Kuala Lumpur, Malaysia – The 8th edition of the e-Conomy SEA report by Google, Temasek and Bain & Company has noted that domestic demand will drive economic growth in Malaysia with household spending, employment and wages on the rise. It also noted that online travel is growing 49% YoY – fastest of all the digital economy sectors – reaching $4b in gross merchandise value (GMV).

According to the report, Malaysia has the fastest-growing transport and food delivery sector in SEA. The sector grew 16%, boosted by Malaysian commuters’ return to offline activities and the continued preference for food delivery. 

It also added that even though foot traffic in malls has recovered to pre-pandemic levels and the food and beverage industry is experiencing an uptick, Malaysian consumers have held onto the digital habits that make their lives easier, such as food delivery and e-commerce. 

Meanwhile, e-commerce growth is flattening after growing 4% between 2021 and 2022 from pandemic-driven growth, but it remains Malaysia’s biggest digital economy sector at $13b, accounting for 57% of the total GMV. E-commerce is seeing high adoption in Kuala Lumpur and Selangor. 

However, there is a persistent gap between demand and supply in other areas of Peninsular Malaysia and East Malaysia, which presents an opportunity for e-commerce players to expand in those areas.

In terms of digital financial services (DFS) adoption, the irreversible offline-to-online behavior shift continues to drive growth in DFS adoption, and cash is no longer king with QR codes and other forms of digital payments becoming ubiquitous. Digital payments are the biggest value driver within the DFS categories in Malaysia – $165b GTV in 2023 – boosted by the government’s support for digital payments adoption and distributing benefits to lower-income communities through e-wallets. This has placed Malaysia as the 2nd biggest digital payment market in SEA in 2023.

It also noted that digital wealth grew 61% YoY – fastest of all the DFS categories – and is expected to be the second largest DFS sector in Malaysia by 2030. The increasing interest towards digital wealth presents a lucrative opportunity for established financial services institutions to retain high-net-worth customers. 

As the competition between DFS players intensifies, pure-play fintechs have extended their lending services to the underbanked segment, while established financial services institutions have been quick to shift their large existing customer bases to digitalised services. 

Lastly, Malaysia has seen good progress on digital inclusion, making inroads into rural areas to bridge connectivity gaps. The percentage of households with internet access saw an increase from 76% to 97% for urban and 49% to 89% for rural, within the time frame of 2015 – 2022. However, consumers outside of metro areas are at risk of facing a widening digital economic divide when it comes to digital participation – active involvement in the digital economy through consumption of products or services across sectors. 

Samuele Saini, country director at Google Malaysia, said, “Malaysia’s GMV is projected to reach between $45b and $70b by 2030 and we’ve seen how the resurgence of tourism along with Malaysian consumers’ sticky digital behaviours in e-commerce and food delivery can contribute to this economic growth. With Malaysia making good progress in bridging connectivity gaps, addressing the digital participation beyond metro areas can prove to be a key in unlocking the next wave of growth.”

Meanwhile, Willy Chang, partner at Bain & Company, commented, “t is remarkable that both Southeast Asia’s digital economy GMV and revenue continued their double-digit growth momentum, with revenue breaking the $100B mark in 2023. This shows the resilience of the Southeast Asian digital economy and that the key players are making progress towards more healthy unit economics and sustainable business models. Despite external headwinds and some return to in-person dining and shopping, we are optimistic that the overall digital economy will continue to grow in the longer run.”

Singapore – Around 23% of market share in 2022 will be accounted for by insurgent disruptors as Southeast Asian consumers’ find ways to satisfy their unmet needs and evolving preferences, a report by Meta, Bain & Company, and DSG Consumer Partners revealed.

The report reveals that there is an emerging new hierarchy of wants and needs for consumers in Southeast Asia.

Almost 39% of consumers indicated a reduction in their average spend in the past year, citing top concerns around economic stability (63%), and cost of living (58%). Alcohol and electronics experienced the largest drop in spending, while food, personal care, and wellness categories remained resilient.

