South-East Asia’s Internet economy to hit RM433.3b this year

by LYDIA NATHAN / pic by AFP

SOUTH-EAST Asia’s Internet economy is set to reach RM433.3 billion (US$105 billion) this year, as the Covid-19 pandemic forces consumers to go online for shopping, entertainment and food deliveries.

According to a report by Google LLC, Singapore state investor Temasek Holdings Ltd and global business consultants Bain & Company Inc, Internet usage across the region has multiplied, garnering 40 million new users this year alone.

The report, which covers Malaysia, Singapore, Indonesia, Vietnam and the Philippines, said the number of new users takes the total up to 400 million, implying that 70% of the region’s population is now online.

South-East Asia’s Internet economy expanded 5% from last year. The region’s online industry is set to triple to US$309 billion in gross merchandise value (GMV) by 2025, nearly in line with the US$300 billion forecast made last year.

The report stated that continued growth in Internet usage has helped create unicorns such as Grab and Gojek, with the region’s start-ups attracting billions in capital from global technology companies and investment firms.

“Already evident is that the coronavirus has brought about a permanent and massive digital adoption spurt, with more than one in three digital services consumers (36% of total) being new to the service, of which 90% intend to continue their newfound habits post-pandemic,” the report said.

The report found that South-East Asians spend an hour on average online. Malaysians spent 3.7 hours online before the pandemic struck which spiked to 4.8 hours per day at the heights of the country’s lockdown.

“It now rests at 4.2 hours per day. With eight out of 10 users viewing technology as very helpful during the pandemic, it has become an indispensable part of people’s daily lives,” it said.

The report also said part of the increase is due to the significant growth of e-commerce as a sector.

“This steep ascendance has largely offset declines in travel. Overall, 2020 GMV is expected to reach a total value of RM47 billion, having grown at 6% year-on-year. Looking at 2025, it is expected that the overall Internet economy will reach RM123.7 billion in value, reaccelerating to about 23% compound annual growth rate,” it said.

Meanwhile, the report also said two main sectors will remain nascent, namely the health technology (healthtech) and education technology (edtech) sectors.

“Healthtech and edtech have played crucial roles during the pandemic, they are set to take off as the pandemic helped lower barriers and injected new impetus to both sectors,” the report noted.

Healthtech across the region has noticeably grown four times and has retained its users post lockdown, while edtech saw a steep uptick in 2019 after years of modest funding, it said.