While global tech funding took a hit in 2019 amidst economic slowdown, Southeast Asia remained a bright spot with healthy growth in investment flows, as per a new research report.
In the first half of 2019, Internet firms in the region raised US$7.6 billion — about 7 per cent growth over the same period last year, says the ‘e-Conomy SEA report 2019’ jointly done by Google, Temasek and Bain & Company.
A growing cadre of ‘aspiring unicorns’ has emerged and they are on the lookout for late-stage funding to scale further.
The report further reveals that Southeast Asia’s internet economy hit the US$100 billion mark, a 39 per cent increase from US$72 billion last year. By 2025, it will have tripled to US$300 billion.
The internet economies in Malaysia, the Philippines, Singapore, and Thailand are growing between 20 and 30 per cent annually. However, the two pacesetters in the region are Indonesia and Vietnam, with growth rates in excess of 40 per cent a year.
This surge across the region is attributed to the influx of new online users in the region — about 100 million more compared to four years ago.
Southeast Asia has made progress in overcoming the initial challenges of the internet economy by making internet access more affordable and strengthening consumers’ trust in digital services. However, talent constraints remain a pressing concern, as companies look for skilled workers to take on the influx of new roles created in the digital economy.
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The e-Conomy SEA report 2019 report highlights the most significant industry trends observed in 2019 and analyses the current and future potential of the Southeast Asian Internet economy across its six largest markets (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam).
Other key highlights of the report
E-commerce is the biggest and fastest-growing sector. More than 150 million Southeast Asians are now buying online, and the industry is valued at US$35 billion today compared with just US$5 billion in 2015 — and on track to hit US$150 billion by 2025.
When it comes to services like ride hailing and food delivery, Southeast Asia is rapidly growing and the momentum is only going to continue as a new generation comes of age and people outside big cities come online.
Ride-hailing is surging, with 40 million people ordering transport, food and other services on demand, as compared with just 8 million in 2015.
Up until now, seven metropolitan areas have made up more than half of Southeast Asia’s internet economy despite accounting for just 15 per cent of the total population. Between now and 2025, the internet economy is set to grow twice as fast outside Metros as inside them.
Technology has made financial services more accessible to users in the region, and it is projected to expand further to reach out to 100 million Southeast Asians with limited access to financial services today. Digital Payments is set to grow from US$600 billion in 2019 to more than US$1 trillion by 2025, accounting for almost one in every two dollars spent in the region.
Stephanie Davis, Managing Director, Google SEA, said, “Southeast Asia has an incredibly exciting digital economy, as consumers are turning to digital to complete millions of tasks daily, resulting in unprecedented growth. However, there’s more to be done to realise digital’s incredible potential.”
Rohit Sipahimalani, Joint Head, Investment Group, Temasek said, “Mobile technology is changing the way Southeast Asians work and live; providing them with greater access to new opportunities and markets. This trend is creating attractive investible opportunities in Southeast Asia’s Internet economy.
These opportunities tap on structural trends that are being driven by transformational technologies and changing consumption patterns. Together with businesses, governments and communities, we are committed to helping create a better, smarter, and more sustainable Southeast Asia,” Sipahimalani added.
Photo by Shea Rouda on Unsplash
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