Southeast Asians spend 3.6 hours on mobile Internet every day
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Southeast Asians spend 3.6 hours on mobile Internet every day

SOUTHEAST ASIA is the world’s third-largest Internet economy, according to a report by Google and Singapore’s state-backed investment company, Temasek Holdings Ltd.

The Internet has taken Southeast Asia by storm, according to the first-of-its-kind study by the two firms, and digital will help drive what was once one of the most under-developed regions of the world into a US$200 billion economy by 2025. Rich with talent, customers and capital, the region is expected to reach US$50 billion driven largely by the e-commerce and online travel.

Google and Temasek’s report – building on top of the success of their 2015 edition – is filling a data void on more information about Southeast Asia, so it’s no surprise that the top-line numbers have raised eyebrows. There’s an expectation that the numbers quoted by the 2017 “e-Conomy” report will be exceeded quickly, as the region is already expected to make a quarter of its projected value in this year alone suggesting that region is bursting with real potential.

SEE ALSO: Indonesia to ban bitcoin from 2018 in latest Internet crackdown

lazada

Source: Reuters

Southeast Asia’s Internet demographics have seen huge gains in the five years between 2015 and 2020, with a growth rate of 14 percent meaning that it’s beating out China (four percent) and the United States. Among the 11 nations that make up the region, Indonesia has been marked as the fastest-growing market in the whole region, clocking in a 19 percent Internet growth rate.

The region is edging out mainstays of Asia’s Internet landscape, India and China, to emerge as an Internet-savvy hub where users spend an average 3.6 hours on the mobile Internet every single day. That’s higher than the averages in Japan (one hour), the US (two hours) and the United Kingdom (1.8 hours).

And a significant portion of that time is spent on online shopping – Southeast Asians spend twice as much time as shoppers in the United States on e-commerce marketplaces, driving the explosion of success for companies like Indonesia’s Tokopedia and Singapore’s Lazada.

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E-commerce remains the biggest slice of the Internet pie, growing at a compound annual rate of 41 percent to touch US$10 billion in 2017. That’s already US$5.5 billion more than was earned just two years ago. Those numbers only take into account first-hand sales, meaning that a lucrative second-hand and consumer-to-consumer sales don’t even get counted.

The segment will likely remain the most lucrative for the whole region, especially as digital and cashless payments infrastructure continues to improve. For now, the Internet is proving to be a cheap way for merchants to access commercial practices, especially as real estate value continues to rise in the region’s biggest cities like Jakarta and Singapore. The region’s e-commerce market is expected to exceed US$88.1 billion in value by 2025.

Just because e-commerce is the biggest market, that doesn’t mean travel loses out — in fact, the online travel industry will remain the biggest segment for digital spend and experience fourfold-growth by 2025. The industry is expected to be worth US$90 billion by then, driven by hotels, airlines and ride-hailing.

gojek

A Go-Jek passenger wears a helmet with the startup’s logo as he rides pillion. Source: Shutterstock/findracadabra

Hotels and airlines are boosting numbers, with services such as Traveloka helping out. More and more businesses are adopting tech into their daily operations to make booking rooms, tours and searching for the best eats much easier. It’s not just local spending here either – the expatriate and foreign travel industries are still pouring into the region, and digital services are making it easier to get around the fragmented region.

SEE ALSO: 90 percent of Southeast Asia’s poor live in Indonesia and the Philippines

The ride-hailing market is now seeing as many as six million rides being booked across all platforms every single day, and expect those numbers to go up as more platforms partner with traditional taxi services to bolster numbers. The market has seen huge growth since 2015 and will be worth US$20.1 billion by 2025.

Currently, there are battles between US Uber and the region’s leader, Grab, for dominance in the market (though there are some rumours that Uber is planning an exit). They’ll want to be wary of Indonesia’s Go-Jek, whose empire has plans to move beyond Indonesia.

This article was originally published on our sister site Tech Wire Asia