Internet Economy Rapidly Grows in Southeast Asia

Experts predict that Southeast Asia’s internet economy will hit $300 billion by 2025. (Flickr)

Internet access is rapidly increasing in Southeast Asia. A recent industry report predicts Southeast Asia’s internet economy will hit $300 billion by 2025, according to Reuters. To achieve such numbers, the industry is expected to grow 200% over the next five years. “This pace of growth has exceeded all expectations Internet access is not affordable for large segments of the population and consumer trust in digital services has improved significantly,” according to the report.

Since 2015, the internet economy has already more than doubled, as a majority of companies go into e-commerce. Other popular sectors were ride-hailing, online travel activities, and online media activities. Ride-hailing was reported to be worth $13 billion alone, quadrupling its value since 2015. By region, Indonesia and Vietnam lead Southeast Asia, according to Aljazeera. 

The digital payments sector is also on the rise in Southeast Asia. Digital payments are expected to exceed $1 trillion by 2025, according to Bloomberg. 98 million of 400 million adults in Southeast Asia are considered “underbanked,” meaning that they have bank accounts but limited access to financial services. To them, digital banking could be easy access to credit and other financial services. This high potential for growth will also likely attract investors. 

Since 2015, people and companies have invested $37 billion in fundings. The report qualifies this by arguing that "investors remain bullish on Southeast Asia largely because of structural drivers in place that will continue to support the growth of the Internet economy: a young population, growing Internet connectivity and rising income levels.”

However, there are some downsides to rapid growth. One of them is regulations. Malaysia’s competition regulator proposed a fine on Grab, a ride hailing service, for violating competition laws due to preventing drivers from promoting rival services. The fine is valued in US dollars to be $20.53 million.

Moreover, with the rise of the internet comes the rise of social media regulations. Singapore recently implemented a law requiring social media sites to remove content that the government terms as inaccurate. There are also labor issues, as industries have a greater demand for tech workers than there are in supply. As a result, counties, such as Singapore, are beginning to look for foreign laborers. 

The predicted high-level growth will have a huge impact on the developing Southeast Asia region. As more and more companies move their services to the internet, millions of citizens will be able to access services. The predicted growth may change as it gets closer to 2025, but for now, many companies are continuing to invest heavily in the region.