Southeast Asia is a diverse region with a growing population and increasing income, and it has been the most invested new region in the past decade. It is also a holy land for entrepreneurs, with many Web3 builders heading to Southeast Asia every year in search of high-growth opportunities.
This article by PASA will focus on the Web3 construction in Southeast Asia! We will start from the reasons why everyone chooses to build in Southeast Asia, to the Web3 environment in the region, from the capital distribution in Southeast Asia to personal experiences of building in Southeast Asia, and explore the holy land of Web3 entrepreneurship together!
Web3GO Labs has streamlined and refined this Space talk, and here are the core sharing contents of the guests.
Why Choose Southeast Asia for Web3 Construction
First is policy factors. Web3 carries certain risks, and the majority of countries in Southeast Asia neither encourage nor prohibit Web3, being in a middle state. This state allows for greater operational space, so it is much easier to obtain licenses and permits through certain relationships than in mainstream Western countries.
The second point is geographical location factors. Now that the pandemic restrictions have been lifted, the travel time to Southeast Asia is relatively short. Moreover, the team will not go abroad all at once, only a part of the core team or teams needed for external operations will go first, and other team members will follow gradually. Being in Southeast Asia, which is closer to home with a smaller time difference, allows for higher efficiency in interaction and communication between the two sides.
The third point is cultural environment factors. Southeast Asia generally has a high proportion of Chinese people, and the level of friendliness towards Chinese is also quite good, making it easier to adapt in terms of food and other aspects. If you need to move your family to a foreign country for a long time, Southeast Asia is a good stepping stone.
The fourth point is market factors. When the team goes abroad, it needs to consider the landing of overseas market products. Southeast Asia has a large population with income levels lower than those in China and other developed countries. Many application projects offer rewards of only a few US dollars, which might be insignificant for Western users, but are very important for Southeast Asian users, potentially earning them a significant side income.
Moreover, Southeast Asia has a good penetration of mobile internet and smartphone ownership, and the population is relatively young, so the cost of learning Web3 is lower for these groups. As long as the rewards are sufficient, it can attract and stimulate these groups, potentially leading to user growth.
The fifth point is cost factors. The best environment for Web3 is still in the US, especially for developers of infrastructure technologies. However, for teams from China going abroad, the costs in Southeast Asia are relatively low. Although the overall costs in Singapore might be high, in many other countries outside Singapore, such as Thailand, Malaysia, Indonesia, the overall costs are still manageable.
Western countries have already experienced a complete development from cash accounting to credit cards and banking systems, but many people in Southeast Asian countries do not have bank cards and can only pay in cash. An underdeveloped banking system means there is no legacy, making it easier to introduce new things, such as new wallets and payment systems, which people are more likely to accept.
Especially in countries like Myanmar, the Philippines, Cambodia, and Laos, where their own currency systems are not very stable and exchange rates fluctuate greatly, users in these countries are very welcoming of new payment systems and can gain users at a lower cost.
The Web3 Environment in Southeast Asia
The Monetary Authority of Singapore (MAS) is the main regulatory body for Web3 in Singapore. The head of MAS has stated in parliament that Singapore should not give up on Web3 and become a node of Web3. The concept of a node means that Singapore does not intend to be the center of Web3 in the world, nor does it aim to become the financial center of Asia.
The government has never mentioned this concept; it is usually brought up by the private sector. Singapore has always been about centrism, trying not to stand out. After the FTX debacle, Singapore is also reflecting on whether the government should intervene in Web3.
Johor Bahru in Malaysia is very close to Singapore, connected by the Johor-Singapore Causeway, which allows travel by car, bus, or train. The cost of living in Johor Bahru is much lower, with apartment prices about one-fifth to one-sixth of those in Singapore, and office space prices are also a fraction of those in Singapore. Malaysia's attitude towards Web3 is relatively open, and the visa policy allows multiple entries for one year and different types of visas, perfectly solving the entire team's visa issues. (by Suki)
Vietnam is rich in Devs. Also, due to historical reasons, there are many overseas Vietnamese there, so many projects in Vietnam are actually led by overseas Vietnamese with local Vietnamese developers, and cannot be considered complete Vietnamese projects. But because such projects set the tone, Vietnam, like the West, pays attention to community building.
The Philippines places great emphasis on localization. They rely on American capital, but the stories they tell are about the Philippines, about Southeast Asia, where they have a scenario of 1.2 billion users, making them the strongest in this vertical track. Localized stories are very popular.
Southeast Asia is suitable for application-side development, because applications need users, and the user base here is large with low customer acquisition costs. Vietnam and Malaysia provide sufficient education in computer science, have basic technical capabilities, and have ample talent reserves. However, working on the Infra track is still somewhat challenging.
The Capital Situation of Web3 in Southeast Asia
Institutions generally invest in some cost-effective application projects in some Southeast Asian countries, as this allows for low trial-and-error costs and the potential for breakout hits. The last bull market saw quite a few games, including Axie, which originated from Vietnam, a strong advantage that has also been recognized by capital.
The capital situation in Singapore, where local funds are relatively few and global funds are more common, especially Chinese funds based in Singapore. Some family offices choose to collaborate with some institutions. In Vietnam, there might be more local institutions, including local incubators. So some countries have a dense local capital presence, while others have more foreign capital, with regional differences.
