
Spring is in the air
The past two years have been challenging for digital businesses seeking funding, but there are reasons to be more optimistic in 2024.
The economic recovery is boosting consumer spending across the increasingly affluent region of 670 million people, with one person joining the middle class every two seconds. ASEAN has one of the world’s highest rates of digital adoption, while e-commerce surpassed the USD 100 billion revenue mark last year.
Innovative financing approaches and the region’s strong fundamentals will support the growth ambitions of businesses across ASEAN. And as part of the bloc, Vietnam is sure to benefit.
