Southeast Asia has proven to be incredibly resilient over the past several years as residents and businesses have turned to the internet, frequently for the first time, to find new ways to complete tasks that were previously only possible in person. We witnessed such tenacity once more in 2022, as the area started to recover from the pandemic while global economic headwinds were intensifying.
Southeast Asia’s digital economy is still demonstrating its strength and dynamism despite the obstacles. This year, gross merchandise value (GMV) is predicted to increase by 20%, reaching a value of US$200 billion. Fortunately, the region is on course to reach that milestone three years earlier than we anticipated in our first report in 2016, as the most recent e-Conomy SEA 2022 research reveals.
100 million new people have joined the internet in the past three years. As technology becomes more and more ingrained in people’s lives, especially in metropolitan areas, the rapid adoption of digital services that we observed during the pandemic is now slowing down. Many online firms are refocusing their efforts from acquiring new clients to developing deeper relationships with their current clientele.
However, there is still a lot of potential for the digital economy to expand, particularly in suburban areas where adoption of digital services is still comparatively low.
In light of it, the following are the report’s primary highlights for 2022:
Different growth trajectories are used by different digital sectors
The pandemic caused a large increase in e-commerce, which has continued to flourish with GMV increasing 16% annually. Despite consumers partially returning to in-person shopping and companies concentrating on boosting profitability, such as by lowering prices and monetizing value-added services, growth persists. After tripling during the epidemic, food delivery is back on trend and is predicted to expand by 14%. Transport is on track for a strong rebound with a 43% increase year over year, but it still faces challenges including high fuel prices and a labour shortage. The resumption of travel is expected to result in a notable 115% gain, helped by the opening of international crossings. Though it may take some time before they fully recover, the transport and travel sectors are anticipated to experience a modest rebound through 2019.
Due to post-pandemic changes in offline to online behaviour, Digital Financial Services (DFS) has continued to expand, and we are witnessing the emergence of successful business models. While conventional financial services speed up digitalization to compete with these emerging companies, pureplay fintechs and consumer tech platforms are fortifying their positions in the region as they race to acquire various customer segments.
Investments in technology are still thriving
We also gain insight into how investors in Southeast Asia’s digital economy view the region’s growth and innovation through the research. Despite the present economic climate making investors more cautious, tech investment remained strong throughout the first half of 2022, with a 13% increase in deal value from H1 2021 to H1 2022. DFS continued to be the most funded sector in Southeast Asia and surpassed e-commerce as the top investment sector, continuing the trend from the second half of 2021. The digital decade has promise for emerging industries, as over 80% of VCs anticipate that investments will shift to Web3, SaaS, and health tech.
New tools pave the way for a digital economy that is sustainable
In the past, Southeast Asia’s digital economy has been supported by factors including payments, funding, logistics, internet access, and customer trust. Although there has been great progress in many areas, as the digital economy grows, we must widen our goals to make sure that no one is left behind and the rise is sustainable.
Given the current macroeconomic environment, it is obvious that enterprises must prioritise the road to profitability in the coming two to three years if they are to keep up their growth momentum. Long-term success will hinge on digital inclusiveness and solving escalating social and environmental issues. Everyone, including businesses, clients, investors, and governments, has a shared obligation to contribute to the achievement of these objectives.
Southeast Asia is demonstrating its ability to be resilient and flexible despite the global economic challenges. The region’s digital economy is predicted to develop twice as quickly as GDP in most nations through 2030 and might reach up to $1T if it is successful in scaling sustainably and realising its full potential. Its fundamentals are still robust, and the digital decade holds immense promise.
Source: Blog.Google