Ride-hailing, e-commerce lift region's Internet economy

Ride-hailing and e-commerce have galvanised South-east Asia's Internet economy, which will reach US$50 billion (S$68 billion) this year and potentially exceed US$200 billion by 2025.
Ride-hailing and e-commerce have galvanised South-east Asia's Internet economy, which will reach US$50 billion (S$68 billion) this year and potentially exceed US$200 billion by 2025.BT FILE PHOTO

Ride-hailing and e-commerce have galvanised South-east Asia's Internet economy, which will reach US$50 billion (S$68 billion) this year and potentially exceed US$200 billion by 2025.

A report by Google and Temasek also found that all four sectors of this economy have experienced "solid growth" this year.

The stars were e-commerce and ride-hailing, with a compound annual growth rate of over 40 per cent from 2015.

Online travel has shot up 18 per cent, while online media expanded with a compound annual growth rate of 36 per cent.

Mr Rajan Anandan, Google's vice-president and managing director (South-east Asia and India), said: "It suggests that growth is likely to continue in South-east Asia."

E-commerce sales will hit US$10.9 billion in gross merchandise value this year - double the US$5.5 billion in 2015, and growing at 41 per cent a year.

South-east Asian mobile Internet users are among the most engaged globally - spending on average 140 minutes a month on regional e-commerce platforms, versus just 80 minutes on the top platform in the United States.

The report did not name these platforms, but cited Lazada, Shopee and Tokopedia as leading players in South-east Asia.

Ride-hailing services will reach US$5.1 billion in gross merchandise value this year, more than double the US$2.5 billion in 2015.

Over six million rides per day were booked on the region's top apps - Go-Jek, Grab and Uber - in this year's third quarter alone, up more than fourfold since 2015.

The report said: "The acceleration of ride-hailing services... reflects steep pent-up consumer demand, attractiveness for drivers as a viable job opportunity, and product innovation leading to improved user experience."

It noted that ride-hailing players are fast expanding to food delivery, courier services and digital payments.

South-east Asia's Internet economy will account for 2 per cent of the region's gross domestic product this year and is projected to reach 6 per cent by 2025, said the report. This puts it "on a solid trajectory to exceed US$200 billion by 2025", it added.

There are seven Internet unicorns - firms valued at over US$1 billion - in South-east Asia, with four of them based in Singapore: Grab, Lazada, gaming firm Razer and Internet firm Sea.

The other three are based in Indonesia: Go-Jek, travel firm Traveloka and e-commerce firm Tokopedia.

A version of this article appeared in the print edition of The Straits Times on December 13, 2017, with the headline 'Ride-hailing, e-commerce lift region's Internet economy'. Print Edition | Subscribe