The digital economy in Southeast Asia is on track to hit $240 billion by 2025, which is $40 billion more than previous estimates, according to the latest e-Conomy Southeast Asia 2018 report from Google and Singapore-based Temasek, which manages investments and assets for the government.
The report said the internet economy in Southeast Asia “hit an inflection point in 2018,” thanks in part to the most engaged mobile internet users in the world, as well as industries like ecommerce, online media, online travel and ride-sharing, which grew at never-before-seen rates.
As a result, the region’s internet economy will hit $72 billion this year alone, which means it will have more than doubled since 2015. And, the report said, investor confidence in the region is growing as startups raised $9.1 billion in the first half of the year, which is almost as much as they raised in all of 2017.
This year was also the first that ecommerce platform Lazada, which Hangzhou, China-based shopping titan Alibaba acquired in March, brought its Singles Day hysteria to the six Southeast Asian countries in which it operates: Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam.
As a result, Singapore-based Lazada said 20 million consumers in the region browsed and shopped on Nov. 11. The most popular brands were makeup companies Maybelline and L’Oréal Paris, as well as baby formula brand Enfa and smartphone brand RealMe.
In a statement, Alibaba said its investment in Lazada underscores its confidence in the growth prospects of Southeast Asia, which is key to its plan for global growth.
“With a young population, high mobile penetration and just 3 [percent] of the region’s retail sales currently conducted online, we feel very confident to double down on Southeast Asia,” said Lucy Peng, who served as Lazada’s chairman at the time, in a statement.
These factors—young consumers and more mobile devices—are affecting virtually every country in the region. Plus, since ecommerce adoption is still quite low, there’s plenty of room to grow as they overcome lingering challenges like digital payments and logistics.
In multiple cases, governments have stepped in to try and usher in a new era of commerce. That includes Malaysia, where a government initiative aims to increase online shopping, and Thailand, where the government has a digital initiative to spur growth and has introduced a money transfer service called PromptPay. In Vietnam, the prime minister announced a plan in 2016 to grow ecommerce over the next four years. Halfway through, the FT reports, online businesses are growing thanks again in part to young consumers and mobile devices. Logistics, however, remain a challenge between road conditions, traffic and sprawl.
While shoppers in Singapore can choose from Lazada, Amazon and online marketplace Qoo10, which analytics firm SimilarWeb said was the most trafficked retail site in terms of average monthly visits on desktop at 3.5 million, ecommerce is less developed in the Southeast Asian countries of Cambodia—where electricity is particularly expensive—Laos, Myanmar, Brunei and Timor-Leste. They, too, have similar challenges, although reports say mobile commerce is starting to grow in Cambodia thanks in part to a large population of consumers under 35, as well as in Myanmar, where 40 million consumers are using smartphones and have access to mobile payments.