The city’s combination of close proximity to major markets like Indonesia, Vietnam, and the Philippines, deep access to financial capital, and a highly educated population has appealed to tech firms looking to expand their presence in Southeast Asia. COVID-19 has accelerated the growth of Southeast Asia’s growing digital economy, which has approximately 400 million digital consumers and will reach $300 billion by 2025.

Yet Singapore’s status as a startup hub may be under threat from another trait of the pandemic: the shift to remote work. As American Big Tech companies are grappling with a return to the office, startups and VC firms in Southeast Asia are already reevaluating having all their team members in one place. With employees distributed across the region, if not the wider world, Singapore risks becoming less attractive as a place to base operations and hire talent.

“If I’m hiring a program manager for my accelerator program…I could very much be working with a program manager in Malaysia instead of a program manager in Singapore,” Ee Ling Lim, head of APAC Business Development at 500 Startups, said last week at a Fortune Virtual Conversation titled “Fostering the Next Generation of Unicorns.”

“Southeast Asia is becoming a convergence point of different strategies, different capital, to emerge in one region to test out different investment approaches,” said Leo Jiang, chief digital officer for APAC at Huawei Cloud and AI. 

Southeast Asia is “on the map” for international investors, and competition between different VC firms to find the next unicorn will keep the region as “the fastest growth market around the world for many years to come,” said Moses Lo, founder of Xendit, a digital payments platform with operations in the Philippines and Indonesia.

Yet tech founders hoping to enter or expand in Southeast Asia need to avoid seeing the region as one homogenous market. Lo said that founders often give up on Southeast Asian markets “because they thought it was copy-paste, localize some things, change your language, and that should work.” It doesn’t, he said.

COVID-19 has expanded the region’s digital potential, and not just by changing consumer behavior. Edwin Chow, assistant CEO at Enterprise Singapore, argued that COVID measures had encouraged industries that are normally “very resistant to digitalization” to embrace digital tools. Singaporean construction, for example, “can no longer bring in large numbers of foreign workers to actually build the project,” thus forcing them to adopt digital tools to conduct business. 

Yet the panelists recognized that these changes also threaten Singapore’s status as the tech hub for Southeast Asia. 

Lim called the shift to remote work a “wake-up call” for Singaporeans, noting that the cost-benefit analysis around hiring in the city-state changes if she “was able to hire six designers out from Indonesia, all with really good skill sets, compared to one designer in Singapore.” 

Chow agreed, calling the need to adapt to remote work “a real issue.” For Singaporeans, the shift to virtual work means that “the individual, wherever he or she is, is competing globally for that job.” Chow explained that Singapore was investing heavily in schemes to grow a globally competitive talent pool, including one effort to match mid-level professionals with younger tech talent in the hope of creating new startups. “Three months later, [they will] make a pitch to early-stage investors for seed funding. And during that three-month period, the government will pay them a stipend to ease the transition.”

Yet Chow understands that Singapore will need to adapt to the changing times. “We are too small to be able to set the rules of the game. We just have to do our best to live with it.”