Southeast Asia’s Internet economy is expected to exceed US$240 billion by 2025, US$40 more than the previous estimate, a new study has showed.
The study, which was released by Google and Temasek, also shows that lower costs enable more consumers to go online using their smart phones.
This year, the region’s Internet economy is expected to hit US$72 billion in gross merchandise value, representing growth of 37% over a year ago. This increase is beyond the 32% compounded annual growth rate (CAGR) recorded between 2015 and 2018.
In Singapore, the Internet economy formed 3.2% of GDP, second only to Vietnam in South-east Asia.
The study, first published in 2016, encompasses e-commerce, online travel, online media, and ride-hailing. Within these areas, new sectors, mainly online vacation rentals, online food delivery, subscription music, and video on demand were added.
Researchers say the growth rate is in largely due to the increasing affordability of mobile Internet. The cost of one gigabyte of data has been more than halved relative to people’s income over the last four years, according to Rajan Anandan, vice-president for India and South-east Asia at Google.
Of the six countries, Indonesia is the fastest-growing. Supported by the largest Internet user base (150 million users in 2018), it has the largest and fastest-growing Internet economy in the region at early 50% compound annual growth rate from 2015 to 2018.
Among the sectors, e-commerce continues to be the most dynamic, and is expected to exceed US$23 billion this year.
The three largest players in the region – Lazada, Shopee and Tokopedia – are estimated to have grown more than seven times collectively since 2015 and are estimated to account for 70% of the market.
Also worth noting is that companies valued between US$10 million and US$100 million raised a record US$1.4 billion in the first half of 2018.
“This is very interesting and it has happened because there are a number of new players that are being attracted to the region,” said Rohit Sipahimalani, joint head, investment group, at Temasek, citing VCs like Seqoia and B Capital.
Separately, online media, which includes online advertising, gaming, subscription music and video on demand, is projected to exceed US$11 billion this year. It is projected to reach nearly US$32 billion in the next seven years.
