South-east Asia’s (SEA) internet economy is now worth US$100 billion, and will triple to US$300 billion by 2025, an annual report on the region’s digital economy has found.
Of this, US$12 billion was from Singapore – slightly over 10 per cent of the regional total.
Jointly published by Google, Temasek, and Bain & Company, the report – released on Thursday (Oct 3) – looked at services and startups in the internet economy.
Google said that the overwhelming growth in SEA forced it to revise its previous prediction upwards by US$60 billion.
“When we look at Southeast Asia, we really only see two speeds: fast and faster (growth),” Google’s SEA managing director, Stephanie Davis, said at a media briefing.
Davis added that the region’s 180 million internet economy users had world’s highest mobile engagement rates, and a gross merchandise volume growth higher than even the US and China.
Funding into SEA continued at a “healthy pace” this year despite the slow global economy, with US$7.6 billion going to regional startups in the first half of 2019, the report said.
Of this sum, 70 percent (or US$5.3 billion) went to startups based in Singapore – whose businesses often serve the entire region, said Temasek’s investment head, Rohit Sipahimalani.
He added that Singapore had the best talent pool in SEA, resulting in a disproportionate number of startups choosing to establish themselves here.
In particular, many countries lack engineering talent, Sipahimalani said.
There are currently 11 unicorns in the region, and a “growing cadre” of about 70 “aspiring unicorns”, whose valuation is tantalisingly close to US$1 billion, he added.
Sipahimalani estimated that of these aspiring unicorns, most are from Singapore, followed by Indonesia and Vietnam.
They include Singapore-headquartered startups like Carousell, ShopBack, Ninja Van, PropertyGuru, Zilingo, Carro, eCommerce, GoBear and One Championship.
Also on the list are Indonesia’s Halodoc and Akulaku, Vietnam’s Sendo and Tiki, and Malaysia’s iflix.
Sipahimalani said he expected the total funding for 2019 to beat 2018’s record-breaking amount of US$14.1 billion, and for the majority of those funds to go to e-commerce and ride hailing businesses.
The two industries the report identified as the fastest growing this year were e-commerce and ride hailing (including transportation and food delivery).
The e-commerce market, which the report said saw five million orders per day, was estimated to be worth US$38 billion.
Meanwhile, ride-hailing was estimated to be worth US$12.7 billion, thanks to a growing number of dual-income, time-conscious middle class families seeking convenience.
This industry was dominated by unicorns Grab and Go-Jek.
Singapore in particular saw demand for food delivery double from last year, sending the value of its ride-hailing market to US$3 billion, the report said,
It added that Singaporeans’ high disposable income meant average order values were three or four times higher than in other countries.
“Food delivery has undergone a fundamental shift in consumer behavior since 2018. From a niche service that was used only occasionally by a small group of users, it has become common for busy professionals and families alike to order food online for everyday meals and special occasions,” the report said.
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