The ASEAN startup ecosystem has made great strides over the past years in both commercial innovation and investment activity. Since 2015, over $13 billion have been poured into the promised land looking for the best and brightest ideas1. In the center of this wave is Vietnam, home to a thriving community of entrepreneurs and innovators…
Overview of the ASEAN startup scene
The region has established itself as a hotbed for creators, disruptors and energetic businessmen in recent years. Across the Pacific Ocean, cities like Ho Chi Minh City, Manila, Singapore are racing against each other to become the next Silicon Valley of the Far East. Household names like Go-Jek, Grab and SEA have become local icons of which the up and coming startups model themselves after.
Chinese technology giants such as Alibaba and Tencent have bet big on the region, pouring in billions of dollars2. According to a study by Kroll and Mergermarket, US investors have accounted for 25% of investment in ASEAN startups since 2015. What is the secret behind the region’s attraction globally?
The 10 countries that make up the Association of Southeast Asian Nations (ASEAN) are home to 655 million people. Were ASEAN a country, it would be the world’s third-most-populous nation and boast the sixth-largest economy.Furthermore, market conditions are in place to enable startup growth. Over 50% of the population is under the age of 30and they aretech savvy. Internet penetration of the region has reached 65% while mobile subscription passes the 100% mark (vs population)3. A recent survey by Datareportal reports that 69% of the survey respondents have made an online purchase via a mobile phone4.
All eyes on Vietnam
As the 6th largest economy in ASEAN, Vietnam has all necessary attributes to become a major startup hub in the region.With a median age of 30 and 70% of the country’s 96 million people are smart phone users5, Vietnam is an attractive market made up of tech-savvy, digitally active consumers who are keen on trying out new products. The educated population also offers a large pool of low-cost, high-tech talent for local and regional firms.
Large corporations have increasingly seeking partnerships with the startup community. Viettel which is the largest state-owned corporation in Vietnam, has sponsored start-up events such as Viet Challenge and Viettel Advanced Solution Track. VPBank and TPBank also have offered preferential lending programs for startups, while UP Coworking has provided free facilities for qualified companies in exchange for business solutions.
According to Ernst & Young’s latest market research, Vietnam ranks 2nd in Southeast Asia in the startup ecosystem’s development rate.The total capital and number of technology-related deals made have grown six times in the last two years6.In the first half of 2019, retail and payment firmsheld the largest share of investment with 60 per cent. Trailing behind is emerging sectors such as real estate and logistics.By theend of the fiscal year, investment in startups will double last year’s figure, reaching $800 million.
Where the opportunity is for startups
In the period between 2014 to 2018, Vietnam’s consumer finance industry has expanded rapidly at 59% annually7. This is the result of the government’s plan to provide financial service to the unbanked and underbanked population. It also provides a lucrative opportunity for both global and local startups to capitalize on one of Vietnam’s major megatrends.
As the leader of consumer finance industry, FE CREDIT has taken the first steps by holding the first of its kind business accelerator program, named FE Xcelerate. According to Mr. Basker Rangachari, Chief Marketing Officer, FE CREDITthe program’s aim is to partner with early stage fintech firms to revolutionize the organization’s business model and operations.
FE CREDIT is also the winner ofmany prestigious local and regional awards such as: “Top 10 Excellent Brands for Consumers,” “Top 10 Asia’s Most Trusted Brands” and “Best Consumer Finance Company Vietnam 2019.”
Why FE Xcelerate and who may join?
Prior to 2017, the company focused on growing its physical network. Today, FE CREDIT’s is well travelling on its path to digitization. Continuing its journey of finding digital solutions for all its business processes, FE CREDIT has announced the launch of its first-ever accelerator program, FE Xcelerate, in partnership with MEDICI.FE CREDIT intends to in-source and develop innovations by partnering with early-stage startups with disruptive solutions to address specific areas within FE CREDIT’s business line.
Some of the areas of collaboration with startups are building a customer platform for digital engagement, creating an omnichannel digital customer service and designing an on-demand platform to serve customers in real time. FE CREDIT aims to support and mentor both domestic and foreign Fintech startups, as well as provide them the opportunity to co-create business solutions which can be scaled into commercial products.
Once the product is approved by the committee, all license and transaction fees will be paid for under an official commercial agreement. Additionally, options for equity investment will also be a topic of discussion between FE CREDIT and FE Xcelerate’s selected fintechs.
To be eligible, startups must have a minimum viable product and should have been fully operational for at least last one year. Other required information includes details on management team, experience, number of employees, how long the company has been in business and the company’s funding. Applying startups may be from Vietnam or anywhere in the world.
Register for FE Xcelerate at: https://innovation.gomedici.com/fe-xcelerate/
Guarantor loans surge to top of UK financial complaints chart
By Huw Jones
LONDON (Reuters) – Complaints about guarantor loans by companies such as Amigo soared last year, eclipsing grievances over payment protection insurance (PPI) that have dominated for more than a decade, Britain’s Financial Ombudsman Service (FOS) said on Wednesday.
Consumers have turned to loan providers since last March as lockdowns to fight the COVID-19 pandemic strained their finances.
“For more than a decade, the Financial Ombudsman Service received an unprecedented number of complaints about PPI. We’re now seeing thousands more complaints about credit – including about guarantor loans,” FOS said in a statement.
Guarantor loans require a friend or family member to guarantee they will take on repayments if the borrower falls behind. Complaints about this type of loan reached more than 10,000 in October to December, up from just over 300 in the same period a year before, the FOS said.
Complaints about other types of home credit jumped to over 6,000 from 430 over the same period.
