Today, Google, Temasek and new partner, Bain & Company released its e-Conomy 
Southeast Asia report for 2019, highlighting the most significant industry 
trends observed in 2019 and analysing the current and future potential of the 
Southeast Asian Internet economy across its six largest markets (Indonesia, 
Malaysia, the Philippines, Singapore, Thailand and Vietnam). 

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The report shows that the region's Internet economy has hit a new milestone, 
reaching $100 billion for the first time this year, a 39 percent increase from 
$72 billion last year. The Internet economies in Malaysia, the Philippines, 
Singapore, and Thailand are growing between 20 and 30 percent annually, but the 
two pacesetters in the region are Indonesia and Vietnam, with growth rates in 
excess of 40 percent a year.

This surge across SEA is attributed to the influx of new online users in the 
region -- about 100 million more compared to four years ago. This growing 
market of customers has incentivized businesses in the region, from established 
'unicorns' to small-medium enterprises, to adopt and leverage digital tools to 
expand rapidly.    

As the world's most engaged Internet users, Southeast Asia is shaping 
technology trends in its own way. When it comes to services like Ride Hailing 
and Food Delivery, the region 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. By 2025, the regional Internet economy will have tripled to $300 
billion.

Here are some key insights from this year's report.

1)  Internet businesses have hit new heights

Southeast Asia's Internet sectors are booming, and this is indicative of the 
fundamental changes in the way people shop, eat and get around. e-Commerce is 
the biggest and fastest-growing sector. More than 150 million Southeast Asians 
are now buying what they need online, and the sector is valued at $38 billion 
today compared with just $5.5 billion in 2015 -- and on track to hit $150 
billion by 2025.  

RideHailing is surging, with 40 million people ordering transport, food and 
other services on demand, as compared with just 8 million in 2015.  

2)  Time is money: competing for user engagement
As the ecosystem matures, Internet economy companies are switching their focus 
from acquiring new customers to driving higher engagement with existing users. 
To do so, they are offering a variety of products and expanding into new 
services including gamified promotions, enticing streaming content, live news 
and more. Consumers are benefiting from these trends, as they have access to 
more choices and lower prices.

3)  Opportunity is spreading beyond the big cities

Up until now, seven metropolitan areas have made up more than half of Southeast 
Asia's Internet economy despite accounting for just 15% of the total 
population. Between now and 2025, the Internet economy is set to grow twice as 
fast outside Metros as inside them. This growth will support new jobs and 
opportunities, increase the need for investments to expand Internet access in 
less served areas, and drive inclusion of the entire Southeast Asian population 
into the Internet economy.    

4)  Digital Financial Services reach an inflection point with increasing access 
as a priority

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 $600 billion in 2019 to more than $1 trillion by 2025, accounting 
for almost one in every two dollars spent in the region.

5)  Funding remains healthy despite global headwinds

In 2019, global economic growth has slowed, with the outlook remaining cloudy. 
But even as global tech funding takes a hit, Southeast Asia has remained a 
bright spot. Funding flows into the region continued to grow at a healthy pace, 
from the high base of a record-breaking 2018. The first six months of 2019 saw 
Internet firms raise $7.6 billion, about 7% more than in the same period in 
2018. A growing cadre of "aspiring unicorns" has emerged and they are on the 
lookout for late-stage funding to scale further.

6)  Ecosystem challenges are being resolved

Experts shared that 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. 

- 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 realize digital's incredible potential. Whether it's 
providing support for small businesses to grow, teaching Southeast Asians 
digital skills, expanding Internet access to more people or advocating for 
smart policy and regulation, we're looking forward to helping bring the 
benefits of technology to millions more people across this dynamic region."

- 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." 

- "Southeast Asia's digital financial services are growing rapidly, with 
digital payments already at an inflection point and expected to exceed $1 
trillion in gross transaction value by 2025," said Florian Hoppe, Partner and 
Leader of Asia Pacific Digital Practice for Bain & Company. "Digital financial 
services offers the biggest opportunity for serving the underbanked, nearly 100 
million adults in the region with limited access to financial services 
currently, by lowering costs and bridging gaps in data availability. This 
segment will be the main battleground for most players, with consumer 
technology platforms well-positioned to serve their needs given their large and 
engaged user base."

View quick summary e-Conomy SEA 2019 report here( 
https://static.prnasia.com/pro/media/mnr/201910/temasek/Google-Temasek-Bain%20Report%20One%20Pager%20%28SG%29.pdf) 

 
SOURCE  Temasek, Google and Bain & Company