Thursday, March 28, 2024

Report: Internet economy in SE Asia worth $100 billion in 2019

A new research report on the “e-Conomy” in Southeast Asia has revealed that the region’s Internet economy has hit a new milestone, reaching $100 billion for the first time this year — a 39-percent increase from $72 billion last year.

The report highlighted the most significant industry trends observed in 2019 and analyzed the current and future potential of the Southeast Asian Internet economy across its six largest markets (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam).

The report also showed the Internet economies in Malaysia, the Philippines, Singapore, and Thailand are growing between 20 and 30 percent annually, but the two pacesetters in the region are Indonesia and Vietnam, with growth rates in excess of 40 percent a year.

The surge across SEA is attributed to the influx of new online users in the region — about 100 million more compared to four years ago. This growing market of customers has incentivized businesses in the region, from established ‘unicorns’ to small-medium enterprises, to adopt and leverage digital tools to expand rapidly.   

As the world’s most engaged Internet users, Southeast Asia is shaping technology trends in its own way. When it comes to services like ride-hailing and food delivery, the region is rapidly growing and the momentum is only going to continue as a new generation comes of age and people outside big cities come online. By 2025, the regional Internet economy will have tripled to $300 billion.

“Southeast Asia has an incredibly exciting digital economy, as consumers are turning to digital to complete millions of tasks daily, resulting in unprecedented growth,” said Stephanie Davis, managing director at Google SEA.

“However, there’s more to be done to realize digital’s incredible potential. Whether it’s providing support for small businesses to grow, teaching Southeast Asians digital skills, expanding Internet access to more people or advocating for smart policy and regulation, we’re looking forward to helping bring the benefits of technology to millions more people across this dynamic region.”

Here are some key insights from this year’s report.

  • Internet businesses have hit new heights — Southeast Asia’s Internet sectors are booming, and this is indicative of the fundamental changes in the way people shop, eat and get around. e-Commerce is the biggest and fastest-growing sector. More than 150 million Southeast Asians are now buying what they need online, and the sector is valued at $35 billion today compared with just $5 billion in 2015 — and on track to hit $150 billion by 2025. Ride-hailing is surging, with 40 million people ordering transport, food and other services on demand, as compared with just 8 million in 2015. 
  • Time is money: competing for user engagement — As the ecosystem matures, Internet economy companies are switching their focus from acquiring new customers to driving higher engagement with existing users. To do so, they are offering a variety of products and expanding into new services including gamified promotions, enticing streaming content, live news and more. Consumers are benefiting from these trends, as they have access to more choices and lower prices.
  • Opportunity is spreading beyond the big cities — Up until now, seven metropolitan areas have made up more than half of Southeast Asia’s Internet economy despite accounting for just 15% of the total population. Between now and 2025, the Internet economy is set to grow twice as fast outside Metros as inside them. This growth will support new jobs and opportunities, increase the need for investments to expand Internet access in less served areas, and drive inclusion of the entire Southeast Asian population into the Internet economy.   
  • Digital Financial Services reach an inflection point with increasing access as a priority — Technology has made financial services more accessible to users in the region, and it is projected to expand further to reach out to 100 million Southeast Asians with limited access to financial services today. Digital Payments is set to grow from $600 billion in 2019 to more than $1 trillion by 2025, accounting for almost one in every two dollars spent in the region.
  • Funding remains healthy despite global headwinds — In 2019, global economic growth has slowed, with the outlook remaining cloudy. But even as global tech funding takes a hit, Southeast Asia has remained a bright spot. Funding flows into the region continued to grow at a healthy pace, from the high base of a record-breaking 2018. The first six months of 2019 saw Internet firms raise $7.6 billion, about 7% more than in the same period in 2018. A growing cadre of “aspiring unicorns” has emerged and they are on the lookout for late-stage funding to scale further.
  • Ecosystem challenges are being resolved — Experts shared that Southeast Asia has made progress in overcoming the initial challenges of the Internet economy by making Internet access more affordable and strengthening consumers’ trust in digital services. However, talent constraints remain a pressing concern, as companies look for skilled workers to take on the influx of new roles created in the digital economy.

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