Thanks to affordable mobile internet, the internet economy in Southeast Asia is expected to surpass $240 billion in 2025, according to a new study conducted by Google and Temasek Holdings of Singapore.
According to the study — which looks at ride-hailing, eCommerce, online media and online travel in Singapore, Indonesia, Malaysia, Vietnam, Thailand and the Philippines — the internet economy will end this year with a market value of about $72 billion, which is 37 percent higher than a year earlier on a gross merchandise value basis. Indonesia, which has the biggest and quickest growing internet economy, is forecasted to reach $100 billion by 2025, accounting for 40 percent of the spending. The report noted that in Southeast Asia, greater than 90 percent of internet users connect via smartphones. Combined, the six countries have 350 million internet users, which is up from 260 million in 2015. “While the internet economy is growing in all six Southeast Asian countries covered in our research, the stage of development relative to the size of each country’s economy differs. It is most developed in Vietnam, where the GMV of the internet economy is 4% of the country’s GDP, and it has the most room to grow in the Philippines, where it reaches 1.6% of GDP. Singapore, where the internet economy is 3.2% of its GDP, ranks second in Southeast Asia, although it still lags behind markets like the U.S. or China,” Google and Temasek wrote in the report.
The study also found that online shopping has emerged as the fastest growing segment of the internet economy in Southeast Asia, with sales projected to surpass $23 billion this year. The report predicted the market would swell to more than $100 billion by 2025 as consumer trust in online shopping grows. The report predicted the growth would be led by Indonesia, which is already in the lead. The ride-hailing sector in Southeast Asia is expected to hit $7.7 billion this year and grow to $30 billion by 2025.
The region is also seeing a surge in fundraising on the part of internet economy companies over the last four years with Google and Temasek predicting this year will be a record with $9.1 billion already raised in the first half of the year. That is close to all of 2017. “With the total capital raised adding up to $24 billion in less than four years, Southeast Asia is progressing ahead of schedule towards the goal of attracting the $40 to $50 billion worth of investments that we estimated would be required to build the internet economy by 2025,” the companies wrote in the report.