However, despite the reduced spending, the report observed a reprioritization of what is perceived as needs versus wants for consumers. What consumers previously considered luxuries like eating out every week, branded apparel, and the latest gadgets have moved into what is now seen as new ‘needs’. Social media was also cited as the top essential category and streaming as the rising essential category across income levels.

With some wants slowly transitioning into new needs, the report also unveiled some interesting data emerging in the Southeast Asian workforce.

According to the report, Gen Zs and solo entrepreneurs are becoming important cohorts to engage with as SEA’s working population is set to increase by 24 million people by 2030.

The rising incomes and growing middle and upper middle classes are causing the region to move closer to a consumption inflection point, which will accelerate the trajectory of consumption growth. And Gen Zs and single households are two particular consumer segments driving this growth.

Around 23% of Gen Zs comprise the total Southeast Asian population, while the solo economy, made up of single households, is growing, driven by three key demographic groups: older singles, young professionals, and young urban migrants.

The shifts in household sizes are expected to be most pronounced in the Philippines, Singapore, and Thailand, which are expected to see a 20% increase in single households by 2030.

Additionally, the report revealed that Gen Zs value individuality, authenticity, and identity more than other generations. They are not just digital-centric but highly engaged in the digital community, messaging businesses an average of eight times a month, and 82% of them said they are part of an online community.

However, older generations are also quickly catching up in terms of experimenting with new technology. Data from the survey reports reveals that AI is powering personalisation across generations.

With all generations in the region spending more time online and experimenting with new technologies such as AI, VR, and healthtech, businesses in SEA should have an idea of how they can successfully engage with their consumers.

The report showed that businesses in Southeast Asia are beginning to use AI for marketing purposes and to address region-specific issues. Almost 73% of business leaders surveyed recognised the opportunities from AI. However, they also admitted that they were not prepared to seize them.

Nevertheless, once businesses can focus on personalised marketing and invest in AI-powered and AI-enabled tools to facilitate personalisation on a large scale, they will be able to effectively reach Southeast Asian consumers and drive a strong ROI.

However, the most interesting data the report captured is the emergence of insurgent disruptors or brands that are new to the market but are growing five times quicker in revenue versus their category growth rate.

These insurgent disruptors are now responsible for US$52b in revenue in Southeast Asia alone and accounted for 23% of the market share in 2022. Among the top categories where insurgent disruptors have successfully gained market share are beauty, personal care, and packaged food.

Praneeth Yendamuri, partner at Bain & Company, said, “Southeast Asia as a region has demonstrated resilience amidst the global slowdown and consumer sentiment is rebounding in most markets. This is a great opportunity for businesses to address the needs of approximately 700 million consumers in a USD $4T economy that is forecasted to grow at 4.6% to 2030 (vs. 2.7% globally).”

He added, “SEA has repeatedly shown its importance as part of investors’ portfolios with significant global valuation and profit and loss impact. To take the region to its full potential, bold moves are required: relooking at your SEA ambitions by prioritising, sequencing, and, most importantly, funding them. Companies should also form an obsession with local consumers and evolve operating models to be locally responsive, balancing the incumbent scale advantage with the disruptive insurgent mindset.”

Speaking on the report, Benjamin Joe, vice president for Southeast Asia and emerging markets at Meta, also commented, “AI is powering better experiences for people, and it’s powering better outcomes for businesses. At Meta, we’re combining our AI-powered discovery engine with the social connection that has always been the core of our platforms to deliver more relevant, entertaining, and locally attuned experiences. With new tools capable of big impact, it’s no surprise that marketers across Southeast Asia are already starting to lean into AI to drive more impactful engagement and performance.”

“Embracing AI is now more crucial than ever for businesses aiming to thrive in the ever-evolving digital landscape of Southeast Asia,” he added.

