Southeast Asia’s internet economy is forecast to reach US$1 trillion by 2030, as a lot more people came online for the first time this year for shopping, according to a new report from Google, Temasek Holdings and Bain & Company.
As many as 60 million new internet users across Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand were added to the region’s internet economy since the start of the covid-19 pandemic. Of which 20 million joined the internet economy in the first half of 2021.
That pushed the total number of internet users to 440 million people, representing 75% of the population in the six Southeast nations, leaving out ASEAN members: Brunei, Cambodia, Laos and Myanmar, as well as East Timor and Papua New Guinea.
The surge in internet users was caused by the pandemic, as it influenced the rise in digital services such as e-commerce, food and grocery delivery and online payment.
On the whole, Southeast Asia’s internet sector remained resilient to the negative effects of the pandemic, including several months of massive lockdown which affected businesses and employment globally.
As the effect of the pandemic dwindles, following the vaccination of more people, countries have begun easing restrictions this year to rebound stronger to pre-pandemic levels.
According to the report, Southeast Asia’s online industry is expected to grow from an estimated US$174 billion in gross merchandise volume (GMV) by end-2021 to US$360 billion by 2025, and US$1 trillion by 2030. This is driven primarily by growth in e-commerce and food delivery, as consumers restricted by stay home orders turned to the internet.
Investments in the Southeast Asia internet economy to rise
All six countries covered in the report saw double-digit growth, with Indonesia alone contributing about 40% of the total gross merchandise volume.
The Philippines is leading by a large margin, and is set to post a 93% growth in GMV from US$9 billion in 2020 to US$17 billion in 2021.
“GMV (for Southeast Asia) has increased 49% year-on-year, as seismic consumer and ecosystem shifts accelerated by COVID, continue to drive a massive digital adoption spurt,” said Florian Hoppe, Bain’s Asia-Pacific Head of Digital Practice.
In addition to e-commerce, online financial services in the region are also increasing as digital payments and e-wallets become more main-stream, according to the report. The gross transaction value for digital payments in the six countries this year is predicted to be US$707 billion, up 9% from last year.
E-commerce is predicted to be the leader among the categories of the internet economy through to 2025 and beyond, according to Stephanie Davis, vice president for Southeast Asia at Google.
Investments will rise to all-time high this year as companies intend to flood the region’s markets, the report highlights. The first half of 2021 is already on track to surpass the 2020 full year value as e-commerce and digital financial services continue to attract the largest shares of investments.