Southeast Asia’s internet economy to breach $100b this year, joint study shows

Southeast Asia’s internet economy will reach US$100 billion by the end of this year, representing a 39% leap from the US$72 billion recorded last year, new data from Google, Temasek, and Bain & Company shows.

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The e-Conomy SEA 2019 report attributed the upturn to the surge in online users in the region, which is estimated to be around 360 million currently – an increase of 100 million since 2015.

While the internet economies in Malaysia, the Philippines, Singapore, and Thailand are rising at an already impressive 20% to 30% annually, growth rates in Indonesia and Vietnam have been going up to more than 40% a year, the report shows.

The region’s internet sectors are booming, with ecommerce being the biggest and fastest-growing sector. Ecommerce is currently valued at US$38 billion, coming from just U$$5 billion back in 2015. That number is also expected to rise to US$150 billion by 2025.

A previous study by online shopping aggregator iPrice Group and app analytics company App Annie found that Alibaba-owned Lazada had the most number of monthly active users as of Q1 2019 in Southeast Asia, followed by Singapore-based Shopee.

Lazada Group chief executive Pierre Poignant also recently said that the company has more than 50 million active buyers annually, making it the top ecommerce player in the region.

Another thriving sector in the region is ride-hailing, which got a boost from food delivery services. It’s Southeast Asia’s second-best performing sector, with a value of around US$12.7 billion, quadrupling from US$3 billion in 2015. Ride-hailing also has the potential to surpass US$40 billion in 2025.

In Singapore alone, the online food delivery sector doubled in value compared to 2018, having reached US$3 billion in 2019, the report shows.

Archrivals Grab and Gojek have been battling it out in the super-app race in Southeast Asia, with both stepping up their games in ride-sharing, food delivery, and other services.

The region’s digital payments segment has also been on the rise, becoming the form of payment for nearly one in two dollars spent in the region. The sector is expected to hit US$1 trillion by 2025, with e-wallets accounting for over US$22 billion this year and likely to grow 5x by 2025.

Digital lending is also on track to build a US$110 billion loan book by 2025, driven by growth in consumer and SMB lending.

According to the study, recent innovations have made financial services more accessible to users in the region and is expected to reach 100 million Southeast Asians with limited access to financial services today.

“Mobile technology is changing the way Southeast Asians work and live; providing them with greater access to new opportunities and markets,” said Rohit Sipahimalani, joint head of Temasek’s investment group. “This trend is creating attractive investible opportunities in Southeast Asia’s internet economy.