A deep dive into the health and prospects for Southeast Asia’s
digital economy has predicted little slowdown across six countries –
Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam –
although some sectors and some destinations will fare better than
others.
The e-Conomy SEA 2022 report compiled by Google, Temasek and Bain
& Company investigated trends and insights of the five mainstay
digital sectors - e-commerce, travel, food and transport, online media,
and digital financial services (DFS).
The report projects that Southeast Asia’s digital economy is on track
to hit US$200 billion gross market value in 2022, three years earlier
than was anticipated in the inaugural report shared in 2016.
Post-pandemic, transport and online travel sectors are expecting
strong recovery, 43% and 115% YoY growth respectively, as international
travel resumes.
However, these sectors face headwinds such as increasing fuel prices,
supply shortages, and continuing travel restrictions in high-value
corridors (e.g. China, South Korea), while consumer demand is suffering
from skyrocketing prices.
Recovery is expected to be gradual and take years to reach 2019 levels, the report noted.
Below are key findings from the report:
Changing priorities
Most digital players are now
shifting priorities from new customer acquisition to deeper engagement
with existing customers to increase usage and value.
Driving social progress
Southeast Asia’s digital
economy has the potential to reach greater heights and at the same time
drive social progress and make a positive impact on the environment.
“Together with businesses, governments and communities, Temasek is
committed to using our catalytic capital to spur sustainable and
inclusive growth so that every generation prospers,” said Fock Wai
Hoong, deputy head, technology & consumer Southeast Asia, Temasek.
Doubling down on inclusivity
While increasing
profitability and maintaining growth momentum in the next two to three
years has become a priority for companies across the
region, it’s just as important to ensure the digital economy scales in an environmentally and socially sustainable way.
“Addressing ESG concerns and doubling down on our collective efforts
to improve digital and financial inclusion will be a key to unlock the
full potential of Southeast Asia’s 1 trillion digital economy by 2030,”
noted Stephanie Davis, vice president, Google Southeast Asia.
Turbulence ahead
The acceleration of the digital
economy during the pandemic has unlocked significant value for industry
sectors, but it is critical to recognise that the new macro turbulences
ahead will see different growth archetypes emerging across verticals.
“We are seeing market leaders take a longer-term recovery strategy
and invest in capabilities to target markets and consumer segments with
higher value generation potential,” said Florian Hoppe, partner and head
of digital practice in Asia-Pacific, Bain & Company.