Digital is here to stay.
According to a new report released by Google and Temasek, Southeast Asia’s internet economy is projected to exceed US$240 billion by 2025. The figure is US$40 billion higher than previously estimated. The higher estimated market value is thanks to a large, growing, and engaged internet user base.
Google and Temasek’s latest report covers four main areas of the internet economy – ride-hailing, e-commerce, online media, and online travel – with a focus on six Southeast Asian countries, namely, Singapore, Indonesia, Malaysia, Vietnam, Thailand and the Philippines. Within the four areas, the report also added new sectors such as online vacation rentals, online food delivery, music subscriptions, and video-on-demand.
The region’s internet economy is now estimated to be at US$72 billion in gross merchandise value (GMV), up from US$50 billion in 2017. GMV is a key industry metric that measures the total dollar value of merchandise sold online. The following chart shows the breakdown of the region’s internet economy GMV according to the four main economic areas:Source: e-Conomy SEA 2018 report
The GMV of the internet economy as a percentage of Southeast Asia’s gross domestic product (GDP) is expected to blow past 8% by 2025. In 2015 and 2018, the percentage was 1.3% and 2.8%, respectively. The report stated that Southeast Asia is still behind the US by almost 10 years in terms of the internet economy’s development; the GMV of the US’s internet economy already accounted for 6.5% of its GDP in 2016.
Indonesia has the biggest and fastest-growing internet economy in Southeast Asia, which is set to grow to US$100 billion by 2025 and account for 40% of the region’s internet-related spending. The Philippines has the most room to grow, with its internet economy taking up just 1.6% of its GDP in 2018. Vietnam has the most developed internet economy with a 4% share of GDP. In Singapore, the internet economy accounted for 3.2% of its GDP.
Some Singapore-listed stocks that could benefit from the internet economy’s growth are Synagie Corp Ltd (SGX: V2Y) and NetLink NBN Trust (SGX: CJLU). Synagie is an e-commerce solution provider for Southeast Asia’s body, beauty and baby sector while NetLink NBN Trust is involved with Singapore’s fibre network infrastructure.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns units in NetLink NBN Trust.