S-E Asian Internet economy to top $138b

The South-east Asian Internet economy, which refers to business conducted through markets based on the World Wide Web, will exceed US$100 billion (S$138.5 billion) in gross merchandise value (GMV) this year.
Fruit seller Eric Ang with the Facebook live-streaming set-up at his stall in Ang Mo Kio Market and Food Centre, which he uses to hawk his produce for a few hours at a time a couple of days a week.
Fruit seller Eric Ang with the Facebook live-streaming set-up at his stall in Ang Mo Kio Market and Food Centre, which he uses to hawk his produce for a few hours at a time a couple of days a week.ST PHOTO: AILEEN TEO

Boom in past 4 years fuelled by increase in online access via cellphones: Report

Shop owner Eric Ang, who sells apples and other fruit, recently embraced digital tech to shift a few more items at his stall - Xing Hong Fresh Fruits at 628 Ang Mo Kio Market and Food Centre.

After arranging his wares on the counters, he attaches his smartphone to a light stand and switches on Facebook Live.

That allows him to hawk his produce via live streaming for a few hours at a time a couple of days a week.

Mr Ang, 33, is among the many people across South-east Asia - including those working in traditional sectors - who are fuelling the region's booming Internet economy.

It is estimated that this economy will exceed US$100 billion (S$138.5 billion) in gross merchandise value (GMV) this year, more than tripling in size over the past four years, according to a report from Google, Temasek and consulting firm Bain & Company.

At this rate, the South-east Asian Internet economy, which refers to business conducted through markets based on the World Wide Web, is on track to hit US$300 billion by 2025 - US$60 billion higher than previously estimated.

The annual report, out yesterday and first published in 2016, looks at trends and data across five Internet economy sectors - e-commerce, online media, ride hailing, online travel and the newly added digital financial services.

Besides research, data and expert interviews, the report, which covers Singapore, Malaysia, the Philippines, Thailand, Vietnam and Indonesia, also looks at Google Trends.

Indonesia is leading the way as the largest and fastest-growing Internet economy in the region this year with an estimated US$40 billion in GMV, thanks to the growing adoption of digital payments in the country.

Singapore's Internet economy, which has been expanding by an average rate of 17 per cent a year since 2015, will have an estimated GMV of about US$12 billion this year.

For Mr Ang, taking his business online has proved successful, with sales up 30 per cent from last year, while his customer base has gone beyond the Ang Mo Kio regulars to include people in Jurong and the East Coast area.

He told The Straits Times: "People always assume that customers who buy my fruit through Facebook Live are those from the younger generation, but many of them are actually aunties. Everyone is buying things through the Internet now."

Indeed, the report noted a major reason for the blistering growth of the region's Internet economy is that many people can now go online, especially through their mobile phones.

Just a decade ago, around 80 per cent of people in the region had limited or no Internet connectivity, but 100 million or more users have gone online in the past four years, said the report. That brings the total Internet user base to 360 million.

The region also has the most engaged mobile Internet users, with people spending more time online via smartphones than anywhere else in the world.

Thailand tops the charts with users spending an average of five hours and 13 minutes a day on the mobile Internet. Singapore is at No. 23, with users spending two hours and 58 minutes a day, and they are the biggest spenders.

The report said: "With high per capita incomes, the wealthy city state is ahead on many metrics. For example, average order values in Singapore's e-commerce sector are three to four times higher than those in the rest of the region."

E-commerce has become the biggest sector of the region's Internet economy, rising from US$5.5 billion in GMV in 2015 to an estimated US$38 billion this year.

The trend is being spurred by popular Internet shopping festivals such as Chinese retail giant Ali-baba's Singles Day, now the world's biggest shopping event.

Ride hailing is the fastest growing sector in Singapore, boosted by demand for food deliveries. Google Trends noted that queries for online food delivery brands have grown more than sevenfold here over the past four years.

The report added: "From a niche service used only occasionally by a small group of users, (food delivery) has become common for busy professionals and families alike."

This is in line with the rest of the region, which has seen the number of ride-hailing users, including those who want food delivery, surge fivefold to reach 40 million today, from eight million in 2015.

 
 
 

Online media, which refers to content like video and music streaming or online gaming, has risen nearly four times over the past four years to a value of US$14.2 billion.

This is due to the increasing popularity of locally created content, in terms of short-form videos and live streaming content, and locally made games such as Free Fire.

Online travel, the most mature Internet economy sector, continues to see growth in the region, jumping to an estimated GMV of US$34.4 billion this year from US$19.4 billion in 2015. "A rising middle class of affluent users... is further boosting the sector," said the report.

Growth in the newly added segment of digital financial services is set to rise as users increasingly look towards more convenient and alternative options.

Digital payments alone, which are defined as cashless transactions including cards, account-to-account transfers and e-wallets, are expected to cross US$1 trillion by 2025, accounting for nearly one in every two dollars spent in the region.

A version of this article appeared in the print edition of The Straits Times on October 04, 2019, with the headline 'S-E Asian Internet economy to top $138b'. Print Edition | Subscribe