Meanwhile, Sameer Mehta, head of Southeast Asia at DSG Consumer Partners, also shared, “Insurgent disruptors are new brands less than 10 years old that have demonstrated strong market share growth. With ‘wants’ transitioning into ‘needs’ and dissatisfaction with what the incumbent brands provide, it is no surprise that Southeast Asian consumers are choosing insurgent disruptors to satisfy their unmet needs and evolving expectations.”

Manila, Philippines – The trio Google, Temasek, and Bain & Company has finally released its overview of the SEA region’s digital economy for 2022. Titled ‘Through the waves, towards a sea of opportunity,’ the latest iteration of the annual e-Conomy SEA report projects that the Philippine digital economy is on track to hit $20b Gross Merchandise Value (GMV) by the end of the year. This is a $3b growth from last year’s $17b projected value. 

It is also projected to reach $35b GMV by 2025 and $100b to $150b GMV by 2030.

Despite the partial resumption of in-store shopping, e-commerce accounted for 70% of the overall Philippine digital economy. It is expected to reach $14b GMV by 2022 with a 17% growth from last year and is expected to amount to $22b GMV by 2025 as it continues to steer the local digital economy.

Aside from e-commerce, food delivery and video-on-demand round up the top three digital activities of Filipinos, showing an adoption rate of 88%, 69%, and 58% respectively amongst digital urban users.

Moreover, projections include transport and food delivery reaching $1.9b GMV, travel growing at $1b GMV, online media reaching $3.1b GMV, and digital financial services such as lending and remittance hitting $6b this year.

The report also stated that the Philippines will attract more investors across sectors in the years to come, as its digital investment sector grew 63% from last year. Digital financial services in the country continue to attract investor interest, garnering 56% of total investor funding in 2022. 

“The Philippine digital economy remains resilient despite headwinds and continues to provide boundless opportunities as it is projected to reach $20 billion GMV by end of year. This year’s e-Conomy SEA report also suggests that the country will be a leading investment destination with over 70% of investors expecting deal activity to increase in the period of 2025 to 2030,” said Bernadette Nacario, country director at Google Philippines.

Willy Chang, associate partner at Bain & Company, also said “The Philippines’ digital economy is one of the more attractive investment hubs in the region. Across internet sectors there remains tremendous whitespace for growth as the ecosystem drives greater digital inclusion in the country, particularly outside of metro areas.”

“The seventh edition of the e-Conomy SEA report shows that the digital future of the Philippines is bright as it has the fastest growing digital investments sector this year in the region,” said Department of Trade and Industry Secretary Alfredo Pascual.

e-Conomy SEA is an annual research programme that combines Google Trends, Temasek, and Bain & Company’s insights and analyses of the digital economies of six countries in SEA: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

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.”

Malaysia– With many people shifting their marketing behaviors online, notable statistics have shown a significant increase in the number of digital consumers in the Southeast Asia region, particularly in Malaysia, a report from consulting firm Bain & Company shows.

Conducted in collaboration with social media giant Facebook, statistics noted that Malaysia clocked a total of 83% of digital consumer growth, making it the country in Southeast Asia with the highest concentration of online consumers, which are then followed suit by Singapore with a 79% growth and the Philippines with 74%.

Moreover, the report showed that the Malaysian demographic, those that are 15 years old and above have an average of 51% on their willingness to switch consumer brands from time to time.

In regards to trying out new and unheard-of brands, statistics for Malaysian consumer behavior stooped, from 43% in 2019 to 40% in 2020, showing reluctance to try out unique and new brands.

With COVID-19 restricting movement including physical shopping, statistics for purchasing demand across online channels for Malaysians doubled to 40% this year.

“Brands need to enhance their value proposition both online and offline, and be flexible and adaptable to change, now more than ever. Within the eCommerce space, we aim to ensure strong digital content, product availability online and a robust supply chain,” commented Phee Chat Chow, executive director for marketing, communications and innovation at Nestle Malaysia and Singapore