Southeast Asia (SEA) is a region on the path of rapid economic advancement. Led by Vietnam, which achieved staggering gross domestic product (GDP) growth of 7.1% in 2018, Southeast Asia as a region recorded GDP growth of 4.8% last year — less than the 5.1% recorded in 2017, but still outpacing global GDP growth of 3.6%.
Economic progress notwithstanding, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) noted in its report “Inequality in Asia and the Pacific in the era of the 2030 Agenda for Sustainable Development” that as of 2017, SEA countries have failed to meet the UN’s Sustainable Development Goals (SDGs), particularly Goal 10: reduce inequality within and among countries.
It is disheartening to note that the richest 1% of Thais hold 58% of the wealth in Thailand. In Indonesia, the cumulative wealth of the four richest in the country is greater than that owned by the 100 poorest Indonesians. As the region contends with unbalanced wealth distribution, it may be fruitful to think outside the box for answers, one of which may take the form of Security Token Offerings (STOs).
In an ideally democratic, egalitarian world, the poor should not be deprived of the chance to grow their wealth simply because they are lacking in it. If the poor in Southeast Asia are to have any chance of growing what little wealth they have, then the doors to the global investment market must not be closed to them. STOs, which allow for fractional ownership through the tokenization of assets, could be the ideal tool to democratize the global investment market, helping SEA countries and the region as a whole come closer to achieving Goal 10 of the UN SDGs.
With its rapid economic advancement, urban population growth in Southeast Asia is accelerating, which in turn, is driving up real estate prices in SEA cities. Based on the Knight Frank Global Residential Cities Index, global real estate prices rose by 4.3% in the first half of 2018, with Asia recording the strongest growth. Within Southeast Asia, the growth of the property market was driven mainly by the city-state of Singapore and the Indonesian capital of Jakarta, which recorded quarterly growth rates of 3.1% and 1.8% in the second quarter of this year, respectively.
Given the rising real estate prices in SEA countries, property markets in the region present an attractive investment opportunity for the poor to elevate their standard of living. Thus far, it has been implausible for poor Southeast Asians to invest in real estate due to market prices far exceeding their means. But with the rise of STOs and tokenized assets, investors can become fractional owners of real estate, without the cumbersome procedures and minimum purchase amounts of real estate investment trusts (REITs).
Another aspect of Southeast Asia’s economy on which STOs can capitalize is the massive commodities-intensive infrastructure development projects being undertaken by governments in the region. Leading the way is Indonesia with its “Sea Toll Road” program, under which the government will be spending up to US$70 billion to link up the country’s major ports. Additionally, Vietnam has set aside US$26 billion under its Rail Transport Strategy 2020 to construct a railway which will reduce travel time between Ho Chi Minh and Hanoi to about eight hours.
To top it all off, Thailand had in October 2018 approved the construction of four mega-projects worth about US$14 billion in the country’s Eastern Economic Corridor. With all these ongoing infrastructure projects in the region, rising demand for construction raw materials in Southeast Asia certainly bodes well for STO-based commodities tokenization, which offers a hassle-free investment alternative for the region’s poor as compared to regular commodities trading platforms.
If left unchecked, the issue of unequal wealth distribution in SEA countries may lead to a host of social issues that could upset their political stability, hampering the continued economic development of the region. STOs, with their ability to democratize investment, could be the way forward for millions of disadvantaged Southeast Asians and the betterment of the region as a whole.
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