Southeast Asia’s Internet economy is on pace to expand 37 percent this year to US$72 billion and is projected to exceed US$240 billion by 2025, according to a joint research report by Alphabet Inc’s Google and Temasek Holdings Pte.
The region’s Internet economy is being fueled by 350 million online users who are buying airline tickets and goods, ordering rides and food with their smartphones across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
The annual research report covers gross merchandise value in four sectors of the Internet economy: e-commerce, ride-hailing, online media and travel.
In last year’s report, Google and Temasek, Singapore’s state investment company, had estimated that the Southeast Asian Internet economy would reach US$200 billion by 2025.
Southeast Asia’s Internet companies this year attracted a record amount of capital from venture capitalists, private equity firms and corporate investors, raising US$9.1 billion in the first six months of the year, compared with US$9.4 billion in all of last year, the report said.
The region’s ride-hailing market is to expand to about US$7.7 billion this year and is expected to reach US$28 billion by 2025, underscoring the ambition of PT Go-Jek and Grab to become Southeast Asia’s super apps, it said.
Google and Temasek began including online food delivery in this category for the first time this year, given the growing importance of the business.
Online travel is the largest and most established among the four sectors of the Internet economy, accounting for about US$30 billion in bookings this year, the report said.
About 41 percent of all travel bookings made in Southeast Asia were completed online, up from 34 percent in 2015, it said.
By 2025, 57 percent of the bookings would be made online when the market is projected to reach US$78 billion, it added.
Online shopping has been the fastest-growing sector of the Internet economy, reaching US$23 billion this year, according to the report.
It is expected to exceed US$100 billion by 2025, it said.
This year has been a “year of transformation” for the ride-hailing services in Southeast Asia as Uber Technologies Inc exited the region after a deal with Grab and Indonesia’s Go-Jek expands outside its home turf, the report said.
Ride-hailing services are popular in Singapore, the second-largest market in the region by value, worth an estimated US$1.8 billion this year, it said.
Indonesia’s Internet economy, the largest and the fastest-growing in the region, reached US$27 billion this year and is poised to grow to US$100 billion by 2025, it added.
Vietnam’s Internet economy is booming as e-commerce this year almost doubled from a year earlier, and online advertising and gaming grew at more than 50 percent, the report said.
Online travel market has “huge headroom for growth,” due to low penetration of online travel bookings in the region, the report said.
This year’s report included the areas of the Internet economy that were not covered in previous research reports, such as online vacation rentals, subscription music and video on demand, and online food delivery.
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