Stocksak: Southeast Asia Internet Economy Forecast Cut on Economic Headwinds


© Stocksak. FILE PHOTO – A man walks past the sign for “Google for India”, India’s annual technology event, September 19, 2019. REUTERS/Sankalp Phartiyal


By Chen Lin

SINGAPORE, (Stocksak), The estimated value of Southeast Asia’s internet economy by 2025 is $330 billion. However, this estimate is a decrease from the previous forecast due economic uncertainty and more pressure for tech companies to make profit.

The annual report, by Alphabet (NASDAQ:)’s Google, Singapore state investor Temasek Holdings and global business consultants Bain & Company, trimmed its forecast for 2025 from $363 billion in last year’s report.

“Amidst global macroeconomic headwinds and reduced disposable income, skyrocketing costs, and lower product availabilities, there is tapering demand from Southeast Asia customers,” the trio stated in a joint release.

This region, which includes 11 countries, is one of the fastest growing internet markets in the world. It has a young population, widespread smartphone use and urbanisation, as well as a growing middle class.

The report covers Indonesia, Thailand and Vietnam as well as Singapore, Malaysia and the Philippines. It predicts that the internet economy will grow 20% to $200 billion this year, three years earlier then was anticipated in the inaugural report.

All six countries will experience double-digit growth between now 2025, with Vietnam the country with the fastest growing digital economy at 28%.

Indonesia, the most populous country in the region, saw its digital economic growth of 22% to $77Billion this year. This contributes to approximately 40% of Southeast Asia’s online spending.

On the tech investment front: While early-stage deals have strong momentum, late stage deals are experiencing “more pronounced drops” and a pause on plans to go public.

Global investors are becoming more cautious due to rising interest rates and falling stock valuations. Initial public offering prospects will grind to a halt over the next 12-18 months, the report stated.

Digital financial services are expected to surpass e-commerce and become the region’s most important investment sector. Payments will make up the majority of the deals.

The sector saw record funding of $4 billion in the first half 2022.

The report indicated that Vietnam, Indonesia, and the Philippines are likely to attract more investment in the long-term.

“Universally investors generally expect deal activity to recover from 2024 onwards,” said Fock Wai Hoong, Deputy Head of Technology & Consumer and Southeast Asia at Temasek.

The report stated that venture capitalists had $15 billion to sustain deals at the end of 2021.

News Source and Credit

Stocksak Editorial

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