SINGAPORE — More than 75% of the population in six major Southeast Asian countries has internet access and a majority of them have shopped online at least once, according to a new report from googleTemasek Holdings and Bain & Company.
As many as 40 million people in Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand came online for the first time this year, according to the report published Wednesday.
That brought the number of internet users in those six countries to more than 440 million people, 80% of whom made purchases online at least once, the report said.
The report did not address the populations of all Southeast Asian countries, and did not include ASEAN members Brunei, Cambodia, Laos and Myanmar, as well as East Timor and Papua New Guinea.
The coronavirus pandemic has sparked a wave of digital services such as e-commerce, food and grocery delivery, and online payment. More than 60 million people in the region were using digital services for the first time because of Covid-19 – with 20 million of them doing so in the first half of 2021, according to the report, which is in its sixth year.
The Road to a $1 Trillion Internet Economy
Most internet sectors in Southeast Asia are resilient to the ill effects of the pandemic, including months of strict lockdown measures, which hit businesses and jobs worldwide.
As the number of people vaccinated against Covid grows, countries have slowly eased restrictions this year to get their economies back on track.
The report predicted that the internet sector in those six Southeast Asian countries could reach $174 billion in gross merchandise value (GMV) by 2021 — a 49% increase from a year ago, with e-commerce making up the bulk of the market. drove growth. GMV is a metric most commonly used in e-commerce that measures the total dollar value of goods sold over a period of time.
In addition to e-commerce, online financial services are also growing in the region as digital payments and e-wallets become more mainstream, the report said. The gross transaction value for digital payments in those six countries this year is projected to be $707 billion, up 9% from last year.
According to Stephanie Davis, vice president of Southeast Asia at Google, e-commerce is expected to remain the largest segment of the Internet economy through 2025 and beyond.
“But we’re also seeing really robust growth in the other categories,” Davis told CNBC’s.Street Signs Asiaon Wednesday. “We expect transportation to make a comeback, we see food delivery remaining strong in the region.”
The muted travel segment — which took a hit as a result of the pandemic — will rebound from next year and return to strong growth by 2025, she added.
All six countries will show double-digit growth this year compared to 2020.
The Philippines leads by a large margin and is expected to record 93% growth in GMV from $9 billion in 2020 to $17 billion in 2021, the report found.
Overall, the internet economy in the six countries is predicted to exceed $360 billion by 2025. According to the report, it could reach somewhere between $700 billion and $1 trillion by 2030 as online shopping becomes the norm.
A thriving deal landscape
More investors are pouring money into Southeast Asia’s internet economy, especially in sectors such as e-commerce and online financial services.
“The world is awash with liquidity and people are looking for growth opportunities in a world without interest rates,” Rohit Sipahimalani, chief investment strategist at Singaporean state investor Temasek, told CNBC’s “Street Signs Asia” on Wednesday.
“In addition, people have been really impressed with the resilience of… [the region’s internet] sector during Covid,” he said, adding that in the past it was mainly private capital that financed companies operating in that space.
“This year is the first time we see many of these companies able to tap into the public markets,” he said.