In the wake of the pandemic, global growth has encountered immense challenges, and commercial activity has been affected worldwide. However, Southeast Asia’s online economy has skyrocketed, with lockdown restrictions hot-footing the digital adoption originally predicted to occur over the spread of the next few years.
According to the e-Conomy SEA 2020 report, digital spending in Southeast Asia has increased to $620 billion USD, an exponential increase, compared to last year’s $600 billion USD. In addition, it is expected to almost double to $1.2 trillion USD by 2025.
Undeterred by the global economic contraction, the region’s internet economy gross merchandise value (GMV) has remained at $100 billion USD, with projections showing that it is likely to surpass $300 billion USD by 2025.
Online spend is exceeding digital user growth in Southeast Asia
The report outlines a huge turn towards digital channels following COVID-19, with eCommerce recording a 63% growth. On the contrary, the online travel sector experienced a 58% contraction, though it hopes to bounce back at $60 billion USD by 2025. Other digital services that gained momentum and saw subsequent investments were the food delivery, online payments, healthtech and edtech sectors.
Shifting towards a digital world
This year also marked the biggest shift towards cyberspace yet, with as many as 400 million registered internet users, accounting for 70% of the ASEAN region’s population. About 40 million joined for the first time, a sharp increase compared to last year’s 10 million new online users.
COVID-19 has had a significant impact on the daily lives of Southeast Asians and technology has played a crucial role in providing access to essential and non-essential digital services, from healthcare and education to grocery shopping and entertainment.
Eight out of ten Southeast Asians said technology helped them withstand the pandemic disruptions, and more than one in three online consumers started using a new digital service, with 94% planning on continuing to use at least one post-pandemic.
These 40 million internet newbies came online from six countries across ASEAN, namely Singapore, Vietnam, Thailand, Malaysia, Indonesia and the Philippines. In the last three, the majority of new digital consumers live in non-urban areas, which further highlights the importance of improved internet connectivity across all demographics—a common point of contention within the region. As the demand and access to online services grow beyond big cities, the increasing reach in previously offline zones demonstrates encouraging progress in bridging the metropolitan-rural digital divide.
Singapore is leading the way
A 70% decline in online travel caused Singapore’s economy to drop by 24% to $9 billion USD this year, but it is hoping to see a surge by 19% to $22 billion USD by 2025. Singapore continues to be Southeast Asia’s growth promoter and high-tech hub, hosting the highest number of unicorns in the region.
The city-state has economically reinvented itself several times, continuously adapting to the latest changes and trends in the global market. Its vibrant free-market economy is constantly evolving, innovating and developing, giving it one of the highest per capita GDPs in the world.
Singapore’s auspicious trade location, low tax rates, the relatively transparent legal system, trade flexibility and investment incentives have placed the country second in the World Bank’s Ease of Doing Business Report and first in the Index of Economic Freedom.
This island nation enjoys a corruption-free single-party political system, providing unusual social and political stability in an otherwise turbulent region. Armed with strong government policies and a highly skilled vernal population, Singapore aspires to become the world’s first smart nation, where everything will be integrated and interconnected through cyber-physical systems (CPS) and the Internet of things(IoT).
To assist in reaching that goal, Singapore has the second-fastest internet in the world and is a global leader in 5G readiness. With a fast IT network currently being one of the top in-demand infrastructures, the country has managed to lure global giants such as Google and Facebook into opening new headquarters in the country in 2016 and 2018, respectively.
By making bold moves towards digital adaptation, Singapore continually expands frontiers and stays ahead of the curve. In the aftermath of the pandemic and its cascading economic effects that are still unravelling, going digital has turned from a tactical option to a functioning prerequisite. As shown in the e-Conomy SEA 2020 Report, people have started using the internet more extensively and in a wider range of ways than ever before. The skyrocketing digital spending in Southeast Asia is a quintessential example of rebuilding the economy by seizing the underlying opportunities amid the current crisis.
Agility, resilience and an open mind towards digital channels are key factors for tiding over the present and future challenges. By fostering startups, extending digital boundaries and making the internet more accessible for its tech-savvy population, Southeast Asia is shaping the future of technology in the area and beyond.