South-East Asia’s booming Internet economy is set to double to US$363bil by 2025, eclipsing the previous forecast of US$300bil , research from Google, Temasek Holdings Pte and Bain & Co shows.

E-commerce, travel, media, transport and food are driving the region’s digital growth, with online spending rising 49% in 2021 to US$174bil , the companies said in their latest annual report. The region added 60 million new Internet users since the start of the pandemic, led by Thailand and the Philippines.

South-East Asia, home to Alibaba Group Holding Ltd’s Lazada and Tencent Holdings Ltd-backed Sea Ltd, will see a 62% increase in e-commerce gross merchandise value (GMV) this year as home-bound consumers pick up groceries and essentials from the likes of Lazada’s RedMart and Sea’s Shopee.

Online shopping is now forecast to hit US$234bil in 2025 versus a previous US$172bil estimate, making up 64% of the region’s total estimated digital GMV of US$363bil , the research shows.

“Continued shifts in consumer and merchant behaviour, matched with strong investor confidence, have ushered South-East Asia to its ‘digital decade’ - and the region is on its way towards US$1 trillion GMV by 2030,” Google and its partners said in the report.

Deals for Internet companies in South-East Asia totaled US$11.5bil in the first half of this year, putting the region on track to surpass the US$11.6bil investment in all of 2020. Some of the region’s most valuable tech startups including Grab Holdings Inc and GoTo are preparing to go public to raise capital or allow early investors to monetise their holdings.

Indonesia is the region’s largest digital economy where online spending will probably double to US$146bil by 2025. Venture capital deals in the country in the first half of 2021 surpassed the full-year totals of each of the past four years, the report showed.

Vietnam is expected to grow at the fastest rate among the six countries tracked by the study, nearly tripling in online GMV over the next four years.

 - Bloomberg