Thailand: Thaksin Lese-Majeste & PM Lawsuits, 2029 Super-Aged Population & D2C Consumer & VC Opportunities with Wing Vasiksiri - E350

· VC and Angels,Thailand,Podcast Episodes English,Southeast Asia


“One problem in the market is that many companies seek venture capital (VC) without being suitable for it, and many founders mistakenly believe that raising VC means their company is worth building, which isn't true. Venture capital is a very specific type of risk instrument. When you raise it, you're essentially a highly volatile call option for the fund. Venture capital is great for businesses with a natural J curve and a hypothesis that they can quickly capture significant enterprise value. This is often due to market dislocations or inflection points that allow smaller, more agile companies to move faster and capitalize on unique opportunities.” - Wing Vasiksiri


“The big concern with any aged or aging population is that the burden falls on the young to support the old through social welfare. This leads to a less productive population, resulting in falling productivity, declining GDP, and overall economic struggles. Historically, countries have avoided this trap in two ways: by encouraging people to have more kids and by implementing supportive government policies. However, it's challenging to measure the success of these policies and predict how long it will take for them to be effective.” - Wing Vasiksiri


“This is a trend we've been observing in the country for a while. It may not be widely discussed, but the government has been implementing specific programs to encourage people to have more kids and make it cheaper to do so. This trend started some time ago, and it's common in developing economies transitioning to developed ones. Even if people are wealthy and can afford to have kids, both parents usually work, leaving little time to focus on raising a family. As a result, career priorities take precedence. On the other hand, many people find it increasingly expensive to raise children and feel they can't afford it. All these factors combined are leading to an aging population.” - Wing Vasiksiri

Wing Vasiksiri, General Partner of WV, and Jeremy Au discussed three main themes:

1. Thaksin Lese-Majeste & PM Lawsuits: Recent legal events (Thailand's court delay in the verdict on dissolving the Kao Klai (Move Forward Party), Thaksin Shinawatra lawsuit and PM Srettha Thavisin cabinet hearing) contribute to political instability, affecting investor confidence and stock market performance. They also discussed the economic impact of Thailand’s highest interest rate in a decade at 2.5%, and the ongoing conflict between the Prime Minister and the Bank of Thailand over whether to lower rates to stimulate growth. The country's economic growth forecast stands at 2.6%, lagging behind neighbors like Indonesia and Vietnam.

2. 2029 Super-Aged Population: Thailand reached the "aged" demographic milestone in 2023 (20% of its population 60+ years old), and is projected to become a "super-aged" society by 2029. This shift presents challenges such as increased social welfare burdens and reduced productivity. However, it also creates opportunities in sectors like healthcare and elder care. They also noted the trend towards health-conscious consumer behavior, indicating potential for businesses to cater to this demographic shift.

3. D2C Consumer & VC Opportunities: They discussed the success of Thai and Singaporean D2C companies like "After You," a dessert chain that went public by localizing consumer food preferences. Wing highlighted a common issue where many companies seek venture capital (VC) without being suitable for it. He clarified that venture capital is a specific type of financing intended for highly volatile and high-growth potential businesses. He also emphasized that raising venture capital does not inherently validate a company's worth and pointed out that VC suitability depends on the business’s ability to capture significant enterprise value quickly, often driven by market dislocations such as technological advancements or regulatory changes.

Jeremy and Wing also compared consumer market trends in Thailand vs. Singapore, regulatory changes for marijuana and alcohol production, and public-private partnerships in supporting infrastructure projects.

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(02:01) Jeremy Au:

Hey, Wing. Good to see you.

(02:02) Wing Vasiksiri:

Good to see you as well. How are you doing?

(02:04) Jeremy Au:

Good. I think it's been a long weekend in Singapore. So a nice holiday to the kids and kind of like a crazy start to the week to get stuff done again. How about you? I understand you're traveling the U. S.

(02:13) Wing Vasiksiri:

Yeah, in the US right now. Appreciate you waking up early to do this. But yeah, all good otherwise. Nice weather here. We'll be back in in Southeast Asia next week. So it's been a good trip.

(02:22) Jeremy Au:

Oh, very good. And so we want to talk about the whole like, Thailand and obviously quite a lot of headlines recently. I think primarily, it sounds like there's also the legal system, new lawsuits regarding the current prime minister, as well as Thaksin. Could you share a little bit more about that wing?

(02:36) Wing Vasiksiri:

Yeah, Thailand's been in the headlines for a couple of things recently, right? I think two main things. One, the big one, they were, the court was supposed to have a verdict on the dissolution of the Kao Klai or the Move Forward Party. There were some allegations that they were trying to overthrow the monarchy during the 2023 campaign, but they decided to delay that, so it's been postponed a bit.

