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Southeast Asia internet economy to hit $50 billion in 2017, says report from Google and Temasek

  • Southeast Asia's internet economy is poised to hit $50 billion this year and $200 billion by 2025, according to a new report by Google and Temasek
  • The region's e-commerce market will reach $10.9 billion in gross merchandise value this year, while ride hailing services could hit $5.1 billion, the report said

Digital businesses can't afford to ignore Southeast Asia, according to a new report by Google and Singaporean state investment vehicle Temasek.

Home to fast-growing economies such as Indonesia and the Philippines, Southeast Asia boasts a massive internet user base that's overwhelmingly focused on mobile. That will push the region's internet economy to hit $50 billion this year and $200 billion by 2025, growing from 2 percent of regional gross domestic product to 6 percent by 2025, the report said.

Google / Temasek

"Users in Southeast Asia are incredibly engaged, spending an average of 3.6 hours per day on mobile internet, more than in any other region in the world ... These incredible levels of engagement have led to a sizable market opportunity."

Focusing on e-commerce, ride hailing and overall venture capital investments, the report highlighted just how explosive Southeast Asia's internet economy is.

Mobile-first platforms drive e-commerce 

Google / Temasek

E-commerce sales of first-hand goods will reach $10.9 billion in gross merchandise value this year, up from $5.5 billion in 2015, the report found. Momentum is chiefly driven by mobile-first marketplaces such as Lazada and Tokopedia, where small and medium businesses sell to consumers.

Consumer demand underpins ride-hailing

Ride hailing services are expected to hit $5.1 billion in gross merchandise value this year, more double from $2.5 billion in 2015, and could reach $20.1 billion in 2025, the report said.

Google / Temasek

Players such as Grab and Go-Jek have also expanded their offerings beyond consumer transportation to focus on payments and lifestyle services, increasing their attraction to customers, the report said.

Venture capital investments catching up to China

Google / Temasek

Between 2016 and the third quarter of this year, Southeast Asian internet companies raised more than $12 billion of capital, up from $1 billion in 2015, the report stated.

Venture capital investments in these firms stood at 0.18 percent of Southeast Asian GDP
in 2016, on par with India and narrowing the gap with China's 0.30 percent figure, the report said.