Southeast Asia’s internet economy, spanning online travel to ride-hailing, will reach $50 billion this year, putting it on a solid trajectory to grow fourfold by 2025, according to a joint research report by Google and Temasek Holdings Pte.
As more consumers buy airline tickets and book hotels through smartphones, the region’s online travel market expanded from $19.1 billion in 2015 to $26.6 billion in 2017, according to a report the two companies released Tuesday. The research covered four key sectors of the internet economy: travel, media, ride-hailing and e-commerce.
Online shopping and ride-hailing have come into focus as Grab, Uber Technologies Inc. and Go-Jek capture consumer preferences with evolving business models. Of the $12 billion of capital invested in Southeast Asian internet companies since 2016, $9 billion was raised by its unicorns, or startups with more than $1 billion valuations. The region, which includes Singapore, Indonesia and Malaysia, raised just $1 billion in 2015.
“This shows how global and regional investors have favored the largest and most established internet companies,” the report said.
The growth is being driven by a surging number of new smartphone users. Southeast Asia will have 330 million monthly active internet users by the end of 2017 –- equivalent to the size of the U.S. population — after adding more than 70 million users since 2015.
E-commerce sales of new goods will reach $10.9 billion in gross merchandise value in 2017, almost double their level in 2015, according to the report.
Southeast Asia’s ride-hailing market, which is fiercely contested by Grab, Uber and Go-Jek, is expected to double from 2015 to $5.1 billion in 2017, before reaching $20.1 billion in 2025.
“Millions of users transact and play on their platforms on a daily basis, giving them a head start as they aim to build digital payment services accepted by online and offline merchants,” the report said.