Southeast Asia’s internet economy to exceed $240bn by 2025

Southeast Asia’s internet economy to exceed $240bn by 2025 –Study

A total of six economies - the region's largest - have been covered in the report.

The report by Google credits this rise to massive expansions in the ride-hailing, online travel and e-commerce market and firm establishment of new markets such as online food delivery, subscription music and VOD (video on demand) in these southeast Asian countries like Indonesia, Singapore, Philipines, Vietnam, and Malaysia.

The study focused on four sectors within the digital economy and found that the online travel industry will be responsible for the most significant chunk of the estimated US$72 billion in revenue.

The Vietnamese internet economy (US$9 billion in 2018, 38% CAGR in 2015-2018), compared in the study "to a dragon being unleashed", has nearly tripled in three years thanks to ecommerce and online media.

However, the recent exponential growth of Southeast Asia in the internet economy is giving analysts and observers something else to ponder.

It added that Southeast Asia's internet economy "experienced a dramatic surge in fundraising over the last four years", accumulating a total investment of US$24 billion.

The annual study, authored in latest edition is considered to be the most comprehensive research program for tech in Southeast Asia.

Moreover, Indonesia, the world's fourth largest country by population, is anticipated to reach around $100 billion by 2025, ahead of Thailand $43 billion, and Vietnam $33 billion with strong growth forecast across the board. There are now 350 million connected internet users living in the region, which is an increase of more than 90 million since 2015.

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This new "inflection point", as the study calls it, has made Google and Temasek raise their initial estimation of growth which was US$200 million in the next seven years to US$240 million.

The GMV of e-commerce in the region will exceed United States dollars 23 billion in 2018, the report said, and rise more than four times to exceed USD 100 billion by 2025, helped by increased consumer trust.

The most dynamic sector of the internet economy over the past three years has been e-commerce.

E-commerce will account for US$23 billion, followed by online media, and ride-hailing services with US$11 billion and US$8 billion respectively. It is expected to exceed US$100 billion by 2025. They have also gained popularity among a younger workforce due to their flexibility and the opportunities they offer partners who want to supplement their income to cover costs (e.g. from owning or renting a vehicle). In 2015, funding by venture capitalists, private equities and corporate investors crossed the US$1 billion mark.

The achievement was driven primarily by the boom of e-commerce in the region, particularly by the performance of Lazada, Shopee, and Tokopedia which are homegrown in the region.

It is also worth noting that Grab is the region's first decacorn (company with US$10 billion-plus valuation), and took the lion's share of the investments (US$6 billion). Companies in the rest of South-east Asia raised US$2 billion.

The Philippines also has the lowest adoption of digital payment services in the region at 21%, with only only one in five internet users in the Philippines using these services.

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