While the world focuses on China and India as the next big growth grounds for the digital economy, the meteoric growth in the Southeast Asian digital economic sector challenges this very notion. And the challenge perhaps prompted Google to team up with Singapore based investment giant Temasek to publish a report regarding SE Asia’s booming digital economy.
The report predicts that the economy will reach 72 billion USD by the end of this year (surpassing the GDP of over 100 countries in the world). That would mean a 44 % increase from last year’s 50 billion USD and an astonishing 277% increase from 19.1 billion in 2015. And that is not all, Google also expects the market to reach a value of 240 billion USD by 2025, which is over twice what was predicted in previous years.
The report by Google credits this rise to massive expansions in the ride-hailing, online travel and e-commerce market and firm establishment of new markets such as online food delivery, subscription music and VOD (video on demand) in these southeast Asian countries like Indonesia, Singapore, Philipines, Vietnam, and Malaysia. Indonesia, which is currently the 4th most populated country, has the largest share in the market ($27B), followed by Thailand ($12B) and Singapore ($10B).
Daily ride-hailing users in 2018 are up to eight million from 1.5 million in 2015, with monthly users growing to 35 million from eight million during the same time period. Homegrown ride-hailing and food delivery companies like Grab and Go-Jek along with e-commerce companies like Lazada, Shopee, and Tokopedia have benefitted significantly with this growth.
Affordable mobile data and improvements in connectivity have led to more internet users in Southeast Asia; more than 90 percent of them are accessing the world wide web through their smartphones, the report said. 350 million internet users are living in the region. Since 2015, more than three million Southeast Asians, a population bigger than Chicago’s or Madrid’s, have gone online for the first time every month.
This growth also spurs employment opportunities. Google predicts over 1.7 million full-time jobs will be created in the internet economy by 2025 for highly-skilled professionals as well as flexible work opportunities in sectors like ride-hailing.
The report also discusses capital raising landscape in these countries. Billion dollar companies took the lion’s share of these investments. They received 16 billion US of the 24 billion USD invested over the past 4 years. The report constantly maintains that financial growth is only possible if the companies continue to receive sufficient investment. And this becomes a rising concern for the smaller startups, with big companies scooping in all the money.
However, the report also indicates sufficient investors have taken towards smaller companies, with investments in non-unicorns growing four times in the first half of 2018. More than 2,000 internet economy companies in the region have secured investments, with companies valued less than $1 billion able to raise collectively almost $7 billion in the last three years. Google hailed these companies as the bedrock for the flourishing digital economy.