And then in conjunction with that Thaksin the former, ex-Prime Minister, and he's kind of the, the leader of the Pheu Thai Party, not, not officially, but it's like his daughter who heads it, and it's like his family kind of supporting it. And there's been some news about that as well, where he was, I think, sentenced to jail, but then was able to make bail. Similar allegations of violating the Lèse-majesté rules. Yeah, I think both parties are kind of facing some headlines with the courts right now.

(03:24) Jeremy Au:

Yeah, and I think it's interesting because there's a lot of optimism that we discussed last time around because a lot of the current government has been around like pro-business reform which is kind of fundamental to the economy and also fundamental to the tech sector as well. And so I think the news articles, from like Reuters and Channels News Asia had this question, which is Hey, does this mean that we see that the stock markets have dropped again, because of this high stock market, what do we expect to see in the future?

(03:52) Wing Vasiksiri:

You've definitely seen volumes decrease overall in the stock market. I don't know how much it's a direct result of this. I'm sure it's playing some role, probably just kind of in general political instability. It's not something that investors favor, but for the most part, in Thailand, we've been able to go through these political regime changes fairly peacefully and without kind of a lot of interruption to how businesses run and operate here. For the most part, there's been a couple of changes there and it's been pretty much a smooth transition, even though the ruling party was removed by the military at one point.

Another piece of news that I think is probably impacting that as well is the Bank of Thailand also voted to keep interest rates at 2.5% in the country. This is the highest it's been for a decade, but in addition to that, the prime minister and the Bank of Thailand, they're very openly having disagreements and arguments about where interest rates should be. I think it's something we touched on briefly last time, but the Prime Minister is saying last time, it's a crisis. We need to lower the interest rates to kind of stimulate economic growth. But the BoT has remained firm in their stance to keep interest rates the same. So I think that the conflict between the Prime Minister and Bank of Thailand showing there's like a misalignment of how they perceive the economy is not great.

There's also slowing economic growth overall, I think it's predicted to be about 2.6% this year, which is much less than our neighbors, like Indonesia and Vietnam, for example, rising household debt. So there's a couple of things that are, I think, coalescing together that is making this resulting kind of lower confidence in the stock market. So that's like the big-picture headline.

(05:24) Jeremy Au:

Yeah. And I think what's interesting is that, we're talking about some of the macro factors here that are also in parallel to all of this. So I think the first one I actually agree with you is about the interest rates. I mean, I think it's also a common issue, actually, in Southeast Asia right now. And I think as a bit of context here is the US also has maintained as high interest rates at the same time as the highest has ever been for a long time. And so when America has a high interest rate and Southeast Asian country has a relatively lower interest rate, then money will flow from Asia, the Asian country currency to the US. And if the gap is too large, then there'll be an even faster flow of that currency and then the currency starts to weaken.

So I think we're seeing that now in Malaysia, which is roughly the same GDP per capita as Thailand. And it's also facing the similar challenge where the currency is dropping versus the US dollar because, there's an outflow, right? And so I think everybody in Southeast Asia is having the same dynamic where I think a lot of folks are keeping their interest rates higher to prevent accelerating the outward flow or the weakening of their currency. That's happened to Japan as well to some extent. So yeah, I think it's kind of like a weird repeat of 1996 before the Asian financial crisis in 1997. So yeah, it's because I think there's a similar dynamic where there was like, American high interest rates, Southeast Asia had lower interest rates. But I think it feels like everybody is more prepared in Southeast Asia this time around because all the central banks have much more currency, much more US dollars and forex and reserves as one. And two, like I said, even the Bank of Thailand is choosing not to lower the interest rate because of that learning, right? Yeah, it will be interesting to see how it plays out.

(06:50) Wing Vasiksiri:

Yeah, no, exactly. I think for all this talk of kind of economic independence and these countries being not correlated. It's like how the US goes and what happens there very much drives what happens in Southeast Asia, this part of the world, and every part of the world. So I think the elections, the upcoming elections, are going to be huge potential interest rate cuts later this year. I think that's the main signal that we'll have to look for.

(07:11) Jeremy Au:

Yeah, and I think that's why even though we're kind of talking about individual countries, it always goes back to America at some level right now. It's Southeast Asia, but also I think the overall regional dynamics as well. One interesting dynamic that you and I were commenting about as well, and I actually didn't realize this personally, was about the fact that Thailand is becoming an aged, officially aged country and society in 2023 and soon becoming super-aged by official definition which obviously is something that was not obvious to me. Tell me more about it from your perspective.

