An annual report on Southeast Asia (SEA) by Google, Temasek and Bain & Company announced that the region’s digital economy is now worth a staggering US$100 billion (S$138 billion), with US$12 billion (S$16.6 billion) coming from Singapore. The report also revealed that Singapore normally receives 65% of SEA’s funding for startups.
Jointly published by Google, Temasek, and Bain & Company, the report studied the services and startups in the internet economy in the region.
The main findings of the report showed that SEA’s internet economy is now worth US$100 billion (S$138 billion), with the two top markets being e-commerce and ride-hailing/food delivery services.
Also, because of access to great talent, Singapore was found to have received most of the region’s funding for startups, with the city-nation getting 70% of all funding in the first half of this year.
According to the report,, which was published on Thursday, October 3, SEA’s internet economy is set to triple to US$300 billion (S$414 billion) by 2025.
Google noted that because of the overwhelming growth in SEA, its previous predictions had to be moved upwards by US$60 billion. SEA is moving at “two speeds: fast and faster,” according to Google’s SEA managing director, Stephanie Davis.
Davis added that the region, with its 180 million internet economy users, had the world’s highest mobile engagement rates, and a gross merchandise volume growth higher than even the US and China.
Fastest-growing industries in SEA
The report identified two industries as the fastest growing in 2019—ride hailing (which encompasses transportation and food delivery services) and e-commerce.
According to the report, Grab and Go-Jek dominate the ride-hailing industry in SEA, which is now worth an estimated US$12.7 billion (S$17.5 billion). This can be credited to an increase in dual-income, middle class households looking for time-saving solutions to maximising their time.
In terms of food delivery services, Singapore in particular saw a 100 percent increase in food delivery demands from 2018. This interest skyrocketed the value of its ride-hailing market to US$3 billion (S$4.14 billion).
Singaporeans’ higher disposable income average resulted in values three or four times higher than other countries in the region.
The report noted that since 2018, food delivery “has undergone a fundamental shift in consumer behavior…from a niche service that was used only occasionally by a small group of users, it has become common for busy professionals and families alike to order food online for everyday meals and special occasions”.
The value of food delivery services is in “sparing consumers the inconveniences of humid weather and traffic jams” and in delivering hot food straight to people’s homes. Customers have a wide range of food choices available to them, from cheaper meals to more upscale options.
The report estimated the e-commerce market in SEA to be worth US$38 billion, with 5 million orders placed everyday.
The e-payments (US$600 billion) and online travel bookings (US$34.4 billion) industries were also identified as growing industries in the region.
Singapore receives most funding in SEA
Singapore is the most funded country in the region.
In the report, Temasek’s investment head, Rohit Sipahimalani, noted that of the US$7.6 billion (S$10.5 billion) funding for regional startups in the first half of this year, Singapore received 70 percent (US$5.3 billion/S$7.3 billion).
Singapore, with the best talent pool in SEA, particularly in the engineering department, attracts the most startups. Businesses born in the city-nation often serve the rest of SEA.
Of the region’s 11 unicorns, Sipahimalani estimated that most are from Singapore, and then Indonesia and Vietnam.
They include Singaporean startups like Carousell, Ninja Van, PropertyGuru, ShopBack, Zilingo, Carro, aCommerce, GoBear and One Championship.
Indonesia’s Halodoc and Akulaku, Vietnam’s Sendo and Tiki, and Malaysia’s iflix were also on the list.
The total funding for 2019 is expected to beat 2018’s record-breaking amount of US$14.1 billion (S$19.5 billion), Sipahimalani said, adding that the majority of those funds will be going to ride-hailing and e-commerce businesses. /TISG