Southeast Asia sees rise in digital services as people stay home

Southeast Asia sees rise in digital services as people stay home
Image source: ©Leung Cho Pan via

Southeast Asia saw a rise in digital services as the coronavirus pandemic forces people to stay home, according to a new report.

Southeast Asia digital services like food delivery, e-commerce, and online payment have recorded an increase in usage, based on a new report from Google, Temasek Holdings, and Bain & Company.

Digital financial services are seeing momentum as more small-and-medium-sized businesses have been more open to accepting online payments.

The report predicts the digital payments increase from $600 billion in 2019 to $620 billion in 2020 as the average number of cash transactions declines and could hit $1.2 trillion by 2025. Digital payments refer to mobile wallets, account-to-account transfers and credit and debit cards.

Findings revealed that 40 million people in six countries across the region came online for the first time in 2020. These countries are Malaysia, Singapore, Indonesia, Vietnam, the Philippines, and Thailand. That figure made the total number of internet users in those countries to 400 million. The report says this is about 70% of the population.


The new users came from non-metropolitan areas in Malaysia, Indonesia, and the Philippines, the report shows.

Forecast for Southeast Asia digital services

Southeast Asia digital services along with other internet sectors could experience strong growth and reach $100 billion in gross merchandise value (GMV) in 2020, the report said. E-commerce could see a 63% growth while the online travel segment had 58%. GMV is a metric used in e-commerce to determine the total dollar value of goods sold over a definite period of time. The region’s internet sectors in general are seen to cross $300 billion in GMV by 2025.

In an interview with CNBC, Aadarsh Baijal, head of digital practice in Southeast Asia, at Bain & Company, said that while the coronavirus pandemic forced more people to make online transactions this year, it does not mean they would spend more by 2025. Hence, the report’s five-year forecast on the value of Southeast Asia’s internet economy is not changing.

However, it is “entirely possible” the region could reach the $300 billion mark before 2025 if economies recover, Baijal said.

“We’ve been profoundly impacted by the global coronavirus but it has been heartening and encouraging to see that the resilience still exists in Southeast Asia’s digital economy,” Stephanie Davis, vice president for Southeast Asia at Google, said on CNBC’s “Squawk Box Asia” on Tuesday.

Davis pointed out that Covid-19 influenced the decision-making for consumers across Southeast Asia.

“When we ask consumers why they chose to use e-commerce, as just one example, during coronavirus, they share with us that yes, it was to avoid potential exposure to coronavirus. But really importantly, near the same percentage of people state it is because it is efficient and they found it to be helpful,” Davis said.

The report examines the five main internet economy sectors in Southeast Asia: e-commerce, transport and food delivery, online travel, online media and financial services. The 2020 version cited health technology and education technology as categories due to their rise throughout the pandemic.