SEA internet economy to hit 'inflection' value of $72B in 2018

Southeast Asian internet economy will be worth US$72 billion by year-end, fuelled by increasing number of mobile users and high-growth markets such as e-commerce and ride-hailing, reveals annual Google-Temasek study.
Written by Eileen Yu, Senior Contributing Editor

The Southeast Asian internet economy will be worth US$72 billion by end of 2018 when it hits an inflection point, fuelled by the region's highly engaged mobile users and high-growth markets such as e-commerce and ride-hailing.

In June 2018, the number of internet users totalled more than 350 million across six Southeast Asian markets: Singapore, Thailand, Vietnam, Malaysia, Indonesia, and the Philippines. This figure climbed 90 million from 2015, with more than 3 million in the region logging online for the first time every month.

In addition, more than 90 percent of Southeast Asian consumers connect to the internet primarily through their smartphones, according to the third iteration of Google and Temasek's annual e-Conomy report.

The region's internet economy would hit a gross merchandise value (GMV) of US$72 billion by year-end, encompassing e-commerce, online travel, online media, and rid-hailing services. This represented a 37 percent growth from 2017, surpassing the study's previous projection of 32 percent CAGR (compound annual growth rate) between 2015 and 2018.

In fact, the region will hit an "inflection point" this year as consumer trust in online transactions and operating in an internet economy has made significant progress, driving adoption across multiple sectors, the study revealed.

For instance, it noted that more than 120 million in Southeast Asian would have made an online purchase this year, compared to fewer than 50 million in 2015.

The number of active ride-hailing users also would climb from just 8 million in 2015 to 35 million this year. Some 8 million rides would be consumed each day across 500 cities, the study found, adding that regional players such as Grab and Go-Jek were fuelling the market's growth with the introduction of services that included food delivery. The region's food delivery industry was estimated to be worth US$2 billion this year.

In addition, some 164 million in Southeast Asia would play online games in 2018, up from 130 million in 2015, while 41 percent of travel reservations would be be made online this year, compared to 34 percent in 2015.

The Google-Temasek study, which last year projected the Southeast Asian internet economy to be worth US$200 billion by 2025, now has revised the figure upwards to US$240 billion. The report noted that the region's internet sector, in three years, generated value that was bigger than the GDP (Gross Domestic Product) of more than 100 countries worldwide.

It also would account for 2.8 percent of the region's GDP this year, compared to 1.3 percent in 2015, and would surpass 8 percent by 2025.

The Southeast Asian e-commerce market alone would be worth US$102 billion by 2025, having doubled in value this year from 2017. The industry's three biggest regional players were Lazada, Shopee, and Tokopedia.

These Southeast Asian technology companies were part of a community that raised US$24 billion since 2015, with US$9.1 billion secured in the first half of 2018--compared to US$9.4 billion raised in the whole of 2017.

Some 1.7 million full-time jobs were expected to be created in the internet economy by 2025, according to the study.

Indonesia, the region's largest and fastest-growing internet economy at 49 percent CAGR, would be home to 150 million online users by end-2018 and generate US$27 billion in GMV. The country's internet economy would be worth US$100 billion by 2025, contributing US$4 of every US$10 spent in the region.

(Source: Google-Temasek e-Conomy SEA 2018 report)
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