According to Fintech News, various key factors are contributing to the ASEAN Internet economy: the widespread uptake of mobile phones, a growing middle class, according to a new report by Google, Temasek and Bain & Company. This is underpinned by the fact that this region is home to the most engaged mobile internet users which number 360 million, 90% of which use mobile phones to connect to the internet.
The e-Conomy SEA Report 2019, released early October 2019, reports that over the last 4 years, 100 million people became online users. This has impacted the internet economy, which is currently at US$ 100 billion, a 39% increase from the previous year, with an anticipated market capitalization of R300 billion in 2025.
Source: e-Conomy SEA 2019
The research highlights significant industry trends and analyses the anticipated future potential of the ASEAN internet economy across the regions six largest markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Trends show that services such as eCommerce online travel, ride hailing and food delivery have experienced exponential growth.
We take a look at the key industries which are being impacted by the regions internet economy.
Booming ride hailing industry
Ride hailing has seen massive growth with the number of active users expanding from 8 million in 2015 to a current figure of 40 million. Led by Grab from Singapore and Gojek from Indonesia, the ride hailing industry has diversified to offer a wide range of serves from food delivery, grocery shopping, entertainment ticket selling, auto maintenance and financial services.
The report anticipates this expansion trend to continue as the next generation comes of age and people outside big cities join the online arena.
Source: e-Conomy SEA 2019
The two top countries: Indonesia and Vietnam
Source: e-Conomy SEA 2019
Within this region, the internet economy in Malaysia, Thailand, Singapore and the Philippines have an annual growth between 20%-30%. Indonesia and Vietnam, on the other hand, are recording growth rates in excess of 40% per year.
According to the report, Indonesia’s internet economy has more than quadrupled since 2015 and according to the current growth, is expected to exceed US$130 billion by 2025.
Vietnam’s economy is expected to reach US$12 billion in 2019, growing at a rate of 38% per year since 2015, with the eCommerce the biggest driver of this growth.
Source: e-Conomy SEA 2019
Digital Financial Services
The large percentage of unbanked and underbank people is a key factor which is driving the growth of digital financial services.
Of the nearly 400 million adults in Southeast Asia, just over 25% are fully banked and have full access to financial services. 98 million are classified as underbanked, with a bank account but insufficient access to credit, investment and insurance, while 198 million do not have a bank account at all.
Source: e-Conomy SEA 2019
According to Fintech News, the study names five financial services which are ideal for digital transformation: payments, remittance, lending, investment and insurance.
Digital Payments
Growth in digital payments are expected to grow from US$600 billion in 2019 to exceed US$1 trillion by 2025 and, according to the report, become the payment method for nearly one in every two dollars spent in the region.
Source: e-Conomy SEA 2019
While still in their nascent stage, the other financial services are expected to increase two – threefold over the next five years, Fintech News reports.
According to the e-Conomy SEA report, “The good news is that the Internet economy is maturing to a point where seasoned founders and early employees from the first wave of startups are emerging to lead new ventures and pass on their experience. Southeast Asians who moved abroad to study and start their careers are also responding to the call, with more heading home to join or found startups. This “reverse diaspora” — one that was unheard of only a few years ago — is yet another show of confidence in the future of Southeast Asia’s Internet economy.”
Source: Fintech News
