SINGAPORE, Oct. 3, 2019 / Today, Google, Temasek and new partner, Bain & Company released its e-Conomy Southeast Asia report for 2019, highlighting the most significant industry trends observed in 2019 and analysing 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 shows 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 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.
This 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.
Here are some key insights from this year’s report.
1) 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 $38 billion today compared with just $5.5 billion in 2015 — and on track to hit $150 billion by 2025.
RideHailing is surging, with 40 million people ordering transport, food and other services on demand, as compared with just 8 million in 2015.
2) 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.
3) 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.
4) 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.
5) 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.
6) 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.
E-commerce is growing by leaps and bounds. Millennial customers are setting new trends whether it is online on-demand services like rides hailing, food delivery, or online shopping; thus, opening scope for businesses to expand digitally. Your business can also drive higher customer engagement and leverage the internet economy by adopting digital tools. Panacea Infotech offers cutting edge ecommerce solutions to keep your business ahead of competitors.