(07:39) Wing Vasiksiri:

Yeah, I mean, I think this is a trend that we've been seeing develop in the country for a while, maybe it's kind of less talked about and broadcasted more generally, but the government has been trying to have some specific programs to stimulate people to have more kids and make it cheaper for people to have kids. I think this trend started a while ago, and you see this with a lot of developing kind of transitioning to the developed economies where people, you know, even if you're wealthy and you can afford to have kids usually both parents work, no time, priority gets shifted to focus in the career as opposed to raising a family, which I think is kind of like a natural progression as these economies develop.

And then on the other end of the spectrum, people are saying that, hey, it's more expensive to raise a kid. We can't afford it. And so all of these factors coming together is basically resulting in an aging population. I don't have the figures in front of me, but I think Thailand is up there compared to similarly to Singapore and unlike Indonesia, Vietnam. So the demographic factors is something that is definitely on my mind and something that we look out for as we progress to see what happens next. Related to that, kind of just touching on something that we touched on last time. I think Thailand is going to become the first country in Southeast Asia to legalize same-sex marriage as well. I think the Senate just approved that. It was like 130 to four or something who opposed it. So I think in a couple of months, Thailand is going to be ahead that way. And maybe, hopefully, that attracts some immigration, gets people excited about the policies and skilled immigration, I think is one thing that we can do to counteract the aging population. So we'll see how that goes.

(09:09) Jeremy Au:

Yeah. First of all, great to hear the news about the legislation. I think Thailand, it's quite different from the rest of Southeast Asia. So I think it's always been a bit more permissive, I would say, on that dimension compared to many Southeast Asian neighbors as well. Fascinating to see that legislation move forward. Talking about numbers that you mentioned as well, may I just read out the numbers I have here is that in 2023, Thailand reached a demographic milestone where 20% of the population is now over 60 years old. So it's about 13 million people, which qualifies it as an aged society.

It had taken less than 20 years for Thailand to go from an aging to an aged society which is currently as milestone, whereas it took Singapore and China, like you said, 25 years to get there, the United Kingdom, 45 years, and the US, 69 years to get to the aged milestone. More interestingly is that this is expected to grow to more than 20% by 2029, and so the forecast is that by 2029, Thailand will become a super-aged, society when over 20% of the population is over 65.

So yeah I think a fascinating set of numbers here and I think the concern that the UN is saying is that, hey, once 2029 happens, you'll kind of have a similar age population percentage as Japan, Germany, Italy, and France, but the problem is that these are all wealthy, developed economies and tasks, old and rich, but you know, Thailand is at risk of becoming old before it's rich, similar to the concern around for China as well. So lots of thoughts on my end. I'm curious what your thoughts are.

(10:33) Wing Vasiksiri:

Yeah. I mean, I'm shocked to hear some of those comparisons, especially in terms of the time it took to get to those aged populations. I mean, so the big concern with any aged or aging population is that the burden falls on the young to support the old through social welfare, and things like that. So you have a less productive population. Productivity falls, GDP falls, and the economy as a whole struggles, right? I think historically, the only two ways that countries have been able to kind of avoid this trap is, by encouraging people to have more kids. And I think the government is trying to do that. Although it's very hard to measure the exact degree to success and how long it's going to take for that to show out. So I'm not sure how effective those specific policies are going to be.

I think specific policy was like increase maternity days on a job, make it cheaper childcare. So you'd have like cheaper nursing stations, public facilities where people are more inclined to have kids. And then I think the big thing, like I touched on is this idea of like skilled immigration. If Thailand is able to attract skilled, younger working population, and there's a lot of we talked about last time, natural beauty in the country, a lot of reasons why people would want to move to Thailand and stay, I think if the government can develop some official programs around that, I think that would greatly contribute to kind of the GDP and prevent this. But yeah, I think this is something that people are realizing now. I see it in the headlines, at least in the country, where people are kind of actively talking about this, but you know, it's one of those problems where it's kind of like climate change, where it's not impacting you on an immediate timescale. You don't viscerally feel it, which means that you kind of think about it and you're like, " Okay, we know this is happening, but it's not impacting me right now," And people kind of just go about their daily lives as opposed to having something top of mind. So I think problems like this is dependent on the government or other institutions to be the ones to spearhead the solution, but, I'm curious if you have any thoughts around what you think is going to happen, any kind of ways out of it or what you see.

