Southeast Asia’s Internet Economy to Grow in 2020 despite COVID-19, Says New Report
Southeast East Asia’s internet economy is proving to be resilient, with the sector seen still growing in 2020 despite headwinds from the coronavirus disease (COVID-19) pandemic, according to a new report from Google, Temasek, and Bain & Company.
The report, “e-Conomy SEA 2020: At Full Velocity: Resilient and Racing Ahead,” released on Tuesday, projected the region’s internet economy to grow to $105 billion in gross merchandise value (GMV) in 2020 from $100 billion the previous year and is poised to hit $310 billion by 2025, indicating growth despite a challenged environment. GMV refers to the total value of merchandise sold over a given period of time.
The report, which covers Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam, noted that gains in e-commerce, online media, and food delivery adoption and usage have offset contractions in transport and online travel.
The report noted a rise in internet usage in the region, with 40 million new users this year alone. Year to date, the region has 400 million online users versus 360 million in 2019.
The pandemic has brought about a permanent and massive digital adoption spurt, with more than 1 in 3 digital services consumer being new to the service, the report noted. It added that 9 in 10 new digital consumers intend to continue using digital services going forward. “With 8 out of 10 Southeast Asians viewing technology as very helpful during the pandemic, it has become an indispensable part of people’s daily lives.”
Southeast Asians spent on average an hour more a day on the Internet during COVID-19-imposed lockdowns, the report said as the internet sector provided access to essential goods, healthcare, education, entertainment, and helped businesses “keep the lights on.”
The report said HealthTech and EdTech have played a critical role during the pandemic. “The boost in adoption, compounded with fast growing funding, is likely to propel innovation in this space over the coming years.”
The report said 135 million school children around the region would have lost access to education if not for home-based learning. Many adults also took the opportunity to upskill via online courses, it said.
On HealthTech, the report said mobility tracking systems powered by digital services were key to government planning and control during lockdowns. And as the burden on healthcare systems mounted, digital services helped reduce the pressure by enabling physicians to treat non-critical cases virtually.
The crisis will also boost digital financial services, as consumers and small and medium-sized enterprises become more receptive to online transactions.
Among the countries reviewed, only Singapore is expected see a contraction this year due to the 70% drop in the online travel sector’s GMV. Half of Singapore’s online GMV comes from the sector. The other sectors are expected to grow 20% this year, in particular, e-commerce which will expand 87%.
Singapore will remain a regional hub for e-commerce and other unicorns—startups valued at $1 billion or more—and a key enabler of the e-commerce boom in SEA, the report said.
Meanwhile, Indonesia and Viet Nam's digital economies are expected to see double-digit growth in 2020. While the internet economies of Malaysia, the Philippines, and Thailand will manage single-digit growth.
All countries are expected to see a huge growth in their digital economies in 5 years.
“This year’s seismic consumer and ecosystem shifts have advanced the Internet sector in unimaginable ways, putting it in a stronger position than ever,” the report said. In the 2019 report, the authors identified six key barriers to growth—internet access, funding, consumer trust, payments, logistics and talent.
This year, though, the report noted significant progress on most fields, particularly on payments and consumer trust. However, finding talent with the right skills remains a challenge for the region. It noted an urgent need to reskill and upskill workers so that they can find jobs in growing internet sectors.