Southeast Asia’s internet economy is forecast to reach $1 trillion by 2030, according to a new report by internet giant Alphabet, the Bain & Company consultancy and Singapore state investor Temasek Holdings.
The online sector is expected to grow from an estimated $174 billion in gross merchandise volume (GMV) by the end of 2021 to $360 billion by 2025 and $1 trillion by 2030.
The fast growth is due to a relatively young population, rapid smartphone usage, increasing urbanisation and a burgeoning middle class. E-commerce and food delivery are the dominant sectors as consumers stuck at home turn to the internet.
The report said the region had added 60 million new internet users since the start of the coronavirus pandemic, taking the total to 440 million. Southeast Asia, it said, was one of the world’s fastest growing internet markets.
“Early adopters have deepened usage – pre-pandemic users are consuming four more digital services than they did before 2020 – and the 60 million consumers who joined since the pandemic started are here to stay, with 9 in 10 who tried a new digital service in 2020 continuing to use the service in 2021,” the report noted.
Doubling by End of Year
The report, which covers Indonesia, Thailand, Vietnam, Singapore, Malaysia and the Philippines, found that e-commerce GMV is expected to nearly double to $120 billion by the end of the year and reach $234 billion by 2025.
All countries covered experienced double-digit growth in 2021, with Indonesia contributing 40% of Southeast Asia’s total GMV at $70 billion. The Philippines saw 93% growth, becoming a $17 billion digital economy.
“GMV (for Southeast Asia) has increased 49% year-on-year, as seismic consumer and ecosystem shifts accelerated by Covid-19, continue to drive a massive digital adoption spurt,” Florian Hoppe, Bain’s Asia-Pacific head of digital practice, said.
The optimism was boosted by the region’s solid economic underpinnings, researchers noted. “Strong growth fundamentals, successful exits and supportive regulations have sparked an inpouring of global capital into Southeast Asia at an unprecedented scale.”
The research combines Bain analysis, Google Trends, Temasek research, industry sources and expert interviews to shed light on the internet economy in Southeast Asia.
• George Russell
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