Google: Southeast Asia’s digital market to grow more than sixfold to $200b by 2025

Article taken from TechnAsia

There’s a US$200 billion opportunity in Southeast Asia for tech entrepreneurs and investors, according to research by Google and investment firm Temasek. The two industry heavyweights revealed their findings during the E-conomy SEA event in Singapore today.

A slideshow containing key conclusions from the research is embedded below and also available to view here.

Google and Temasek looked into Southeast Asia’s digital market, and specifically the verticals of ecommerce, travel (including airline bookings, hotels, and cab/ride-hailing services), and online media (digital marketing and gaming).

The research did not include areas like education, entertainment, financial services, and healthcare as there wasn’t enough data available, according to Google’s Rajan Anandan.

This market was worth US$31 billion in 2015, and the research projects this worth to be US$200 billion by 2025.

The main drivers for this optimism are a young population (70 percent of people are under the age of 40), increased internet speeds, and increasing GDP (growing at 5.3 percent over the next 10 years).

Capturing that US$200 billion market will take an investment of US$40 to 50 billion over the next 10 years. According to Temasek’s Rohit Sipahimalani, there are 7,000 startups in Southeast Asia, with 80 percent of them based in Singapore, Indonesia, and Vietnam. The region boasts four unicorns (Garena, Grab, Lazada, and Razer), all of which come from Singapore.

Southeast Asia’s startups attracted US$1.1 billion in funding last year, spread over 355 deals. 88 percent of the cash flowed into Singapore and Indonesia, with 65 percent of the sum going into five giant startups – Grab, PropertyGuru, Trikomsel, Qoo10, and iCarsClub.

The key challenges to overcome on this journey are talent acquisition, especially when it comes to engineering, funding beyond the early stages, payment methods for the large unbanked populations of the region, internet infrastructure outside Singapore and Malaysia’s outliers, logistics infrastructure especially in the last-mile delivery sector, and lack of consumer trust due to high levels of online fraud in the region.

Written by Michael Tegos

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