(12:21) Jeremy Au:

I mean, it's like you said, it's similar to Singapore, right? Singapore is also an aged society shockingly. And I think in terms of the measures you mentioned, obviously there are a lot of cash bonuses for having kids. I think Singapore is working very hard on extending more paternity, maternity leave and so forth. And I think there's also a huge focus on lowering childcare costs. So I think Singapore does it through two major programs from my perspective. One is I think they've effectively increased nationalization slash more government control over the early education sector through extending it through the expansion of managing either directly or indirectly managing the pricing and accreditation of early childcare, because it's a big part of costs especially in early childhood. I think the rest of the single-parent education system is effectively free from a global perspective. I think that's one piece.

I think the second piece that they also do to try to control costs for parents is actually through the helper visa program. So obviously a lot of middle-class families in Singapore have a domestic helper from the Philippines or Indonesia. And so I think there's a big part of driving costs down for families because of having domestic help. I think the other way is managed and what's interesting is also I think in terms of health care. I have the numbers here, but, in the year 2010, the Ministry of Health budget was about $4 billion. And for FY2024, basically this year the budget is about $17.4 billion. With another $1.4 billion allocated for capital expenditure to build more facilities and the like. So that's pretty much like a 4x increase across the past 14 years. And a lot of it is actually honestly being driven by the aging population. When you're older, your body starts to become more expensive to maintain both personally and from a infrastructure perspective. I think it's going to be interesting to see how that happens.

(13:59) Wing Vasiksiri:

Yeah. I think the big concern, like you mentioned is that thailand and Singapore are in very different positions economically. I think GDP per capita Singapore is probably like five, six times that of Thailand. Population-wise, it's probably around 10% of Thailand, which means it's much easier to kind of have these government mandates controls and it's easier to manage a population of that size as opposed to 70 million people. So I don't think there's an easy way out of this. I think it's going to have to be the government working in concert with private industry, getting more immigration, making it easier for people to have kids, to want to have kids, controlling inflation combination of health subsidies that you mentioned as well. But yeah, I think it'd be interesting to see what this government does and how it plays out over the next couple of years. Cause like you really have to act now. These are kind of like the long tail that's going to happen.

(14:45) Jeremy Au:

Yeah, I guess a good news is that Thailand does have a very strong and robust healthcare industry already. So to some extent, there's some infrastructure that's already been built out.

(14:52) Wing Vasiksiri:

Yeah, I think that the health care, there's universal health care. right? And it's relatively cheap. I think private health care is probably one of the best in Southeast Asia, if not the best, just in terms of private hospitals for the middle class, upper middle class, and the upper class. So a lot of the health care infrastructure is definitely here and I think it can support the aging population. So I think that's good news. And then as the economy changes and ages, I think the demand and the consumption patterns and things within the economy is going to change too. So I think making sure kind of businesses are set up for that and understanding what the shift is going to look like will be important.

(15:24) Jeremy Au:

So we've been talking about what those opportunities are, right? So obviously there's the legislation changes, there's the political changes, the demographic changes that we're talking about. Then we're thinking about what the opportunities are. So I think, I've seen two major trends, I would say, that I've really seen at least play out. One is obviously, I would say, elder care or longevity tech, or some version of healthcare piece. And then the second piece, of course, is in light of Thailand's, kind of, GDP per capita, and so forth, a lot of consumer and direct-to-consumer growth as well. What are your thoughts?

(15:55) Wing Vasiksiri:

Yeah, no, I think that is one of the most interesting areas in Thailand, the latter you mentioned in terms of just the consumer market. When you look at Southeast Asia, people will usually group Thailand, Indonesia, Vietnam, Philippines together, and then Singapore is the one that people look at as more developed. I think a better grouping if you look at it at a deeper level like Singapore definitely is kind of like on its own, but then I think Indonesia, Vietnam, and the Philippines are potentially closer together, where it's like the demographics and the tailwinds there look a lot stronger than they do in Thailand and Malaysia. So if you drill down a little bit in Thailand and what that actually looks like, Thailand has a 50% modern retail penetration rate. So what that means is that consumers here are used to Western brands, US and European brands. Typically, if they're expanding in Southeast Asia, Thailand is one of the first markets that they expand to. And the taste of consumers here is much closer to the US and Europe versus Indonesia or Vietnam, or maybe there's more more kinds of local Asian influences. So I think that's that's a big one.

