Southeast Asia's internet economy is forecasted to reach 300 billion U.S. dollars by 2025 as millions of people in the region take up online shopping and embrace ride-share food delivery, an industry report said on Thursday.
To hit that target, the online industry is expected to grow by 200 percent over the next five years from an estimated 100 billion U.S. dollars this year, according to the report by Google, Singapore state investor Temasek Holdings and global business consultants Bain & Company.
The annual report lifted its 2025 outlook from 240 billion U.S. dollars previously after a tripling in growth in the past four years alone as young internet users turn to their phones to do everything from banking and playing games to purchasing plane tickets.
More than 37 billion U.S. dollars has been invested in Southeast Asian online companies over the past four years with the majority going into e-commerce firms like fashion retailer Zilingo and ride-hailing unicorns such Grab and Gojek, the report found.
Ride-hailing alone was worth 13 billion U.S. dollars, quadrupling in value since 2015, and was expected to reach 40 billion U.S. dollars by 2025, when food delivery will be worth as much as transport.
The average annual growth rate of five percent since 2014 puts Southeast Asian countries far ahead of the global average.
There are 360 million internet users across the countries covered in the report – Indonesia, Malaysia, Vietnam, Singapore and the Philippines – up from 260 million four years earlier.
That compares to around 4.4 billion internet users worldwide, up nine percent on a year ago, according to wearesocial.com, a digital monitoring service.
However, there are some significant headwinds to the rapid regional growth, most notably among which is regulatory risk.
Malaysia's competition regulator on Thursday proposed a fine of more than 86 million ringgit (20.53 million U.S. dollars) on Grab for violating the country's competition law by preventing its drivers from promoting rival services. Grab has a month to appeal before a final decision.
Grab is the biggest ride-hailing firm in Southeast Asia, and has strengthened its hold on the market since buying U.S. rival Uber's operations in the region last year.
Singapore fined Grab and Uber 9.5 million U.S. dollars for breaking competition rules for the merger.