Thailand's ecosystem is very strange. Thailand is similar to South Korea, a country where conglomerates thrive. The country's largest VC or incubator is one of the four major banks, Kasikornbank and SCB. SCB invested early in Band Protocol and Alpha Finance, tasted success, and then established the 100x accelerator, specifically recruiting graduates from Thailand's top universities for internal entrepreneurship.
Although they have shown an attitude towards moving into Web3, they still have the demeanor of a bank, and even if American institutions want to cooperate with them, they may not agree. So the entire Thai ecosystem has a bit of an insular feel. Indonesia is the same.
Vietnam has its own VC ecosystem. For example, the coin98 system and the coin68 system, both originally media outlets, gradually became builders, started projects, did incubation, and later became capital, gradually forming a complete ecosystem. Thus, Vietnam has become a global Web3 node.
Advice for Entrepreneurs Wanting to Start in Southeast Asia
【Singapore】 If the team wants to go to Singapore, first, there is no need to worry about language and recruitment issues. Communicating with local Singaporeans, even if their typing is not very good, there is no problem in verbal communication in Chinese. Moreover, after the wave of Web2 going abroad, there are many engineers and product managers from China who have been working in Singapore for several years and have obtained PR, who can also be considered local employees, making their recruitment count towards the local quota.
The second point is convenient transportation and frequent activities. Singapore is much smaller than Hong Kong, and it takes about 40 minutes to drive from east to west, with public transportation also being very convenient. So when participating in many activities, it may take less than ten minutes to travel by subway or taxi, saving a lot of time. Although Web3 activities are currently less active, there are still at least two to three events every week. Many universities support Web3 activities and cooperate with institutions and Web3 project parties to offer some training courses.
The third point, the business environment has low taxes, and personal income tax is also relatively low, but the cost of living is high. In Singapore, you might need a monthly cost of 20,000 RMB, with 10,000 for rent and 10,000 for food or other expenses. If you are not financially prepared, it is quite risky to come directly.
Singapore is a country, and the government will consider what you can contribute to the country. If you want to get government support in Singapore, you cannot just keep to yourself; you must be related to the local ecosystem, from recruiting to training talents. You should cooperate with universities and recruit more locals, so the government will give you some policy support, making it easier to apply for licenses and investments.
【Malaysia】 If the core team wants to come out, part of the team can be placed in Singapore and part in Johor Bahru, Malaysia. This is very suitable both geographically and cost-wise.
The cultural environment in Johor Bahru is very similar to Singapore, with many Chinese people, and even Malays who can speak some Chinese, making the language environment very friendly for Chinese people. If there is no special reason to be in Singapore, placing the entire team in Johor Bahru is also OK, as it is very convenient to go to Singapore and participate in activities there anytime.
From the perspective of bringing families, the education is also very good. Malaysia has some British and American international schools, which are much cheaper than international schools in China.
In terms of recruiting team members, the cost of recruiting local employees is also very pleasing. Johor Bahru has the Malaysia University of Technology, and Kuala Lumpur has the University of Malaya, where the cost of recruiting recent graduates is low, much lower than the cost of recruiting people from China and sending them over, as there is no need for additional subsidies or to solve visa issues.
Malaysian universities are very welcoming to cooperate with Web3 teams. The team can offer internship positions to university students, and the university and project team can also jointly run schools.
From the perspective of investment and financing, there are also some VC teams in Malaysia, and since it is very close to Singapore, it can integrate with Singapore, so financing is not a problem at all.
【Thailand】 As is well known, Thailand is a country open to doing business, welcoming all comers regardless of industry, and there is no government regulation. Conversely, it is also difficult to get extra support from the government. Many teams, mainly composed of Chinese, have already chosen to come to Thailand, and there are quite a few well-known projects here, with Chinese teams having already relocated to Bangkok in their entirety.
If the team accepts a distributed setup, the development team can be placed in Phuket or Chiang Mai, especially Chiang Mai, where labor is very cheap and also relatively quiet. The BD team can be based in Bangkok, where the overall cost of living is relatively low, with daily living expenses comparable to those in China's second-tier cities.
Because the Web3 circle holds many events in Singapore every year, but since Singapore is too small and there is not much to do, most attendees, if they come from Europe or the US in advance, are likely to stay in Thailand until just before the meeting in Singapore. So in Thailand, you can meet many VCs, project parties, and ecosystem parties that you might not see in China or other places.
Conclusion
Due to policy, geographical, cultural, market, and cost factors, Southeast Asia is highly favored by Chinese Web3 builders, and different regions in Southeast Asia also have their own construction environment characteristics and institutional distribution characteristics. But overall, compared to Western countries, the policies and costs in Southeast Asia are very suitable for Chinese builders to go there.
If the team wants to enter Southeast Asia to build Web3, if you go directly to Singapore, you need to be financially prepared, but you don't need to worry about this in other regions. The globalization in Southeast Asia is high, and due to geographical factors, many projects and investors gather in Southeast Asia, making it very convenient for early projects in terms of financing and ecological cooperation negotiations.
