Southeast Asia’s Internet economy hit US$100 billion for the first time this year, up from $72 billion in 2018, with Vietnam and Indonesia topping the list of regional leaders, a Google-backed report shows.
Internet economies in Malaysia, the Philippines, Singapore, and Thailand are growing between 20 and 30 percent annually, but Indonesia and Vietnam are way ahead of the pack with growth rates in excess of 40 percent year-over-year, according to the e-Conomy SEA report 2019.
The report from Google, Temasek, and Bain & Company, released on Thursday, highlights the most significant industry trends observed in 2019.
It also analyzes the current and future potential of the Southeast Asian Internet economy across its six largest markets - Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
These countries and Brunei, Cambodia, Laos, and Myanmar make up the Association of Southeast Asian Nations (ASEAN).
Comparatively, Vietnam and Indonesia are the region’s two breakthrough markets in the development of an Internet economy.
The report shows that Vietnam's digital economy hit $12 billion in 2019 and is expected to surge to $43 billion by 2025, with growth by e-commerce, online tourism, online communications and media, and ride-hailing apps.
In 2019, an estimated 61 million Vietnamese had Internet access and the average Vietnamese spent three hours and 12 minutes each day using the Internet on mobile devices such as smartphones.
As a region, Southeast Asians spent 52 percent of their Internet time on social networks and OTT (over-the-top) apps, 20 percent of their time on video apps, 11 percent of their time gaming, and the remainder divided between various utilities apps.
Even though global tech funding took a hit from global geopolitical and economic instability, Southeast Asia still saw significant investment in the sector, even compared to its record peak in 2018.
Vietnam has become the third most-funded economy in the region, with $600 million invested from 2018 to the first half of 2019 thanks to Hanoi’s and Ho Chi Minh City’s placement among the top seven cities in the region in terms of Internet economy development.
While the number of Internet-related investment deals in Vietnam declined in 2019, the overall value of those deals increased.
International investments in local tech firms including MoMo, Sendo, and Topica have contributed to enhancing Vietnam’s reputation as a favorable destination for investors.
“Mobile technology is changing the way Southeast Asians work and live; providing them with greater access to new opportunities and markets,” commented Rohit Sipahimalani, head of the Portfolio Strategy and Risk Group at Temasek, an investment company headquartered in Singapore.
Sipahimalani said the trend is creating attractive investible opportunities in Southeast Asia’s Internet economy.
“These opportunities tap on structural trends that are being driven by transformational technologies and changing consumption patterns,” he explained.
In Vietnam, however, only one in five small and medium-sized enterprises (SMEs) has an online presence and most Vietnamese SMEs are not ready to take on opportunities in the digital economy.
To help SMEs tackle this challenge, Google launched the Accelerate Vietnam Digital 4.0 project in 2018 with the aim of providing complimentary courses in digital skills, from fundamental to advanced levels, as well as management and leadership training for 500,000 SME employees in Vietnam.