Whilst the world has focused on China and India as the next big growth grounds for the digital economy, the massive growth in the Southeast Asian digital economic sector challenges this very notion. The challenge has even prompted Google to team up with Singapore based investment giant Temasek to publish a report regarding the SE Asia digital economy.
In terms of personal spending, already, the mass affluent account for roughly half of all spending in categories such as leisure travel, watches, and cars across the region. And many are still in the process of trading up to higher-value products in typically middle-class categories such as home appliances, food and beverage, and apparel.
The mass-affluent class in-fact is set to account for 21% of the region’s combined population by 2030 on BCG’s reckoning – and about 45% to 65% of household wealth in markets such as Indonesia, the Philippines, and Thailand.
The joint report from Google and Temasek has predicted that the economy will reach 72 billion USD by the end of this year which is larger than over 100 countries in the world. That would mean a 44% increase from last year's 50 billion USD and an astonishing 277% increase from 19.1 billion in 2015. Google is also expecting the market to reach a value of 240 billion USD by 2025, twice that of previous years.
The report has credited the massive expansion in the ride-hailing, online travel and e-commerce market and firm establishment of new markets (already in the west) such as online food delivery and sales. Indonesia, which is currently the 4th most populated country, has the largest share in the market ($27B), followed by Thailand ($12B) and Singapore ($10B).
Daily ride-hailing users in 2018 are up to eight million from 1.5 million in 2015, with monthly users growing to 35 million from 8 million during the same time period. Companies like Grab and Go-Jek (Delivery Apps) along with e-commerce companies such as Lazada, Shopee and a range of new investment coming from South Korea.
Affordable mobile data and improvements in infrastructure have led to huge improvements in Southeast Asia; more than 90% of them are accessing the internet through their smartphones. 350 million internet users are living in the Southeast Asia region. Since 2015, more than three million Southeast Asians, a population bigger than both Chicago & Madrid's have gone online for the first time every month.
The capital raising in the South East Asia countries was also discussed in the report. Billion dollar companies received most this investment. They received 16 billion USD of the 24 billion USD invested over the past 4 years. This growth has also spurred employment opportunities. Google predicts over 1.7 million full-time jobs will be created in the internet economy by 2025 for highly-skilled professionals as well as flexible work opportunities in sectors like ride sharing (Grab).
7 of the 8 remaining billion went towards smaller companies with over 2,000 internet companies in the region have secured investments, with companies valued less than 1 billion USD able to raise collectively almost in the last three years. Google hailed these companies as the bedrock for the flourishing digital economy.