The complaints about consumer loans usually focused on inadequate affordability checks, FOS said.
Amigo describes itself as Britain’s leader in guarantor loans. FOS said complaints about the company totalled 12,854 in the second half of 2020, up from 1,163 in the first half.
Amigo said it launched a scheme of arrangement, or court-approved compensation process, in January after receiving a high number of complaints last year.
“We are a new leadership team that wants to correct past mistakes in a way that is fair and equitable to all our customers – including our 700,000 past borrowers and guarantors,” Amigo said in a statement.
Provident Personal Credit Ltd was the second most complained about company, with 10,390 complaints in the second half of 2020, FOS said. Provident had no comment.
PPI became Britain’s costliest retail financial scandal that dominated FOS work until the final deadline for complaints passed in August 2019.
(Reporting by Huw Jones; editing by Barbara Lewis)
Sunak promises to do ‘whatever it takes’ to shield the economy
LONDON (Reuters) – British finance minister Rishi Sunak plans to say in a budget speech on Wednesday that he will do “whatever it takes” to support the economy, and that the task of fixing the public finances will only begin once the country is recovering from the COVID-19 crisis.
“We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people,” Sunak will say, according to excerpts of the speech to parliament released by the finance ministry on Tuesday.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” he said in the excerpts.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances â€“ and I want to be honest today about our plans to do that. And, third, in today’s budget we begin the work of building our future economy.”
Britain has suffered the biggest COVID-19 death toll in Europe and the heaviest economic shock among big rich countries, according to the headline measures of official data, after shrinking by 10% last year, its worst slump in three centuries.
Sunak has so far spent almost 300 billion pounds ($419 billion) on emergency support measures and tax cuts.
But Britain has also rushed out Europe’s fastest COVID-19 vaccination programme, raising the prospect of an economic bounce-back once its current, third lockdown is relaxed.
Sunak said in media interviews on Sunday that he would not rush to start addressing Britain’s yawning budget deficit, which is approaching 400 billion pounds – its highest as a share of the economy since World War Two.
Prime Minister Boris Johnson plans to lift lockdown measures gradually, starting with next week’s reopening of schools in England, before most measures are removed by late June.
Sunak is expected to announce an extension of his emergency support measures, including huge income subsidies that are on track to cost more than 100 billion pounds, to provide a bridge for the economy until then.
But he has also said he will “level with people” about how Britain’s 2.1 trillion-pound debt pile would carry on growing without action, which is likely to mean future tax increases.
(Writing by William Schomberg; Editing by Catherine Evans)
UK gilt issuance to be second-highest on record at almost 250 billion pounds – Reuters poll
By Andy Bruce
LONDON (Reuters) – Britain is likely to sell nearly 250 billion pounds ($347 billion) of government bonds in the coming financial year – the second-highest total on record – to help power an economic recovery from the COVID-19 pandemic, a Reuters poll of dealers showed on Tuesday.
The survey of all 15 wholesale primary dealers, or banks tasked by the government with creating a market for its bonds, pointed to gilt issuance of about 247.2 billion pounds for the 2021/22 financial year starting in April.
Such a sum marks a sharp drop from the 485.5 billion pounds of gilts that the United Kingdom Debt Management Office (DMO) plans to issue in the current 2020/21 year to finance the economic response to the COVID-19 pandemic.
Finance minister Rishi Sunak is due to deliver his budget around 1230 GMT on Wednesday, after which the DMO will publish its 2021/22 gilt issuance remit.
Sunak has said he would not rush to fix the public finances as he readies a budget, which will add more borrowing to almost 300 billion pounds of COVID-19 spending and tax cuts.
In November, the Office for Budget Responsibility (OBR) forecast borrowing in 2020/21 would reach 393.5 billion pounds, or 19% of GDP, a peacetime record. The latest official data suggests borrowing will fall below this, partly because more taxpayers than expected have opted against deferring payments to 2021/22.
The poll showed Sunak is expected to announce a budget deficit forecast for 2021/22 of 180 billion pounds, 16 billion pounds more than the OBR had predicted in November.
“Our current estimate is that the latest lockdown will ‘cost’ around 16 billion pounds in terms of additional fiscal support,” said RBC economist Cathal Kennedy.
He cited the fact that more workers are now furloughed than the OBR had assumed in November, as well as expanded support for self-employed people and business grants announced in January.
In addition to the budget deficit, the government must also refinance 79.3 billion pounds of gilts due to mature in 2021/22.
As in the current year, much of the issuance will be soaked up by the Bank of England’s asset-purchase programme, which is due to buy around 100 billion pounds of government debt during the next financial year.
The poll suggested the government will finance borrowing almost entirely through gilts in the next financial year, rather than additional issuance of T-bills or via the government’s retail investment arm.
The DMO is likely to ramp up its issuance of inflation-linked gilts in 2021/22 to around 14% of the total, compared with 7% in the current financial year, the poll showed.
The DMO reined in sales of index-linked gilts through most of 2020 due to uncertainty caused by a review into the future of the retail prices index measure of inflation, which is used to price the bonds.
“Given pent-up demand, we think that this target is achievable,” said Deutsche Bank analysts Sanjay Raja and Panos Giannopoulos.
The dealers did not expect much change in the split between short, medium and long-dated gilts. Britain already has a longer average maturity for its debt than any other major economy, but the recent jump in global bond yields has prompted some commentators to say the DMO should do more to lock in low rates.
The government has also said it will issue the first “green gilts” – bonds to finance environmentally friendly projects – in 2021/22. Most respondents expect one or two bonds to be issued, of around 10 billion pounds in total.
(Reporting by Andy Bruce, editing by Larry King)
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