A new research report produced by Google and Temasek is forecasting Southeast Asia's internet economy to grow to about $US200 billion by 2025, from $US31 billion last year, spearheaded by the e-commerce, leisure travel, and online gaming and digital advertisements sectors. It says that, to realize these opportunities, the region needs an injection of up to $US50 billion worth of investments over the next 10 years.
Currently, SEA's e-commerce market contributes only about four percent of total retail sales, a figure significantly lower than the 14 percent that China's e-commerce industry contributed in 2015.
There are about 7,000 start-ups in SEA, 80 percent of them located in Singapore, Indonesia and Vietnam. The report says this creates huge opportunities for startups to move into other, largely untapped, SEA markets. In the region, just five start-ups make up 65 percent of total investments: Grab, PropertyGuru, Trikomsel, Qoo10 and iCarsclub.
According to the report, the Philippines and Thailand have a nascent start-up scene with a strong potential in e-commerce and logistics. The number of start-ups in the region is expected to grow, as evidenced by the fact that in just four years venture capital funding grew more than 10 times to $US1.1 billion by 2015.
Rohit Sipahimalani, Joint Head, Portfolio Strategy & Risk Group, and Joint Head, India at Temasek, said: 'From a growth perspective that's fantastic. But keep in mind that this figure is one-fourth the amount raised in Israel alone last year, and less than one-fifth the amount invested in India.' He added: 'As we have more success stories coming out of the region, that will start to attract more capital.'