Though expectations were high, the growth of Southeast Asia’s digital economy is beating them all. With more than 330 million internet users and double or triple digits growth in several major markets online, the region is confirming the digital boom with the emergence of a first round of local unicorns.
After a prospective study from 2016 on digital economy of Southeast Asia in 2025, Google and Temasek produced an update to reveal the actual state of the region’s digital economy as of 2017. This new report suggests that the digital economy will actually reach a total of US $ 50 B, well ahead of their initial projections from 2016.
Unprecedented growth of Southeast Asia’s digital economy
There are more than 330 million monthly internet users at the end of 2017, which is a growth of +70% compared to 2015. More than 90% of these users are connecting through smartphones, and they spend about 3.6 hours per day on mobile internet, which is more time than anywhere else in the world.
The explosive growth of the digital economy of Southeast Asia is led by six unicorns, companies that have reached a valuation above 1 billion US $.
- Grab: ride-hailing app that has grown throughout Southeast Asia
- Traveloka: regional leader in hotels and flights booking
- Tokopedia: leader of e-commerce sites in Indonesia
- Go-Jek: ride-hailing app from Indonesia, expanding to payments and services
- SEA Group: gaming platform, mobile commerce and payments
- Lazada: leader of e-commerce in Southeast Asia
Note that Razer, a gaming hardware, software and systems company could also be considered a seventh unicorn as its founder is from Singapore. However it is now headquartered in San Francisco, so technically it is an American unicorn.
They are primarily involved in and driven by the rapid growth of four industries:
- online travel, a market of 26.6 B US $ in 2017 which represents a +18% increase compared to 2015. It is led by airlines and hotels bookings.
- online media, 6.9 B US $ in 2017, +36% increase compared to 2015, led by online ads and gaming.
- e-commerce, with total transaction of 11 B US $, +41% compared to 2015.
- ride-hailing, which reached 5 B US $, +100% compared to 2015.
Digital economy of Southeast Asia – report summary
Introduction, sources, scope – page 2
- Unprecedented growth for Southeast Asia’s $50B internet economy – page 3
- E-commerce reaches $11B, fueled by investments in booming marketplaces – page 4
- Ride hailing booming at 43% CAGR, top players expanding into services and payments – page 6
- $13B invested in Southeast Asia since 2015, majority of funds raised by unicorns – page 9
- Shortage of homegrown tech talent remains the most pressing challenge for growth – page 12
Report from December 2017 by Google and Temasek