Southeast Asia’s internet economy is expected to exceed US$240 billion by 2025, a fifth more than previously estimated, as more consumers use their smartphones to go online.
The joint study from Google and Temasek first published in 2016, encompasses ride-hailing, ecommerce, online travel and online media. The latest report, released this week, adds new sectors such as online food delivery, as well as subscription music and video on demand.
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It estimated that the gross merchandise value (GMV) of the region’s internet economy has reached US$72 billion in 2018, rising 37 per cent from the year earlier.
The GMV of ecommerce in the region will exceed US$23 billion in 2018, the report said, and rise more than four times to exceed US$100 billion by 2025, helped by increased consumer trust.
It credited ecommerce companies – Alibaba Group’s Lazada, Sea’s Shopee, and Indonesia’s Tokopedia – for helping develop the sector.
The report estimated that the GMV of the competitive ride hailing sector, with the addition of online food delivery, has reached US$7.7 billion in 2018.
“Powered by the ambitions of Go-Jek and Grab to become Southeast Asia’s ‘everyday apps’, we project that ride hailing will reach almost US$30 billion by 2025,” according to the research authors.
Both Alphabet’s Google and Singapore state investor Temasek have invested in Go-Jek. Temasek-backed Vertex Ventures is an early investor in Grab.
The Indonesian internet economy is forecast to grow to US$100 billion by 2025, accounting for US$4 of every US$10 spent in the region, the report said.
It added that 2018 was on track to be a record year for fundraising for the region’s internet economy companies, with US$9.1 billion raised in the first half of the year, nearly as much as in all of 2017.
The research covers Southeast Asia’s six largest economies – Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
The growth is being boosted by the world’s most engaged internet users, of whom more than 90 per cent connect to the web through their smartphones, according to the report.
The report said the increasing availability of affordable smartphones and the rollout of faster and more reliable mobile telecommunication services were supporting Southeast Asia’s growing internet user base.