Tuesday, 18 December, 2018

Three Charts That Explain Boom in Southeast Asia's Net Economy

Southeast Asia’s internet economy to exceed $240bn by 2025 –Study Three Charts That Explain Boom in Southeast Asia's Net Economy
Sandy Mccarthy | 21 November, 2018, 07:31

Indonesia - home to Go-Jek - was the largest and fastest growing market for this sector out of all the Southeast Asian countries, with a value of US$3.7 billion in 2018.

The three largest ecommerce companies in the region - Lazada, Shopee and Tokopedia - have played a critical role in the development of the sector.

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.

The GMV of e-commerce in the region will exceed 23 billion dollars in 2018, the report said, and rise more than four times to exceed 100 billion dollars by 2025, helped by increased consumer trust.

Affordable mobile data and improvements in connectivity have led to more internet users in Southeast Asia; more than 90 percent of them are accessing the world wide web through their smartphones, the report said.

Southeast Asia's internet sector is forecasted to be more than $240 billion-worth economy by 2025, according to the e-Conomy SEA Reports 2018 released on November 19 by Google and Temasek, a Singaporean holding economy owned by the Government of Singapore.

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. This represents a growth of 37 percent from the previous year and has accelerated beyond the 32 percent compounded annual growth rate (CAGR) recorded between 2015 and 2018.

The annually published report predicted that the online economy will hit $72bn by the end of 2018, an increase from the $50bn of 2017 and $19.1bn in 2015.

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The region's ride-hailing market will expand to about $7.7 billion in 2018 and is expected to reach $28 billion by 2025, underscoring the ambition of Go-Jek and Grab to become Southeast Asia's super apps. "There are also start-ups coming out of Singapore into the region and this creates new employment opportunities in the Internet economy", he added.

The report is a multi-year research project that aims to shed light on Southeast Asia's internet company by covering four key sectors: online travels, online media such as gaming and subscription music, ride hailing in terms of transport and food delivery, and e-commerce. Following this trend, Southeast Asia is set to attract between US$40- to US$50 billion worth of investments which is required to build a robust internet economy by 2025.

It is also worth noting that Grab is the region's first decacorn (company with US$10 billion-plus valuation), and took the lion's share of the investments (US$6 billion). Over 2,000 internet companies in the region have secured investments.

"Amongst them, the most dynamic segment was that of companies valued between US$10m and US$100m", the firms said.

In the report, authors Rajan Anandan, vice president for Google India and Southeast Asia, and Rohit Sipahimalani, head of the investment group for Singapore's Temasek, noted that the region is actually beating analysts estimated timeline for the success of its digital economy.

Separately, 2018 is turning out to be a record year for fundraising, with US$9.1 billion raised in the first half of the year, almost as much as all of 2017.

Google released the report with Temasek.

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