SEA internet economy to hit 'inflection' value of $72M in 2018

Southeast Asia's Digital Economy to triple in the next seven years, with focus on Indonesia

The most dynamic sector of the internet economy over the past three years has been e-commerce.

It says that growth in the Philippines will be ushered in by increased focus and investments by startups and young regional e-companies that are already successful such as Singapore's Grab and Shopee, and Lazada, owned by China's Alibaba Group.

Southeast Asia's e-commerce market alone is estimated to achieve a value of as much as $102 billion, relying primarily upon the 350 million internet users in the region.

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.

The annual study, which is authored by Google and Singapore sovereign fund Temasek and is arguably the most comprehensive research program for tech in Southeast Asia, has raised its estimation for the size of the digital economy in 2025 from an initial $200 billion after seeing the region reach "an inflection point".

By the end of this year, the value of Southeast Asia's digital economy which measured by gross merchandise value is estimated to be almost $72 billion, jumping as much as 37 percent from 2017. This represented a 37 percent growth from 2017, surpassing the study's previous projection of 32 percent CAGR (compound annual growth rate) between 2015 and 2018. The latest report released yesterday adds new sectors such as online food delivery, as well as subscription music and video on demand. This number is projected to exceed eight percent by 2025.

The report estimated that the GMV of the competitive ride hailing sector, with the addition of online food delivery, has reached Dollars 7.7 billion in 2018.

This growth also spurs employment opportunities.

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Singapore and Indonesia emerged as investors favorite destination as companies headquartered in these countries attracted the vast majority of the funding in the tune of US$16 billion and US$6 billion since 2015.

Funding for internet economy companies have since quadrupled in 2016, when they raised US$4.7 billion.

Since 2015, a total of US$24 billion investment flowed to the region. To put it in perspective, in all of 2017 saw a total investment of US$9.4 billion.

These areas were: internet infrastructure, ability to secure funding, building consumer trust, developing logistics to handle e-commerce, ability to attain talent, and viable digital payment solutions.

It is also worth noting that Grab is the region's first decacorn (company with US$10 billion-plus valuation), and took the lion's share of the investments (US$6 billion). More than 2,000 internet economy companies in the region have secured investments, with companies valued less than $1 billion able to raise collectively nearly $7 billion in the last three years.

Internet economy companies in Southeast Asia (ASEAN) received more than $9.1 billion in funding during the first half of 2018, almost as much as in the whole of 2017, according to the Google-Temasek e-Conomy SEA 2018 report, released on Monday.

Whilst unicorns captured most of the capital attention, the overall startup ecosystem benefitted from growing investor appetites, the Google-Temasek research added.

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