The Underserved Markets of Asia

By Dr Thomas Tang & Freda Tong
Investor Hothouse Forum

Download the full position paper here

Introduction

The financial crisis and its devastating effects dominate the headlines and have forced many to question the future of capitalism. It is a clear example of how, through overleveraging and creating asset bubbles, money has been put to poor use to benefit a few, and to cheat and to deceive others. But, on the other hand, it is also a truism that money can, and must, be put to good use. With ever pressing concerns emerging on the sustainability agenda - climate change, food shortage, water resource constraints and social inequities to name but a few - these are the real challenges of our times which surely merit investor attention.

Yet, despite the strong growth of so-called “social investing” and the promising market prospects, the social investment landscape, particularly in Asia, is dotted with cases of investors who have put in sums of capital – some sizeable - into projects that look attractive but have failed to live up to the expectations of investor and investee.

The former are looking at applying wealth to good causes (often with a philanthropic leaning), whilst the latter are commonly social entrepreneurs seeking capital to deliver on their mission and business (but often without the management expertise). It would appear, at first sight, that with such an obvious match between a supply of finance from well-meaning parties and burgeoning demand for funding from mission-driven agents to carry out their work, this is a recipe for success. But, the failures, which seem to outweigh the successes, are incongruent with this. At the same time, many social enterprises are unable to obtain the funds or loans, in part due to investors, and lending banks too, not spotting or not being aware of the potential for opportunities that are ripe.

The disconnect between investor and investee parties can perhaps be best explained by the fact that whilst lack of funding is an issue, it is not the main problem; rather it is strategic application of funding and the knowledge of how to do so that is the key to unraveling this maze of opportunities.