The region’s gross merchandise value (GMV) continues an upward trajectory and is set to reach US$218 billion, growing 11% year-on-year (YoY), according to this year's e-Conomy SEA report - Reaching new heights: navigating the path to profitable growth by Google, Temasek and Bain & Company. Show In addition, revenues of the Southeast Asian digital economy is poised to hit $100 billion this year, growing 1.7x as fast as the region’s GMV, the report added. Southeast Asia’s internet economy is on track to exceed $100 billion this year before tripling by 2025, becoming one of the world’s fastest-growing arenas for online commerce thanks to a youthful population increasingly comfortable with smartphones. The value of online transactions in areas from internet retail to car-hailing should reach $300 billion by 2025, fueled by an existing population of 360 million online users, according to a research report by Google, Temasek Holdings Pte and Bain & Co. The region, home to ride-hailing Grab and Alibaba Group Holding Ltd.’s e-commerce site Lazada, includes four countries Thailand, Philippines, Indonesia and Malaysia in the top 10 globally in terms of time spent by users online, the study showed. Southeast Asia’s digital economy is estimated to reach US$100 billion in revenue in 2023, an eight-fold increase from 2015, according to the 2023 e-Conomy SEA report by Google, Temasek, and Bain & Company. In addition to revenue, transaction values have also grown 11% in 2023 to reach US$218 billion. The overall value of ASEAN’s digital economy is now expected to reach US$295 billion by 2025, a significant decrease from previous estimates valuing it at US$330 billion by 2025. The reassessment comes as private funding in 2023 declined to its lowest level in six years after record highs. Key drivers of continued digital economy growth include increasing engagement of high-value users by e-commerce platforms, growing consumer confidence and transaction sizes, and prioritizing revenue streams that can drive long-term expansion, such as advertising and delivery services. Nascent sectors, such as health and education technology, are also reported to be experiencing growing percentages of deal activity, a signal that investors may be diversifying portfolios. ASEAN’s digital economy is projected to triple by the end of the decade, growing to almost US$1 trillion by 2030. ASEAN member states’ interests in harnessing the power of this market are underscored by commitments to launch negotiations to develop a Digital Economy Framework Agreement, an agreement which aims to double the value contribution of the ASEAN digital economy to unlock US$2 trillion by 2030. Join the Council to continue reading this article Enhance your business impact in Southeast Asia: Become a member of the US-ASEAN Business Council and tap into a network of possibilities. Free Related Articles Membership PlansCorporate Council Corporate membership provides general advocacy support, access to all country- and industry-specific updates, and access to most Council events. Southeast Asia's digital economy is set to deliver US$100 billion in revenue from digital financial services, e-commerce, travel, online media, food and transport this year. The e-Conomy SEA 2023 report by Google, Temasek and Bain & Company notes that digital financial services are expected to be the top contributor with US$30 billion, followed by e-commerce with US$28 billion. In terms of gross merchandise value, the region's digital economy is expected to grow 11 percent year-on year, a lower rate than the 20 percent in 2022.
Unique perspectives from professionals around the world Join now Southeast Asia's digital economies are set to reach $218 billion in total value of transactions this year, jumping 11% from a year ago despite global macroeconomic headwinds, a new report by Google, Temasek and Bain & Company revealed. "Southeast Asia has weathered global macroeconomic headwinds with more resilience, compared to other regions around the world ... Consumer confidence is starting to rebound in second half 2023 after falling to lower levels in first half 2023," said the report titled e-Conomy SEA 2023. The yearly report analyzed the five main sectors of Southeast Asia's digital economy – e-commerce, travel, food and transport, online media and digital financial services. The report also revealed revenue in Southeast Asia's digital economy is expected to hit $100 billion this year, growing 1.7 times as fast as the region's total transaction value. This is because firms are shifting focus from "growth at all costs" to profitability, in a bid to build "healthy" businesses. "Southeast Asia's digital economy is really in the midst of an unprecedented pivot towards profitability. There's now a laser-like focus on high quality revenue and monetization, which, quite frankly, is incredibly healthy," Fock Wai Hoong, head of Southeast Asia at Temasek, said on CNBC's "Street Signs Asia" on Wednesday.  The report covered six major economies: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. It did not address the populations of Brunei, Cambodia, Laos, Myanmar, East Timor and Papua New Guinea. "Keeping the focus on the digital participation gap and resolutely removing barriers to enable more Southeast Asians to become active users of digital products and services will help the region unlock further growth in the digital decade," Sapna Chadha, vice president at Google Southeast Asia, said in the report. Sectors driving growthOnline businesses are moving from acquiring users at high costs, to deepening engagement with existing customers in a bid to steer focus to profitability, the report noted. "Companies and entrepreneurs now realize that the best way to grow is not grow at all costs, and stretch this early stage mentality across a scale, but quite frankly, to transition as quickly as possible through early stage, growth stage and towards more financial sustainability," Fock told CNBC's JP Ong. The report noted e-commerce platforms are focusing more on engaging high-value users, growing transaction sizes as well as looking to revenue streams such as advertising and delivery services to drive long-term growth. The sector's gross transaction value is estimated to hit $186 billion in 2025, up from $139 billion in 2023. As underbanked consumers and small businesses participate in the digital economy, consumer demand has driven digital lending – which the report said comprised the majority of the $30 billion worth of revenue in digital financial services. Singapore is expected to be the biggest digital lending market in the region through 2030. Thanks to a post-Covid recovery, online travel and transport sectors are on track to hit pre-pandemic levels by 2024, according to the report. Despite a return to in-person dining and cutting of promotions, food delivery revenue – which falls under the transport sector – hit $800 million in 2023, jumping 60% from a year ago. Thailand is seeing "significant momentum" where online travel is the main growth driver in 2023, growing 85% year-on-year. Dry powder still on the riseMacro headwinds such as inflation and high cost of capital have caused the deployment of private funding to plunge to its lowest level in six years, the report noted. Despite investors being pickier, "dry powder" increased to $15.7 billion at the end of 2022, up from $12.4 billion in 2021. The report noted the term refers to "the amount of capital that has been committed minus the amount that has been called for investment." "This shows that there is fuel available to propel Southeast Asia's digital economy to the next stage of growth," the report said. To attract funding in this current economic climate, digital companies need to show investors that they have clear and viable paths to profitability. Digital financial services remains the top sector where investors are deploying capital in, due to its high monetization potential. The report also noted that nascent sectors in the region such as health tech, education tech and automotive are seeing "a growing portion of deal activity," in a signal that "investors are diversifying portfolios." What is the internet economy in Southeast Asia 2023?In 2023, the SEA digital economy delivered $100 billion in revenue, growing at 27% CAGR since 2021, 1.7 times faster than gross merchandise value (GMV). E-commerce, travel, transport, and media contributed $70 billion in revenue. What is the top eSimilarWeb estimates Shopee to be the most trafficked online marketplace in Southeast Asia, with 407 million visits in August 2023, followed by Tokopedia with 138 million August visits and Lazada with 129 million. Lazada and Shopee are prominent in most Southeast Asian nations. How big is the digital economy in Southeast Asia?Southeast Asia's digital economies are set to reach $218 billion in total value of transactions this year, jumping 11% from a year ago despite global macroeconomic headwinds, a new report by Google, Temasek and Bain & Company revealed. Is Southeast Asia internet economy to surge to $363 billion by 2025?Online shopping is now forecast to hit $234 billion in 2025 versus a previous $172 billion estimate, making up 64% of the region's total estimated digital GMV of $363 billion, the research shows. |
