Manila, Philippines – With a fast-growing base of digital consumers and merchants, acceleration in e-commerce, and food delivery, the Philippines’ current internet economy has been recorded as the nation with the highest internet economy growth, with a rate of 93%, according to the latest collaborative research from Google, Temasek, Bain & Company. This has previously been predicted to grow from US$9b in 2020 to US$17b this year.
Currently, the SEA region is estimated to reach US$174b in gross merchandise value (GMV) by the end of 2021. Furthermore, the region’s digital economy is further expected to reach US$360b by 2025, outgrowing the earlier projection of US$300b.
“Much like the rest of the region, the Philippines is entering its digital decade as the internet increasingly becomes an integral part of the consumers’ daily lives. The growth of the digital market in the country was driven by the explosive 132% growth in e-commerce and double-digit growth across all sectors including food delivery services,” noted the study.
The country has seen 12 million new digital consumers since the start of the pandemic, up to the first half of 2021. About 63% of those new digital consumers are from non-metro areas and 99% say that they intend to continue using these services going forward. Pre-pandemic users have consumed an average of 4.3 more services since the pandemic began and 95% of those pre-pandemic consumers are still found to be digitally-inclined consumers today.
“The pandemic has led to enduring digital adoption in Southeast Asia, which has propelled its internet economy to new heights. Temasek looks forward to increasing our investments in Southeast Asia’s digital champions, using our capital to catalyse digital solutions and accelerate economic growth and job opportunities for our local communities,” said Rohit Sipahimalani, chief investment strategist and head of Southeast Asia at Temasek.
It is estimated that the Philippines’ overall internet economy will likely reach US$40b in value, growing at 24% CAGR, which can be amplified due to strict lockdowns as well as heightened adoption of certain digital services.
Willy Chang, associate partner at Bain & Company, commented, “The Philippines’ internet economy is the fastest growing in SEA as a result of strict COVID-19 restrictions and a large number of new digital consumers. There remains ample headroom for growth as long as digital enablers continue to develop. For example, we saw a strong adoption of digital payment methods such as e-wallets and national real-time payment rails which facilitated the growth of the internet economy.”
The report also noted that 39% of local digital merchants believe they would not have survived the pandemic if not for digital platforms. Digital merchants now use an average of two digital platforms, but profitability remains a top concern. Digital financial services saw very rapid growth this year, not only from e-wallets but also from the national payment rail.
Of the digital merchants surveyed, 97% now accept digital payments, while 67% have adopted digital lending solutions. Many are also embracing digital tools to engage with their customers, with 68% expecting to increase usage of digital marketing tools in the next five years.
Bernadette Nacario, country director at Google Philippines said, “The digital adoption we’ve seen in the Philippines since last year has contributed to the accelerated growth of the country’s internet economy, magnifying its vast potential. Google is committed to helping Filipinos maximize the opportunities of going digital and helping the country shape an internet economy that is equitable, safe, and inclusive through programs and products that improve lives.”
