ER
THE COVID-19 pandemic in which most countries have imposed travel and crowding restrictions has prompted a massive migration in the way humans communicate from offline to online, including how to connect economically.
And apparently this situation has also accelerated online absorption at a faster rate than previously estimated so that the sectors that have the most links online are growing very rapidly in several regions, one of which is perhaps phenomenal in the digital economy. One of the regions with the fastest and highest penetration rate for the digital economy is Southeast Asia.
A recent joint report by Temasek, Google, and Bain said that the digital economy in Southeast Asia is growing very rapidly where this year alone is on track to surpass the US$170 billion (IDR2,410 trillion) mark for online transaction value or GMV, starting from online trading to food delivery.
Indonesia, which has a population of around 273 million people, is still the anchor of the region as the largest contributor, reaching 40% of the region’s GMV or around US$70 billion. Thailand followed with US$30 billion, then Malaysia and Vietnam with US$21 billion each, and Singapore with US$15 billion.
GMV in a region where regional online giants such as Sea Ltd, Bukalapak and Grab Holdings are the main players is expected to double to US$360 billion (IDR5.135 trillion) by 2025, and skyrocket again in 2030 to hit the US$1 trillion (IDR14,263 trillion) which is almost equivalent to Indonesia’s gross domestic product in 2020.
With an exponential surge like this, it’s no wonder Southeast Asia is turning into one of the fastest growing digital markets in the world. All of these things were hoisted by the increasing number of smartphone users where currently the number of online users in the six major Southeast Asian countries has reached 440 million people or 75% of the total population of the six countries, which exceeds the total population of the United States.
60 million of that number were forced to go online because the pandemic made them limit their offline movements so that they finally turned to online, including in the way of economic transactions, be it buying or selling. 80% of the 440 million people have at least once transacted online. This figure does not include four other Southeast Asian countries, namely Brunei, Cambodia, Laos and Myanmar.
Moreover, if Timor Leste and Papua New Guinea are included in the calculation of Southeast Asia, then imagine how big Southeast Asia’s digital market is, which maybe only China and India that can beat it.
More and More Unicorns
The scale of the digital market is so large and the online lifestyle is increasingly mass, making Southeast Asia turn into a large ecosystem for the growth of internet-based start-ups, commonly called startups, so that together with India, Southeast Asia is the sexiest region for the digital economy.
Some of these startups have become online giants with a minimum value of US$1 billion (IDR14.2 trillion), which are commonly called “unicorns” after being partnered with or receiving capital injections from large cross-border economic entities in the form of venture capital or joint ventures.
DealStreetAsia data shows that during this year alone until early October, there were 15 unicorns supported by new venture capital. The value is US$17.2 billion, or double the US$8.5 billion injected over the full year last year.
Even though until 2020 there were only 19 unicorns based on venture capital, including Singapore-based Lazada which first held the title of unicorn in 2013. But this year the unicorn boom is hitting Southeast Asia, which has a total of 27 unicorns.
The increasing number of unicorns means that investors buy new shares of these start-up companies at higher prices, so it is not surprising that Southeast Asia is one of the most attractive regions for startup investment.
This is not only driven by the continued growth of the middle class which is the main driver of mobile and internet penetration, but also by the increasing demands for digitizing sales, purchasing, funding and small-medium enterprises or SMEs in Southeast Asia.
This increase in the number of unicorns shows that the company’s valuation in general is increasing and will continue to grow, especially since the availability of capital for startup expansion in Southeast Asia is almost endless.
One of the factors is China’s crackdown on big technologies that makes global investors think twice about investing in Chinese companies because of the business risks that could arise from the Chinese government’s actions so that capital is diverted, one of which is to Southeast Asia.
Another factor in Southeast Asia’s favor is the political and trade feud between China and India that has made Chinese venture capitalists turn their attention to Southeast Asian startups.
Southeast Asia is relatively stable and has a young demographic that is closely related to openness to innovation. And this is becoming a promising and attractive digital economy ecosystem for everyone, not only China, but also other parts of the world. Therefore, there is no better time than now to invest in Southeast Asia’s digital ecosystem.
It’s not as well established as China or the United States, but a nascent ecosystem like Southeast Asia always offers abundant opportunities, moreover, Southeast Asia’s digital economy is getting more and more attractive, which can be seen from the efforts of digital players to make themselves global players as seen from their intensification. mergers and efforts to cooperate with global digital players who are already very gigantic. [antaranews/photo special]
