8 Interesting Facts About South East Asia’s Internet Economy
Google and Temasek recently released a report on the growth of the internet economy in South East Asia. They expect the economy to grow to $200 billion by 2025, driven by a user base growth of 220 million people to 480 million. These are impressive numbers and exciting times for any Internet business in the region. Many companies can capitalise on the greater penetration and growth of the Internet in the region.
With that, here are some of the other highlights from that report:
1. By the end of 2017, there will be around 330 million monthly active users. That is 70 million more than in 2015 and translates to a compounded annual growth rate (CAGR) of 13%.
2. Mobile internet users in South East Asia are exceptionally engaged, spending an average of 3.6 hours per day online. This is more than any other region of the world. Users in Thailand spend 4.2 hours per day on the mobile internet, the most in the world. This is followed by Indonesia where users spend 3.9 hours per day on average. This is around two times the average of the US’ 2 hours per day, and the UK’s average of 1.8 hours per day.
3. The internet economy currently accounts for 2% of the region’s gross domestic product (GDP), up from 1.3% in 2015. However, with the internet economy expected to exceed $200 billion by 2025, it will likely reach 6% of GDP by that time.
4. All sectors of the Internet economy are expected to have grown this year. However, the three sectors that take the spotlight are online travel, e-commerce and ride-hailing.
5. E-commerce reached $11 billion in gross merchandise value (GMV) this year, almost double the 2015’s total of $5.5 billion. This translates to an astonishing CAGR of 41%.
6. Ride-hailing services are also expected to grow this year at an equally impressive rate. The report estimates that these services will total $5.1 billion this year, more than double 2015’s total of $2.5 billion. This sector is expected to more than quadruple by 2025 to around $20 billion in GMV.
7. Investments in the internet economy have grown as a result of the strong projections. Southeast Asian internet companies have managed to raise $12 billion in capital between 2016 and the third quarter of 2017. This is up from just $1 billion in 2015.
8. The biggest threat to this explosive growth is the shortage of homegrown talent. According to the report, many Southeast Asian players have been forced to open tech hubs overseas in search of specialised talent.
The Foolish bottom line
The Internet economy in the region is set to grow at an astounding pace in the next few years. Investors who wish to capitalise on this growth can look for companies that have exposure to the internet and are operating in some of these fast-growing sectors.