And then if you look at successful companies in Thailand, I think this is a big thing where you look at each of these economies, you think about who are the role models, who are the companies that have gone public, done well, generated wealth for founders, employees. One company that I think doesn't nearly get talked about as much as it should, is a company called After You. They're a dessert chain based in Thailand. It started with this girl called May. She was a baker, literally baking for fun, opened up one shop. They sell honey toast and like kakigori, kind of simple-ish desserts, but she really did good with the consumer tastes. Struck a chord. They grew it over a couple years, expanded into other verticals like at-home baking. They have a small grocery chain as part of their entities as well. So they were able to expand that. They IPO'd on the Thai Stock Exchange. At one point, they were worth like $300 million market cap trading at 10X revenue. So it's like a real success story. I checked before that I think they're about $160 million market cap right now. They were listed as like one of the best-performing food and beverages stocks in the world when their market cap exceeded 300 million. So you can see that Thai people naturally are creative. There's a taste, there's an interest in things like this. And I think that D2C and you know, that can include everything from clothing to food and beverage, but I think food and beverage is the one that I want to focus on today is a very interesting market because we've seen the success story. We've seen people have done well. We've seen that there's consumer demand across, all the consumer classes for types of good like this. Yeah, I think that's an area that's worth kind of double-clicking it and focusing on a bit.

(18:29) Jeremy Au:

I think the common criticism is why should VCs be looking at direct-to-consumer, right? That's the kind of debate that's happening. I think there's a very strong push on one side, as you said, is that at the current GDP per capita. I mean, if you look at China, for example, you have Luckin Coffee, you have a lot of companies that have been bringing like a tech angle. So I think that there's a bull case around like D2C, is a kind of like a big piece of it. And then maybe to some extent it parallels the trends in the US, I think we had Casper, which I used to, I used to have a Casper mattress, for a direct-to-consumer mattress. And then there's also all the various other D2C stuff that happened in the US as well, like Harry's for razor blades. So I think there's a certain story piece. I've also worn Allbirds, like every VC and techie.

And then I think the other case as more concern is like, Hey, the criticism is first of all, is it repeatable in Southeast Asia? That's one. Two is the time to hold is probably longer than 10 years. Then three, the outcome is may not be a unicorn or, it's hard to exit. So I think that's kind of like the debate. And now Gus, maybe the snobby side is is it even tech? That's number four, I guess. So I'm just kind of curious about how you think through this.

(19:30) Wing Vasiksiri:

No, I think that's a great point. And I think it is true that when you raise a fund of a certain size, maybe 500 million to a billion, it maybe makes less sense given that the outcomes of these types of companies are more capped. But this is something that I think about a lot, which is kind of like, to answer the question, anytime I'm looking at a company like with the present level of information I have, is this company suited for venture capital as a form of financing? I think one problem in the market is that a lot of companies that shouldn't necessarily raise venture capital as a financing instrument go out to raise venture capital and a lot of founders I think mistakenly kind of get the idea, confuse it up. that The fact that the company is raising venture capital means that it's worth building, which isn't true. I think venture capital is a very specific type of risk instrument where when you raise it, you're essentially a highly volatile call option for this fund. So if you drill down a bit and think about what that means, I think venture capital is great where you have a business, where maybe there's a natural J curve, but you have a hypothesis that this business is going to be able to capture a lot of enterprise value very quickly. And usually, why it's able to capture that enterprise value is because there's some kind of dislocation or some inflection point. And that can be like an adoption inflection point, behavioral, technological inflection point, or maybe like government regulatory inflection point. But usually there's some kind of dislocation in the market that uniquely enables a smaller company that is more agile, can move faster, and has a specific hypothesis to be able to take advantage.

So I think in the US, like all those companies you mentioned, Harry's Casper, HIMS, HERS, Blue Bottle, right? All of these D2C companies,, a lot of them did well, a lot of them did not very well, but I think when these companies were being built in the US at the time, I would argue that the disruption at that time was actually going direct to customer and being able to kind of like target them online in the different shape way. A lot of companies that did well doing that were really the first generation of folks that actually went D2C. I think going D2C at that point was the innovation, was what they did that was different. And so I think if you apply that to Thailand and you think about F&B, like I mentioned, it's probably not for every company in terms of raising venture funding, but if you have a clear hypothesis about why this company is going to grow very quickly and capture a lot of value and you're able to identify some of these inflection points Which we can kind of talk a bit more about. I think that is something that's exciting and could make sense for this form of financing.

(21:59) Jeremy Au:

Yeah. I think the piece about Southeast Asia, zooming in here, based on what you said, is that people who are getting rich at this stage of societal development, want to spend on consumers because if your GDP per capita is 15,000, that roughly corresponds to your annual salary being 15,000. And if your economy promises to grow at 5%, that means that your GDP per capita doubles from 15,000 to 30,000 over the next 15 years. You're probably going to spend it on consumer, right? So now, whether that's like consumer in the sense of like buying and saving for a house, or whether that's buying better food or experiences or travel, I think, obviously kind of leaks out different ways. I think there's something that I do think about quite a bit.

