The thrust to digitalise, both among consumers and merchants has accelerated since the onset of the pandemic. A recent report by Google, Temasek and Bain & Company states that the internet economy in ASEAN’s six major economies—comprising Vietnam, Thailand, Philippines, Malaysia, Singapore and Indonesia—will realise a gross merchandise value (GMV) of $1 trillion by 2030.
Southeast Asia has witnessed a phenomenal increase of digital consumers. Comprising 589 million people, the region included 60 million consumers to the digital bandwagon since 2020 and 90% of these consumers intend to continue using a digital service that they first tried in 2020.
This surge in digital consumption, has also prompted the region’s SMEs to adopt emerging technologies. And 1 in 3 of these digital merchants believe that without digital platforms they would not have survived the impacts of the pandemic.
Investment in the region’s internet economy is also on an all-time high. Deal values in the first half of this year is on track to surpass the 2020 full year value. Two sectors, namely the e-commerce and digital financial services sectors, are attracting the most investment and will continue doing so in the future.
Southeast Asia is entering the ‘digital decade’. Let’s take a closer look at the six major ASEAN economies to understand the state of the internet economy in the region.
Indonesia
Indonesia’s internet economy is poised to reach $146 billion by 2025 from $70 billion in 2021 – growing at a CAGR of 20%.
Exhibit 1: Indonesia’s internet economy by GMV ($ billion)
The e-commerce sector will see the most growth in Indonesia, reaching $104 billion in GMV.
Exhibit 2: GMV per sector in Indonesia ($ billion)
Meanwhile, in the first half alone, the deal value in Indonesia has already surpassed the deal values of each of the last four years.
Exhibit 3: Deal value in Indonesia ($ billion)
Malaysia
Malaysia’s internet economy is poised to reach $35 billion by 2025 from $21 billion in 2021 – growing at a CAGR of 14%.
Exhibit 4: Malaysia’s internet economy by GMV ($ billion)
Significant growth is expected in the online travel sector in Malaysia as economies start reopening. Online travel’s GMV is expected to increase at a CAGR of 34%, growing from $2.2 billion in 2021 to $7.3 billion in 2025.
Exhibit 5: GMV per sector in Malaysia ($ billion)
The growth in deal value this year in Malaysia could surpass the deal values of each of the last four years.
Exhibit 6: Deal value in Malaysia ($ million)
The Philippines
The Philippines’ internet economy is expected to reach $40 billion in GMV by 2025 from $17 billion in 2021 – growing at a CAGR of 24%.
Exhibit 7: Philippines’ internet economy by GMV ($ billion)
E-commerce rules the roost in Philippines. The sector is expected to grow to $26 billion in GMV by 2025. This value will be more than the combined GMV of the other three sectors – transport & food; online travel and online media.
Exhibit 8: GMV per sector in the Philippines ($ billion)
The deal value recorded in H1 2021 has already surpassed the deal values of each of the last four years.
Exhibit 9: Deal value in the Philippines ($ billion)
Singapore
The nation-state’s internet economy is expected to grow to $27 billion in GMV by 2025 from $15 billion in 2021, growing at a CAGR of 16%.
Exhibit 10: Singapore’s internet economy by GMV ($ billion)
The e-commerce and online travel sector are expected to record the highest growth reaching $9.8 billion and $8.4 billion by 2025, respectively.
Exhibit 11: GMV per sector in Singapore ($ billion)
Deal value in 2021 is expected to surpass 2020 values; and may well catch up to Singapore’s 2018 deal values.
Exhibit 12: Deal value in Singapore ($ billion)
Thailand
Thailand’s internet economy is expected to reach $57 billion in GMV by 2025 from $30 billion in 2021, growing at a CAGR of 17%.
Exhibit 13: Thailand’s internet economy by GMV ($ billion)
Thailand’s e-commerce sector is expected to grow to $35 billion in 2025, which will be 7x more than that of the transport and food sector’s growth; and 4x more than that of the online travel sector’s growth.
Exhibit 14: GMV per sector in Thailand ($ billion)
Deal values in 2021 looks strong in Thailand, considering similar growth in deal values in H1 2020 and H1 2021.
Exhibit 15: Deal value in Thailand ($ million)
Vietnam
Vietnam’s internet economy is expected to register a CAGR of 29% between 2021 to 2025, growing from $21 billion to $57 billion.
Exhibit 16: Vietnam’s internet economy by GMV ($ billion)
The online travel sector will witness the biggest jump in growth (44%), reaching $5.9 billion in 2025, from $1.4 billion in 2021.
Exhibit 17: GMV per sector in Vietnam ($ billion)
Deal values in Vietnam has skyrocketed, reaching $1,368 million in H1 2021. This growth has surpassed all the deal values of the past four years.
Exhibit 18: Deal value in Vietnam ($ million)
The future is digital
The internet economy of 2030 will be very different as digital will become the norm. E-commerce will become the new way of life. Around half of all retail spend will be done online vs one-tenth of the online spending done today.
E-grocery will take root, being available 24/7 and will most likely grow to the size of the e-commerce market today, which is $50 to $100 billion GMV.
The transport and food sector will unlock new services assisted by automated vehicles, drones and robotics. Meanwhile digital payments will become so embedded, that it will comprise about 70% to 80% of the entire transaction value.
Similar changes will also be noticed on the business side, where merchants will become more accustomed to procure supplies through digital channels. Selling online will become the norm. And merchants will be more acceptable to digital payments. Meanwhile, interacting with digital tools will become an essential part of everyday life.
