SINGAPORE (Oct 3): Singapore now has five million Internet users, says the e-Conomy Southeast Asia report 2019 published by Google, Temasek and Bain & Company.

And the city state’s Internet economy is expected to hit US$12 billion ($16.6 billion) this year and more than double to US$27 billion by 2025, up from US$7 billion in 2015.

The report also found that Singapore has become an established gateway for funding in South-east Asia, and companies based in Singapore have raised more than US$23 billion since 2016.

One of the sectors experiencing “tremendous” growth is online food delivery, which has doubled in size this year compared to 2018. This has re-ignited growth in the ride-hailing and food delivery sector, which has hit US$3 billion dollars this year.

Zooming out into the wider region, the report says there are now 360 million Internet users in South-east Asia with 90% of them connected to the Internet through their mobile phones.

The regional Internet economy is also set to hit US$100 billion by the end of year and is on track to hit US$300 billion in 2025, US$60 billion more than previously estimated.

The largest slice of the Internet economy this year went to e-commerce at US$38 billion. This was followed by online travel at US$34.4 billion, US$14.2 billion in online media consisting advertising, gaming, subscription music and video on demand, and ride-hailing at US$12.7 billion.

To foot the bill for these Internet goods and services, digital payments are expected to cross US$1 trillion by 2025, becoming the form of payment for nearly one in two dollars spent in the region.

Within digital payments, e-wallets accounted for just over US$22 billion this year, and are likely to surge more than five times to at least US$114 billion by 2025.

Digital lending is also on track to build a US$110 billion loan book by 2025, led by consumer and Small-and-Medium Businesses (SMBs) lending.

Among the trends highlighted, the report found that Internet economy companies are switching their focus from acquiring new customers to driving higher engagement with existing users, as the ecosystem matures.

“To do so, they are offering a variety of products and expanding into new services including gamified promotions, enticing streaming content, live news and more,” says the report, adding that consumers are benefiting from these trends, as they have access to more choices and lower prices.

While Internet access has become more affordable and consumers' trust in digital services strengthen, the report found that talent constraints remain a pressing concern, as companies look for skilled workers to take on the influx of new roles created in the digital economy.

Although the global economic growth slowed this year, the first six months saw Internet firms raise US$7.6 billion, about 7% more than in the same period in 2018.

The deals are also getting larger - the average deal size at the seed stage has almost doubled from US$500,000 from 2016 to US$800,000 in 2019. Similarly, the average deal size at the Series A stage has doubled from US$2 million in 2016 to US$4 million in 2019.