(22:38) Wing Vasiksiri:

Yeah, I think so. That's probably like the natural progression of where consumer spending is moving to. And especially based off what we talked about where people aren't having kids, so they're not necessarily saving to send their kids to school, pay for their education, college, things like that. The natural progression of where that spending is going to shift to is consumption and that can be, I think, goods or services, but it's going to revolve around F&B, physical consumer products and experiences around tourism or things like that. So I think, looking at these demographic shifts we're seeing in Thailand, it makes logical sense that this is where consumer spend is moving into. And so it's probably worth keeping an eye on. I think one thing to add though which kind of relates to the earlier point you mentioned, is that typically startups and venture-suitable companies take advantage of inflection points that happen very quickly, as opposed to ones that play out over a longer period of time, right? And it's not always true, but I think if you look at the best companies, there's a very quick dislocation. And usually that comes from a technological shift or a governmental-slash-regulatory shift.

Those are kind of the two bigger drivers, at least from looking in the US and then kind of behavioral changes or consumer adoption changes that usually take longer to happen is more suited for the big companies to take advantage of, given that, started to talk about this a lot earlier. The main advantage is to move fast, but big companies have distribution. So that's one thing to keep in mind. But yeah, I think your point is very well taken. I think naturally that's where consumption will move into.

(24:05) Jeremy Au:

And one thing that does remind me is that I think the reason why consumers are so appealing is that to some extent, it's also insulated from some of these things we mentioned, right? Or even supported by, so I think it's insulated from political changes or regulatory side because nobody wants to regulate consumer, like who cares if you're buying granola or ice cream or food, right? So I think that's one piece. Obviously, I think it benefits from the fact that Southeast Asia obviously continues to grow that higher economic growth rate. And I think one thing that you flagged up is that I know that you have a thesis as well that the aging population also has opportunities for direct-to-consumer F&B.

(24:38) Wing Vasiksiri:

Yeah, I definitely think so. I think, as a population ages, the demand and behavioral spend patterns change. People demand different types of goods and services. I think the biggest shift you typically probably see is as consumers age, they tend to eat healthy, more healthily, right? It's not always the case, but I think that's like a pretty clear trend. And you already see that playing out in Thailand, as you're even going through the supermarkets or grocery does more transparency in terms of food labeling, things being packaged as natural, no preservatives. So I think that's definitely a strong shift that you're gonna continue to see. As an aging population, there's a new demand. I think the two biggest ones are what you mentioned, which is healthcare and consumption. Did you see a similar thing playing out in Singapore?

(25:17) Jeremy Au:

I think there are three problems with the Singapore market. The first of all is that it's been rich for a long time, so it's not a rapid rise. In fact, economic growth has slowed down and plateaued, because it's already at around 90,000 GDP per capita. So it's pretty much a developed economy. So countries at this rate normally all have a relatively slow growth rate. So that isn't that fast rate, like everybody's consumer spend, the habits are really relatively stabilized. So there isn't that dislocation that's there.

I think the second piece is that Singapore is very exposed to global brands, because, it speaks English, but it's also very low import barriers. There's no tariffs. There's a lot of free trade agreements. There's a lot of travel, right? So I think there's an interesting piece where local consumers end up as they move up, let's say, the household income, they end up buying, for example, more Americanized or Western brands or Japanese brands or French brands rather than buying something that's more domestic, or more upsized.

And I think the third piece is that the market size of Singapore is relatively small. So to some extent the potential for an entrepreneur to build something fresh or large, it doesn't really have that same potential. And it's interesting to see how that happens. There still is direct-to-consumer, but I would say they tend to be more on the luxury side from my perspective, affordable luxury. So for example, I think in terms of the F&B and direct-to-consumer, I think the big ones I can think of is you have OSIM massage chairs which are, a luxury product because a $3,000 massage chair in Singapore dollars is a big investment to make but every kind of upper-middle-class family you see one has a massage chair. So that's one. But interestingly, there's a group, that also owns two brands one is TWGT and the other one is Bacca Coffee. And both of those are very opulent. They're called One Sells Tea and One Sells Coffee. And they're all in the fancy places in Singapore. They're at the airport. And then I think what they're trying to do is they're trying to open up regionally as well in the high net worth districts. So I think Singapore, if they do consumer, tends to be in that mini lux in that sense. I think Razer is a good example for gaming hardware, which is a Malaysian slash Singapore company. And then obviously you see other brands that are in that piece as well.

