Adapting to Asia’s new growth model: digitalisation and decarbonisation

Asia’s growth in recent decades has made it the engine of the global economy, set to deliver around 60% of global GDP expansion in 2024.¹ But the drivers of growth are changing: the region is transitioning to a new economic model that is more sustainable and technology-driven than before.

Digitalisation² and the energy transition³ are emerging as powerful economic drivers across Asia, enabling new business models and growth opportunities for established firms. These shifts give rise to evolving financial needs, though.

Businesses will need to adopt climate technology and digital solutions in order to support their green transition, and will need to invest to adopt this technology.

Providing tailored financial support to businesses that are re-shaping economies, as well as to their investors, also requires innovation – and HSBC is stepping up to the challenge of supporting firms across the region.

Asia Pacific has over 2.6 billion internet users, which is more than anywhere else in the world.⁴ This number also has room to grow: internet penetration rates in the region still lag those in North America or Europe.⁵

As Asian consumers go online, established businesses across the region are embracing their own digital transformation, while a new generation of innovative technology start-ups is emerging. Asia Pacific is home to more than 305 unicorns, or start-ups that have achieved a valuation of USD1 billion, and their combined valuation exceeds USD1 trillion, according to data from CB Insights.⁶

The digital economy is led by sectors like e-commerce, transport and food, online travel, online media and financial services. According to an annual study from Google, Temasek and Bain that tracks six Southeast Asian economies – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – the growth rate in gross merchandise value (GMV) from these new economy sectors is expected to significantly outpace GDP growth for the rest of the decade.⁷

In absolute terms, the report’s authors valued the region’s digital economy GMV at USD218 billion in 2023, and saw it rising to USD300 billion by 2025 and USD1 trillion by 2030.⁸ More supportive policies could give an even bigger boost to ASEAN’s digital economy. The Digital Economy Framework Agreement being negotiated between ASEAN’s member states could unlock up to USD2 trillion of growth for the region’s digital economy by 2030, according to a model developed by Boston Consulting Group.⁹

Growth in the digital economy extends across Asia, though. In China, the value-added output of core industries in the digital economy contributed 10% of GDP in 2023, up from 7.8% in 2020.¹⁰ India’s digital economy is 12% of the country’s output and growing at nearly three times the rate of GDP growth.¹¹

Alongside the rapid growth of the digital economy, economies across Asia are working to accelerate the transition to greener sources of energy. The Asia Pacific region is expected to invest more than USD1.6 trillion in wind and solar power generation capacity over the next 10 years.¹²

Asian businesses of all sizes — ranging from start-ups to the middle market and up to the biggest firms — are finding growth opportunities from the energy transition as policymakers seek to bring down the region’s still-high carbon intensity metrics.¹³

In Southeast Asia, for example, the climate tech sector is growing fast and attracting more start-up funding: venture capital investments in this sector rose at a compound average growth rate of over 15% from 2019 to 2023.¹⁴ Innovative firms in this sector include those that are developing renewable energy storage systems, precision agriculture technologies and digital solutions for circular economy platforms.

Like the digital economy, the transition towards a net zero economy holds considerable potential to boost growth and create opportunities for international businesses in Asia. A report published by organisations including Bain and Temasek predicts that Southeast Asia alone could open up USD300 billion of annual revenues by 2030 through unlocking its green economy.¹⁵

Overall, however, corporates will need to adopt climate technology and the requisite digital solutions to support their own transition journey and invest to adopt this technology.

Here are some of the key trends in digitalisation and decarbonisation that are helping to shape the new economy in Asia Pacific.

• Tech-powered climate solutions: Asia’s next phase of growth and development seeks to align with net zero emissions targets at the national, industry and company level, in keeping with Paris Agreement commitments and sustainable development goals. Companies building tech-powered climate solutions include those like Ampd Energy,¹⁶ which is developing emissions-reducing industrial battery systems to replace fossil-fuel-powered generators at construction sites, or Singapore’s Green Li-ion,¹⁷ which is rolling out new battery recycling technologies.
• Smart, homegrown start-ups: Fresh thinking, quick moving, idea-driven start-ups that are willing to take risks and test new frontiers are rising up around the region. Start-up incubators are playing a key role, and hundreds have emerged across Asia in recent years.¹⁸ In Singapore, for example, HSBC is partnering with venture capital firm Antler, which works with ‘day zero’ founders as they scale up their businesses.¹⁹ Antler has supported the rise of many sustainability related companies, including firms like Reebelo,²⁰ an online circular economy marketplace for refurbished consumer tech devices that is active in six regional markets and expanding into the United States.

• Start-up support: HSBC has a long history of helping early-stage businesses in Asia succeed, whether through business account opening, providing business loans, advising on new market entry or expansion strategies, or even introducing potential partners. The bank’s support initiatives like its US$3 billion New Economy Fund,²¹ which finances start-ups and venture capital investors. (VC) and other backers who invest in them.
• The New Economy Fund has supported companies including:
  • Growthwell Foods,²² one of Asia’s leading plant-based food tech companies, which HSBC provided with acquisition finance and working capital facilities.²³
  • Carro,²⁴ Southeast Asia’s largest used car marketplace, which has expanded to seven markets including Singapore, Malaysia, Indonesia, Thailand, Japan, Taiwan and Hong Kong. HSBC has supported Carro’s growth since 2001,²⁵ including most recently through a multi-currency loan to Carro’s fintech arm in June 2024 that was made available by HSBC’s ASEAN Growth Fund.²⁶

As innovation drives the development of Asia’s digital economy and its push towards a net zero economy, HSBC will continue to support the entrepreneurs, businesses and investors who are making it happen.

Today we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. For more information visit www.hsbc.com/sustainability.