Southeast Asia’s digital economy will hit US$100 billion by the end of this year, representing a 39% leap from the US$72 billion recorded in the previous year. Out of the US$100 billion, US$12 billion (S$16.6 billion) will come from Singapore.
According to the new data from e-Conomy SEA 2019 report (by Google, Temasek, and Bain & Company), which was published on Thursday, October 3, SEA’s digital economy is set to triple to US$300 billion (S$414 billion) by 2025.
The Digital Powerhouse
The report put into numbers what many have seen and felt on the ground in this region which is a digital powerhouse, in spite of the highly diverse market with 360 million Internet users constantly connected primarily on mobile phones.
The digital economies in Malaysia, Philippines, Singapore, and Thailand are rising at an impressive 20% to 30% annual growth rates. Indonesia and Vietnam however, have been going up to more than 40% a year.
The region’s internet sectors are booming, with ecommerce being the biggest and fastest-growing sector. Ecommerce is currently valued at US$38 billion, coming from just U$$5 billion back in 2015. That figure is also expected to rise to US$150 billion by 2025.
“When we look at Southeast Asia, we really only see two speeds: fast and faster (growth),” Google’s SEA managing director, Stephanie Davis, said at a media briefing.
Davis added that the region’s 180 million internet economy users had world’s highest mobile engagement rates, and a gross merchandise volume growth higher than even the US and China.
The Trailblazers in a $12.7 Billion Industry
In Singapore alone, the online food delivery sector doubled in value from to 2018, having reached US$3 billion in 2019, the report shows.
“…From a niche service that was used only occasionally by a small group of users, it has become common for busy professionals and families alike to order food online for everyday meals and special occasions…”
Grab and Gojek blazed the trail in the super-app race in Southeast Asia, with both stepping up their games in ride-sharing, food delivery and e-commerce.
The two companies dominate the ride-hailing industry in the region,
which is now worth an estimated US$12.7 billion (S$17.5 billion). This
can be credited to an increase in dual-income, middle class households
looking for time-efficient solutions for their daily needs.
Unprecedented Growth in Southeast Asia
The report also highlighted that though global economic growth slowed in 2019, Southeast Asia has remained a bright spot as funding continued to flow into the region at a healthy pace. The first six months of 2019 saw internet firms bagging US$7.6 billion, up around 7% from the year-ago period. Companies based in Singapore, have raised more than US$23 billion since 2016.
“Southeast Asia has an incredibly exciting digital economy, as consumers are turning to digital to complete millions of tasks daily, resulting in unprecedented growth. However, there’s more to be done to realize digital’s incredible potential,” said Google SEA managing director Stephanie Davis.
“Whether it’s providing support for small businesses to grow, teaching Southeast Asians digital skill, expanding internet access to more people, or advocating for smart poly and regulation, we’re looking forward to helping bring the benefits of technology to millions more people across this dynamic region.”
The report said that a wide variety of food options, including affordable meals from hawker stalls, led to recurring usage of food delivery services. Other rapidly-growing internet industries identified in the report were e-payments (US$600 billion) and online travel bookings (US$34.4 billion), which was mainly driven by bookings of budget hotels.
Upsized Deal Flows
In addition to the region’s growing internet sectors, deal sizes for startups have also increased in the past year. Data showed that the average deal size at the seed stage has almost doubled from US$500,000 to US$800,000 in 2019. Series A sizes have also doubled to US$4 million this year from US$2 million three years ago.
“Mobile technology is changing the way Southeast Asians work and live; providing them with greater access to new opportunities and markets. This trend is creating attractive investible opportunities in Southeast Asia’s internet economy.”
– Rohit Sipahimalani, joint head of Temasek’s investment group.