(27:15) Wing Vasiksiri:

That's interesting. I didn't know that all those the three luxury high end brands were owned by the same group. So it seems they very much are playing off this trend of aging, richer population and are able to capture that. We haven't seen a similar story in Thailand. I think as a consumer, maybe the two biggest things that you see when you're going to the supermarket is like one like low-sugar beverages and drinks are everywhere. It popped up a couple of years ago, and now they've really penetrated the consumer side, a big part of that actually is also tax. The government has a varying tax degree, depending on how much sugar content is in each drink. So again, this is one of the government-mandated policies to to be healthier. And then the other one I mentioned, it's kind of like clear labeling, putting kind of health benefits first. I think there is a clear trend. I think this is true across Southeast Asia of people becoming more health conscious and health aware. So I think as a country gets richer, it develops, people become more conscious and more aware of this. And this is like further accelerated when it's an aging population. Now, if you're buying things for your grandma or whatever, you want to try to make sure it's somewhat healthy. So I think those are two trends that you can definitely viscerally see moving about as a consumer here. And I think that will kind of only continue to pick up.

(28:22) Jeremy Au:

Yeah, I was disappointed to find out how much palm sugar Pad Thai has. Not as if the fundamental carbs in a dish help either. Like I said, I have become older and wiser to this and now I have to be like, it's my sometimes food rather than my always food. And actually what you reminded me is that I think Singapore has also gone through that evolution. So I think on the low sugar side, maybe about 10 years ago. I think one interesting corridor about direct-to-consumer on the Singapore side is that a lot of Singaporean brands are actually selling to the US so instead of say, building Singapore and then kind of going to the rest of the region I think actually a big corridor has been going to the US. So basically they're providing something that's from an American perspective at high quality, but actually a lower price in the US so that's actually quite interesting. Obviously you see Razer, but you also see furniture brands like Castlery that's another one. Then you see your gaming chairs and all of the various players that there is a interesting corridor that's developing with Singapore. So they basically develop a nice brand in Singapore around for the same GDP per capita, but it's transferable. There's a marketing assets and everybody speaks English. And then America has a similar spending power, but has a much larger market size. And so a lot of these brands actually make the transition from Singapore to America, actually.

(29:27) Wing Vasiksiri:

No, I think that definitely resonates. I'm curious from your perspective, do you think there's any advantages of following that playbook and starting in Singapore and expanding to America as opposed to maybe starting off in America right away. Like you mentioned a lot of these brands where it's they're able to build in Singapore and then expand it. Is that strategic or do you feel like most of the time that's kind of more just opportunistic due to the fact that the founders are based there?

(29:50) Jeremy Au:

I would say opportunistic because if you are American and you lived in American high life, you just build in America, right? Whereas if you're like Singapore, based in Singapore, then I think you basically end up building an interesting consumer brand that is doing well, 1 million to 5 million revenue, and then you kind of hit some level plateau and you end up making some decision to be like, do I want to go to the rest of Southeast Asia, which is geographically closer? Different in terms of language and, have a lower GDP per capita, right? Or maybe they can go to a capital city, which is like Jakarta or Kuala Lumpur, Bangkok, which is somewhat closer, but, obviously, it's still not the same. Or, go to the US so I think that's a common decision point for a lot of founders in terms of their market expansion plan.

One interesting piece I think is that The blend for the Singapore consumer brand is about blending a Singaporean slash American train marketing slash brand perspective. It has a product market fit and leveraging the China slash Southeast Asia domestic manufacturing value chain, which allows them to create that, I'll say affordable luxury brand or premium mainstream or mass affluent brand. The hat is that sweet spot, right? Which is, it looks like a luxury product but you know, the price is, good value. So they're not playing the Singapore consumer brands are not complaining for out for the true luxury, like Swiss watches or true lux. So I think that's, I would say the parameters of it.

(31:08) Wing Vasiksiri:

That makes sense. Yeah. And I think you'll definitely see less of that in Thailand. I think Thailand as a consumer market, it's 70 million people population. Reality is maybe like 30 to 40 million people that are kind of like middle to upper middle class that you're able to target maybe a little less than that. And that's the true address addressable market. And that is a decent size where you can expand and build a relatively large business, especially kind of. So maybe that's the main difference with the Singapore ones, what one interesting trend I think you, you saw, and I don't know if you saw this in Singapore, but this was certainly the case in Thailand, especially during the pandemic, you saw all of these D2C brands just pop up and Instagram was the primary storefront,. At least in Thailand, there were two main channels, Instagram, which was used for promotion and then a Line. And I think in Singapore, it's probably WhatsApp, which is used for like customer service, payments, ordering because of the ease of payments with prompt pay, you're able to transact online. But it seemed like everyone I knew had some kind of lifestyle side business going, whether that's making clothes, bags, a lot of them were food, F&B entrepreneurs.

