Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Could 2017 be the year of the Southeast Asian startup?

There's a lot to suggest that might be the case, with big names from 500 Startups Management Co. to Google Inc. talking up the region.

Its potential to grow into a $200 billion internet economy "is an idea whose time has come," Sajith Sivanandan, who oversees Malaysia, Vietnam, the Philippines and new emerging markets at Google, said at Bloomberg's Asean Business Summit in Hanoi last week.

Google has been keen on Southeast Asia for a while, with research it conducted alongside Temasek Holdings Pte pointing to an e-commerce increase of 16-fold to $88 billion by 2025.

500 Startups, meanwhile, one of the region's most prolific venture-capital firms, is set to add the Philippines to its list of nations with microfunds after making $10 million pools of cash available for new businesses in Thailand and Vietnam.

There are a few challenges, though.

One of them is broadening the scope of investment. To date, the big money has gone to startups in the richest nations (Singapore) or the largest (Indonesia), according to data from CB Insights.

Start Me Up
Two countries got most of the big money in Southeast Asia
Source: CB Insights
Note: Data as of 16 Aug. 2016.

That's nothing to get too concerned about. It makes sense from both an economic and logistical point of view for those two nations to attract the early interest. However, to really transform the region into a startup hub, that money needs to spread more widely.

Another challenge is moving past the copycat culture. The three most-funded startups in the region include a ride-hailing app and two online retailers, not exactly groundbreaking ideas.

Again, don't sweat it. Mimicry is not only the sincerest form of flattery, it's also the first step to innovation. Boffins and tinkerers often start by pulling apart the objects of their desire, figuring out how they work, and then trying to build one themselves. Accuse the Chinese tech giants of today of being mere copycats and you'd miss the incredible amount of innovation they've added to cater for local tastes. Indonesia's Go-Jek, which now has fleets of motorbikes, cars and trucks, is another example of clever expansion via innovation.

Then there's the final hurdle, which is connecting disparate economies so that doing business is made easier. As it stands, a successful Singapore venture needs to virtually start over if it wants to cross the border into Malaysia, where different regulations, taxation and customs restrict the flow of goods, services and capital.

Get Off of My Cloud
Foreign direct investment into Asean nations fell last year, although it was buoyed slightly by intra-regional flows
Source: The Association of Southeast Asian Nations website

Political leaders are recognizing that challenge and appear to be tackling it. Speaking at the Bloomberg summit, Malaysia's Trade Minister Mustapa Mohamed said the region is making progress on reducing barriers, such as cross-country certification of products and services. Vietnam's Prime Minister Nguyen Xuan Phuc warned of a return to more protectionist policies in the face of tighter U.S. trade barriers during a Donald Trump presidency.

Talk by politicians is no guarantee of action, but the maxim of the first step to fixing a problem certainly applies. If business and political leaders commit to tackling the challenges, 2017 will be the year Southeast Asian startups come into their own.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net