SINGAPORE (Nov 19): Southeast Asia’s Internet economy hit US$72 billion ($99 billion) in gross merchandise value (GMV) terms this year across the online travel, e-commerce, online media, and ride-hailing sectors -- thanks to a large, growing and “incredibly engaged” internet user base.

This according to “e-Conomy SEA 2018” report released on Monday by social media giant Google Inc together with Singapore state investment fund Temasek Holdings.

Growing at 37% from a year earlier, the regional Internet economy also accelerated beyond the 32% compounded annual growth rate (CAGR) that the report recorded between 2015 and 2018 and is on track to exceed US$240 billion by 2025 — US$40 billion higher than previously estimated.

As for fundraising in the Internet economy, 2018 is on track to be a record year, with US$9.1 billion raised in the first half of the year, nearly as much as in all of 2017.

This year, the GMV of the region’s Internet economy stands at 2.8% of Southeast Asia’s gross domestic product (GDP) — up from 1.3% in 2015 — and is projected to exceed 8% by 2025. But this is still 10 years behind the US, where the GMV of the Internet economy already accounted for 6.5% of GDP back in 2016.

In the six Southeast Asian countries covered in the research, Vietnam’s Internet economy is the most developed with GMV at 4% of the country’s GDP. The Internet economy also has the most room to grow in the Philippines, where it accounts for 1.6% of GDP. Singapore, where the Internet economy is 3.2% of its GDP, ranks second in Southeast Asia.

This year’s e-Conomy SEA report also saw the addition of the new sectors of online vacation rentals, online food delivery, and subscription music & video on demand. although e-commerce has been the most dynamic sector of the Internet economy in the last three years with three largest e-commerce companies in the region -- Lazada, Shopee, and Tokopedia -- playing a critical role in the development of the sector.

Accounting for just over US$5.5 billion in GMV in 2015, it has grown more than four times since then and exceeds US$23 billion in 2018, representing a 62% CAGR over the period. On the back of the increased consumer trust in e-commerce demonstrated by Southeast Asian Internet users, it is now estimated that the e-commerce sector is set to exceed US$100 billion by 2025.

Online media, which includes online advertising, gaming, and, for the first time -- subscription music & video on demand -- exceeded US$11 billion in 2018. With this addition, it is also projected that online media will hit almost US$32 billion by 2025 — as much as the entire Internet economy was worth in 2015.

Meanwhile, online advertising, the largest segment in online media, exceeded $7 billion this year, driven by digital marketing investments on platforms like app stores, news sites, search engines, social media, and video streaming.

Online travel, the largest and most established among the four sectors of the Internet economy in the region, is expected to add up to nearly US$30 billion in gross bookings value (GBV) this year and hit US$78 billion by 2025.