I think only a few who like stuck through it. And wanted to kind of pursue that seriously as a career, went out to raise money or try to build it into a giant business. I think a lot of them are building it more just, for fun, which I'm all for. And I think like all these technological tools that enable you to do that is great for society, kind of giving people more independence, more control over their time and how they self-actualize to building a company and a product. I think that's something that very much resonates with me. But this was one of the trends that I saw pick up over the last couple of years. It's still not clear which are the ones that are going to kind of stick through it and be built into real large scale businesses, but at least top of funnel is very wide in Thailand. A lot of people are starting these things. Some people are hitting on specific consumer tastes and preferences. So I'm just overall excited to see that top of funnel increase and to see how much easier it is now to start that. What do you think?

(32:58) Jeremy Au:

Yeah, I mean, it always blows my mind that Thailand uses Line. It's like WhatsApp is the norm in a lot of Southeast Asia, right? It's like Malaysia, Indonesia so I always find like Line is a fascinating dynamic , but Vietnam as well as its own kind of like uniqueness as well and the Philippines as well. I always find it mind blowing that we don't have a I don't know common messaging service. I mean, but it's interesting to see. Obviously, I think maybe there's a deeper dive in about how it became so, why did certain things or corridors between countries make it happen? I think what's interesting as well, like you said, is the digitization of these things, right? Because I think historically an F&B outlet, if you were to set it up and you had to have waiters and stuff like that, it becomes very expensive, but now, with all this technology with Instagram, you can sell it from home, right?

And then you have online ordering, so you don't have to have a waiter to do it. So I think the lowering cost of some of the friction points. And also I think you've obviously previously done an analysis around like food delivery as well has been a big piece as well for logistics improvements in Thailand. All these things all play out to make it possible for, like I say, a home based business to work. And I think, honestly, I don't feel like it's a bad thing. Like I said, Thailand is different because I think a lot of Singaporean D2C founders would be happy to have a large enough market in Thailand. I mean, the large enough population size to service, right? Because all the Singaporean founders want to say there's an amount of volume. They're like, oh no, we have to expand regionally or some other country, right? So I think it's the grass is greener on the other side.

(34:20) Wing Vasiksiri:

Yeah. I think it's awesome. I think, it's like you have this sandbox where you have all of these conditions coming together, like you mentioned around delivery services, payments, innovation, distribution through Instagram, and then D2C channel through Line or WhatsApp it is. So there's this sandbox and people are experimenting. And it's like a Darwinian survival of the fittest kind of thing, but it's a lot of creativity. It's a lot of people building. So I think it's great. I think it's great for innovation, great for the culture. And I think, the government or whoever else should support these initiatives because I think that really is going to be the backbone of what drives the economy for new things being done, innovate through different distribution channels, different products, different services. Yeah. So that's something that I'm really excited about.

I think something that we touched on in the last episode was, we saw with marijuana when that was legalized in Thailand, kind of the boom of the businesses that came up from there, a similar thing is happening around alcohol, where it used to be that there was a requirement, I believe it was 100,000 liters a year, that you had to produce at least 100,000 liters a year to be able to legally produce and sell alcohol in Thailand. This was dominated by the Thai Bev, a lot of the big companies. There was new legislation that the government passed that basically allows for microbreweries, where if you're brewing and selling intercon zero to a million liters a year, you are able to get that license and you're able to experiment. That's another interesting dislocation that maybe, people are going to start homegrown Thai gin, seltzers, or whatever it is. I think that could be interesting as well. Conflicts a little bit, maybe with kind of what we talked about initially to start off with the aging population. But anytime there's like a dislocation like that, I think it's always worth keeping, keeping your eye on.

(35:55) Jeremy Au:

Yeah, I think it's spot on. And I think a big part of it was that from my understanding was that, the last King wasn't a fan of alcohol. So a lot of this regulation at that point of time was driven by the policy decisions of the administration. But like you said, this is definitely a dislocation in the regulatory approval of both marijuana as well as alcohol over the past five years. So I think lots of opportunities for, direct to consumer founders are willing to take them. On that note, see you next time.

(36:20) Wing Vasiksiri:

All right. Thanks, Jeremy. It's great to chat.