Southeast Asia’s Internet economy is on track this year to exceed US$100 billion before tripling by 2025, becoming one of the world’s fastest-growing arenas for online commerce thanks to a youthful population increasingly comfortable with smartphones.
The value of online transactions in areas from Internet retail to vehicle-hailing should reach US$300 billion by 2025, fueled by an existing population of 360 million online users, a research report by Google, Temasek Holdings Pte and Bain & Co showed.
The region, home to ride-hailing firm Grab and Alibaba Group Holding Ltd’s (阿里巴巴) e-commerce site Lazada, includes four countries — Thailand, the Philippines, Indonesia and Malaysia — in the top 10 globally in terms of time spent by users online, the study showed.
Indonesia, the world’s fourth most-populous country with 264 million people, anchors a region that also includes Singapore and Vietnam.
The annual report, previously helmed by Google and Temasek, measures gross merchandise value in e-commerce, ride-hailing, online media and online travel, and has become a prime reference for the region’s Internet industry. Bain joined as a lead partner this year and the study encompassed digital financial services for the first time.
E-commerce remains the brightest spot in Southeast Asia’s Internet economy. Aided by online festivals for attractive deals, in-app entertainment and faster delivery, the market is projected to quadruple from US$38.2 billion this year to US$153 billion by 2025.
The bulk of that growth would come from Indonesia, where the e-commerce market is poised to expand from US$21 billion to US$82 billion.
The regional ride-hailing market is projected to reach US$40 billion by 2025 from US$12.7 billion this year, propelling sector leaders Grab and Gojek.
Both see food delivery as a key driver of growth and profitability, which in turn would intensify competition with meal delivery companies such as Foodpanda and Deliveroo.
Vietnam is emerging as the most digital of all economies in the region, with the gross merchandise value of its Internet economy set to account for more than 5 percent of the country’s GDP this year, compared with a 3.7 percent share for Southeast Asia.
E-commerce is a key driver behind the boom in Vietnam, where homegrown marketplaces such as Sendo and Tiki compete with regional players, including Lazada and Shopee, which is backed by Tencent Holdings Ltd (騰訊).
Digital payments are moving into the mainstream and expected to exceed US$1 trillion by 2025. Of the 400 million adults in Southeast Asia, 98 million are “under banked” — people with bank accounts, but limited access to other services such as credit — and another 198 million have little recourse to finance whatsoever.
Those expectations of heady growth are helping to attract investors, despite global headwinds.
Southeast Asia’s Internet companies raised US$7.6 billion in the first six months of this year, up from US$7.1 billion a year earlier, the study showed.
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