According to the latest report by Google, Temasek Holdings Pte and Bain & Co., Southeast Asia’s booming internet economy is expected to double to $363 billion by 2025, surpassing the previous forecast of $300 billion.
Among the industries driving the region’s digital growth are e-commerce, travel, media, transport and food, with online spending rising 49% in 2021 to $174 billion. Moreover, since the beginning of the pandemic, the number of new digital consumers dramatically increased to 60 million consumers, led by Thailand and the Philippines.
Buying groceries and other essentials from the likes of Lazada’s RedMart and Sea’s Shopee will contribute a 62% increase in e-commerce gross merchandise value (GMV) in Southeast Asia this year. The research shows online shopping will hit $234 billion in 2025 compared to a previous $172 billion estimate, making up 64% of the region’s total estimated digital GMV of $363 billion.
Stephanie Davis, vice president at Google Southeast Asia, said “We continue to see users come online at a blistering pace”. Moreover, she added, “Digital consumerism has really taken hold since the pandemic. We’re seeing a digital decade ahead of us in Southeast Asia and a possibility of $1 trillion economy in the digital space by 2030.”
Internet boom
Southeast Asia’s online spending is increasing as a result of e-commerce.
In the first half of 2021, deals for internet startups in Southeast Asia totaled $11.5 billion, putting the region on track to excel the $11.6 billion investment in all of 2020. Some of the region’s most valuable tech startups such as Grab Holdings Inc. and GoTo are gearing up to go public in order to raise capital or allow early investors to monetise their investments.
Rohit Sipahimalani, chief investment strategist and head of Southeast Asia at Temasek, said during a virtual press conference, “2021 has been a record for investments in Southeast Asian net economy”. Moreover, he added, “the world is awash with liquidity and looking for investment opportunities in low interest-rate environment but it’s also because people have seen the resilience of the sector to Covid.”
Indonesia is leading the region’s booming internet economy, with online spending expected to double to $146 billion by 2025. The latest report also found that venture capital deals in Indonesia in the first half of 2021 surpassed the full-year totals of each of the past four years. Meanwhile, Vietnam is predicted to grow at the fastest rate among the six countries tracked by the study, nearly tripling in online GMV over the next four years.
Southeast Asia’s booming internet economy
In terms of digital economies, Vietnam and the Philippines have grown the fastest.
The Indonesian market has the potential to become twice as big as the whole of Southeast Asia by 2030. Although each of the markets does have significant growth potential over the next decade.
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