The value of online transactions in areas from internet retail to car-hailing should reach US$300 billion by 2025, fuelled by an existing population of 360 million online users, according to a research report by Google, Temasek Holdings Pte and Bain & Co.
The region, home to ride-hailing Grab and Alibaba Group Holding Ltd’s e-commerce site Lazada, includes four countries – Thailand, Philippines, Indonesia and Malaysia – in the top 10 globally in terms of time spent by users online, the study showed.
Indonesia, the world’s fourth most-populous country with 264 million people, will anchor a region that also includes Singapore and Vietnam.
The annual report, previously helmed by Google and Temasek, measures gross merchandise value in e-commerce, ride-hailing, online media and online travel and has become a prime reference for the region’s internet industry.
Bain joined as a lead partner this year and the study encompassed digital financial services for the first time.
E-commerce remains the brightest spot in Southeast Asia’s internet economy.
Aided by online festivals for attractive deals, in-app entertainment and faster delivery, the market is projected to quadruple from US$38.2 billion in 2019 to US$153 billion by 2025.
The bulk of that growth will come from Indonesia, where the e-commerce market is poised to expand from US$21 billion to US$82 billion.
The regional ride-hailing market is projected to reach US$40 billion by 2025 from US$12.7 billion in 2019, propelling sector leaders Grab and Gojek.
Both see food delivery as a key driver of growth and profitability. That, in turn, intensifies competition with meal delivery companies such as Foodpanda and Deliveroo.
Vietnam is emerging as the most digital of all economies in the region, with the gross merchandise value of its internet economy set to account for more than 5% of the country’s gross domestic product in 2019. That compares with the 3.7% share for Southeast Asia.
E-commerce is a key driver behind the boom in Vietnam, where homegrown marketplaces like Sendo and Tiki compete with regional players including Lazada and Tencent Holdings Ltd-backed Shopee.
Digital payments are moving into the mainstream and expected to exceed US$1 trillion by 2025.
Of the 400 million adults in Southeast Asia, 98 million are “under-banked” – people with bank accounts but limited access to other services such as credit.
And another 198 million have little recourse to finance whatsoever.
Those expectations of heady growth are helping attract investors despite global headwinds.
Southeast Asia’s internet companies raised US$7.6 billion in the first six months of this year, up from US$7.1 billion a year earlier, the study showed.
Ride-hailing firms led by Grab and Gojek have raised more than US$14 billion over the past four years, while e-commerce firms including Tokopedia have attracted almost US$10 billion.
The late-stage financing rounds for Grab and Gojek are among the largest of their kind globally, according to the report.