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11 Apr 2018 Updated 13 Dec 2018

Latin America's digital economy beckons; will Singapore outfits go?

The Business Times Jacquelyn Cheok

GETTING there can be a hassle - taking up to 24 hours by plane. Communication will be a bother - with most people there speaking only Portuguese or Spanish. But despite these challenges, the Latin American region is an increasingly important one for Singapore tech companies, The Business Times has learnt.

Benedict Koh, regional director for Latin America and the Caribbean at Enterprise Singapore, told BT in a recent interview that if Singapore companies "act fast", they stand to gain early mover advantage in Latin America's growing digital economy.

Mr Koh said: "With Latin America waking up to the call of digitalisation, its digital economy is growing steadily, presenting immense opportunities for Singapore companies. The private sector in Latin America is actively seeking tech solutions to improve and optimise business operations, but in-market solutions are still nascent and in short supply."

Singapore companies can fill this gap, especially in e-commerce, fintech and healthcare - sectors that are right up Singapore's alley, he said.

In e-commerce, Singapore companies can provide services such as visual analytics and big data analytics to "enhance" Latin American e-marketplaces, or comprehensive solutions to help the region's retailers "move online". Latin America's e-commerce market is the fastest growing market globally, forecast to grow from S$77 billion in 2017 to S$154 billion in 2021, Mr Koh noted.

In fintech, Singapore companies can offer financial services for the region's unbanked population, such as allowing the unbanked to access credit and gain credit history through peer-to-peer loans, and conduct payments and money remittance through their smartphones. Singapore firms can also provide banks with artificial intelligence solutions to optimise banking processes.

"In Brazil, 60 million people are unbanked. In Mexico, more than 60 per cent of the population above 15 years old do not have a bank account. The demand for fintech can also be seen through the funding of startups, with the deal count for fintech increasing by 81 per cent in 2016."

In healthcare, Singapore companies can deliver business-to-consumer telehealth solutions that will make healthcare more affordable for patients, or business-to-business solutions that will allow customised healthcare and insurance programmes, and more efficient matching of needs to insurance packages.

"With rapidly rising healthcare and health insurance costs, there is demand for solutions that can improve healthcare efficiency to bring costs down. Many private companies are seeking such solutions to combat healthcare costs for employees."

Asked why there is room for Singapore companies to exploit Latin America's growing digital economy, given the proximity of competing US companies to the region, Mr Koh said that Latin America's tech landscape is currently "fragmented and large enough to accommodate more solution providers", thus ensuring an early mover advantage for Singapore companies that "enter now".

As for the distance problem, Mr Koh said tech is borderless. "Geographical distance means little to tech businesses since many solutions can be provided over the cloud. Cloud solutions also speed up the implementation of the solutions, reducing project lifecycles and making projects more scalable."

Singapore companies enjoy a few advantages, Mr Koh added. One is that they tend to offer "niche, quality solutions that are cost effective", unlike large, traditional enterprise software solutions providers that target the mass market.

"Secondly, solutions by Singapore companies have "higher accuracy rates" than generic solutions offered for the mass market by other software companies.

"Latin American companies also recognise Singapore as being strong on intellectual property, data privacy and reliability, hence they have confidence in our companies' solutions."

His advice to Singapore companies?

Focus on Brazil and Mexico, which are among Latin America's largest and most tech-savvy markets. Also, target the private sector when offering solutions, because digitalisation efforts in Latin America are largely driven by private companies.

"As the market becomes more receptive to innovative solutions, private companies in the same industry will compete and seek quick demonstrative deals, resulting in a shorter project cycle for tech solutions providers."

Oliver Tan, chief executive officer of Singapore-based artificial intelligence startup ViSenze, affirmed that Latin America holds opportunities for Singapore tech companies with its "huge consumer markets".

He told BT: "Latin American e-commerce markets are hungry for new tech. They don't want to be left behind. In Brazil for instance, one can hold a fairly sophisticated conversation with online retailers about using artificial intelligence and data science. They get it quickly.

"If Singapore startups were to spend some time investing in these markets, they can ride the growth wave of market adoption of supporting technologies. I also observed that more US retailers and retail-tech companies are taking an active interest in Latin America now, which reflects the potential of this region."

That said, Mr Tan is cognisant of the distance and language challenges of venturing into Latin America. "You need local hires. You need local partners. You need localised knowledge. Each market is different. In terms of distance, it's a bloody big geography!"

ViSenze has reportedly secured major retail clients in Latin America, where it has sales representatives and partners. Founded in 2012, the startup develops advanced visual-search and image-recognition solutions for e-commerce, retail and content publishing firms.

Mr Tan urged: "So you shouldn't spread your resources too thin. Start by anchoring yourself somewhere, gain market knowledge quickly, win some trophy clients to prove yourself, and then build your network from there."

Feeling inspired? We are looking to partner willing and ready companies to enter Latin America's digital economy. Please contact us at enquiry@enterprisesg.gov.sg

Source: The Business Times© Singapore Press Holdings Limited. Reproduced with permission.