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Southeast Asia's internet economy to reach US$1 tril by 2030: Google, Bain & Temasek report

Jovi Ho
Jovi Ho11/10/2021 10:46 AM GMT+08  • 5 min read
Southeast Asia's internet economy to reach US$1 tril by 2030: Google, Bain & Temasek report
On the day Singapore announced VTLs with Germany and Brunei, search trends for Germany jumped 700%.
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Southeast Asia enters its “digital decade” as the internet economy is expected to reach US$1 trillion in gross merchandise value (GMV) by 2030.

According to the latest e-Conomy Southeast Asia (SEA) Report released on Nov 10, the region’s internet economy is projected to reach US$360 billion by 2025, up from the previous US$300 billion forecast made in 2020.

By the end of this year, Southeast Asia is estimated to reach US$174 billion in GMV, propelled by a growing base of digital consumers and merchants, and acceleration in e-commerce and food delivery,

Some 40 million new internet users came online in 2021, bringing the internet penetration in Southeast Asia to 75%. Eight in 10 of these users have purchased something online at least once.


See: Post-lockdown, eight in 10 Southeast Asians think tech is helpful: e-Conomy SEA Report 2020

See also: Southeast Asia's internet economy to triple to over US$300 bil by 2025: e-Conomy SEA Report 2020

See also: China's understated moves on e-CNY belies its potential sway

The region now has more than 440 million internet users. Since the pandemic began, some 60 million new digital consumers have bought something through the web, a third of them doing so in 1H2021 alone.

The annual e-Conomy SEA Report sheds light on the internet economy in the region, covering Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

See also: From supply chain to supply loop

In 2021, all the countries covered in the report experienced strong, double-digit growth. Indonesia contributed 40% of the region's total GMV at US$70 billion, while the Philippines grew 93% to become a US$17 billion digital economy.

Compiled by Google, Temasek and Bain & Company, the sixth edition of the e-Conomy SEA Report 2021 provides a 10-year outlook for the first time.

Last year’s headline figure projected Southeast Asia's internet economy to triple to over US$300 billion by 2025.

Singapore’s digital economy

The internet economy in Singapore has seen a rebound in 2021 and is expected to grow 35% to US$15 billion from US$11 billion last year. Two-thirds of GMV growth is led by e-commerce, which grew 106% y-o-y.

Looking ahead, Singapore’s internet economy has the potential to reach US$27 billion in 2025.

To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section

Overall, Singapore has the highest proportion of digital consumers out of all internet users at 97%, as compared to the region’s average of 80%.

Its digital merchants are also more inclined to deepen usage of digital services. Travel is showing early signs of recovery, with a 28% increase from US$1.8 billion in 2020 to US$2.3 billion in 2021, boosted by the gradual easing of restrictions such as Vaccinated Travel Lanes (VTLs).

On the day Singapore announced VTLs with Germany and Brunei, search trends for Germany jumped 700%.

Investor interest also recovered, as the region’s deal value reached US$4.3 billion in the first half of 2021 due to the interest in SPACs and the government’s focus on making Singapore the listing destination of choice.

Land of the unicorns

This year, greater deal activity and larger valuations brought 11 consumer technology unicorns to the fore, taking the total to 23.

Deal value came up to US$11.5 billion in 1H2021, surpassing the US$11.6 billion for the entire 2020.

“Investors see Southeast Asia as a lucrative investment destination for the long-term, especially in sectors such as e-commerce and digital financial services, which continue to attract the majority of investments at more than 60% of deal value,” reads the report.

More tech companies are exploring IPOs to raise capital or allow early investors to monetise their holdings, especially in view of strong valuations and novel listing approaches, such as special purpose acquisition companies (SPACs).

Sectoral outlook

By 2025, digital payments are forecasted to reach over US$1.1 trillion in gross transaction value (GTV), up from a forecast of US$707 billion in 2021.

Digital lending could see a 50% increase in outstanding balance from US$26 billion in 2020 to $39 billion in 2021, led by a rebound in lending appetite and growth in usage of “buy now, pay later” services.

E-commerce is expected to propel the Southeast Asia internet economy forward in the next decade. In a strong lead-up to 2030, e-commerce GMV could exceed US$120 billion by end 2021 — a near doubling from 2020 — with the potential to reach US$234 billion by 2025.

The food delivery sector emerged as a bright spot, growing 33% y-o-y to reach US$12 billion in GMV. It has now become the most penetrated digital service, with 71% of all internet users ordering meals online at least once.

While online travel growth remains muted, it is likely to see a recovery in the medium-to long-term, driven by pent-up demand and vaccination progress, reads the report.

Online media witnessed a healthy 32% growth to US$22 billion in 2021. In particular, the pandemic ushered in a new generation of gamers, bringing with them a willingness to spend.

Rohit Sipahimalani, chief investment strategist and head of Southeast Asia at Temasek, says: “The pandemic has led to accelerated and enduring digital adoption in Southeast Asia, which has propelled its internet economy to new heights. Temasek looks forward to increasing our investments in the region’s digital champions, using our capital to catalyse solutions and growth that will enable these companies to take maximum advantage of the digital decade.”

"The phenomenal growth we see in Southeast Asia reinforces our view that the region will define the future of global digital ecosystems,” says Stephanie Davis, vice-president, Google Southeast Asia.

“Google’s commitment is to shape a digital decade for everyone in Southeast Asia, playing our role in creating equitable and responsible growth for the region to achieve its potential of US$1 trillion in GMV by 2030. We’ll continue to build for the future of the internet in this region, ensure equitable growth for all workers and businesses, and provide inclusive and safe access for online communities,” adds Davis.

Photos: Google, Temasek, Bain & Company

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