E-commerce has driven significant growth in the Philippine digital economy at 55 percent, according to the latest e-Conomy SEA 2020 report.
Google, Temasek and Bain & Company released the fifth edition of the e-Conomy SEA 2020 At full velocity: Resilient and racing ahead Report released today (Nov. 10) showed that the COVID-19 pandemic has led to big shifts across the region where 40 million people came online for the first time this year, bringing the total number of Internet users in the region to 400 million.
Based on the report, a large number of the new digital consumers are from non-metropolitan areas, specifically in Malaysia, Indonesia and the Philippines. More than one in three digital service consumers started using a new online service due to COVID-19, and of these, 94 percent intend to continue using the service beyond the pandemic.
The 55 percent growth in the Philippine digital economy has largely offset declines in Travel, Transport and Food Delivery. Overall, in 2020, Gross Merchandise Value (GMV) is expected to reach a total value of $7.5 billion, having grown at 6 percent year on year. Looking at 2025, the overall digital e-Conomy will likely reach $28 billion in value, re-accelerating to ~30% Compound Annual Growth Rate (CAGR).
Bernadette Nacario, Country Director, Google Philippines said, “The country's e-commerce growth is a mirror of both the resilience and vast potential of our digital economy. We will continue to help the country further realize this potential by helping more businesses move online, equipping our workforce with digital skills, and enabling the new generation of startups with training and technology. Google is a partner of the Philippines in taking the progressive steps towards a digital future.”
The report also said that despite a challenging economic environment, Southeast Asia’s Internet sectors continue to see strong growth, hitting $100 billion in 2020, and are on track to cross $300 billion by 2025.
However, there has been a major shift in the verticals contributing to the region’s digital economy. E-commerce has emerged as the largest vertical, growing 63 percent to reach $62 billion in 2020, and is expected to continue its growth trajectory, reaching $172 billion by 2025. On the other hand, and not surprisingly, travel was the most affected segment, contracting 58 percent to $14 billion.
The e-Conomy Southeast Asia Report sheds light on the Internet economy in the region, covering Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The report dives into trends across seven Internet economy sectors--e-commerce, Online Media, Transport & Food, Online Travel, Digital Financial Services, and the newly added HealthTech and EdTech. The report also reviews the tech investment landscape across the region and reveals what investors are looking for in the current environment.
Stephanie Davis, Vice President, Google Southeast Asia said, “COVID-19 has changed people’s daily lives in fundamental ways. The digital adoption that was projected to happen over several years has accelerated. With its young, diverse and mobile-first population, and a host of innovative start-ups, Southeast Asia will continue to define the future of digital ecosystems. At Google, we are committed to supporting Southeast Asia's growth by investing in digital skills and partnering with the ecosystem to make the Internet more helpful and accessible throughout the region.”
Rohit Sipahimalani, Chief Investment Strategist; Head, South East Asia, Temasek said, “Southeast Asia’s Internet economy continues to present investible opportunities for Temasek, and we expect to continue to increase our investments in this space in the next few years. The region’s Internet economy will be the key driver of social progress in areas of interest to us, and support more sustainable and inclusive growth.”
He said that while COVID-19 has been challenging for everyone, the changing behavior of consumers has massively accelerated the digital adoption rate, even in a country like Singapore, where it was already very high.
“Despite significant challenges this year, the long-term outlook for Southeast Asia's digital economy remains more robust than ever. We expect that a number of factors, including dramatic growth of consumer adoption, greater trust in technology, and market forces creating significantly greater online supply, will give a permanent boost to the digital economy,” explained Aardash Baijal, partner and head of Bain & Company’s Digital Practice in Southeast Asia.
“Investors, established players and digital insurgents all continue to face challenges in this market, and we are partnering with our clients to tackle them head-on – be it navigating the rapidly evolving market dynamics, accelerating the pace of innovation or delivering sustainable economics.”