New report highlights COVID-19 impact on Southeast Asia’s internet economy

Now in its fifth edition, the report titled "At Full Velocity: Resilient and Racing Ahead" throws light on how Southeast Asians are leveraging the internet in more ways and on a larger scale than ever before to navigate through the coronavirus pandemic and beyond.

Since the beginning of 2020, 40 million people in Southeast Asia have connected to the internet for the first time as compared to 10 million in 2019 and 100 million between 2015 and 2019. While more than 1 in every 3 digital service consumers across Southeast Asia started using the service due to the COVID-19 pandemic, nine out of 10 new digital consumers plan to keep using at least one digital service beyond the COVID-19 pandemic, according to the e-Conomy SEA 2020 report from Google, Temasek and Bain & Company.

Now in its fifth edition, the report titled "At Full Velocity: Resilient and Racing Ahead" throws light on how Southeast Asians are leveraging the internet in more ways and on a larger scale than ever before to navigate through the coronavirus pandemic and beyond.

Despite the socio-economic disruptions caused by the pandemic, the gross merchandise value of the regional internet economy has held steady at an estimated USD100 billion in 2020 and is expected to surpass USD300 billion by 2025. Further, e-commerce which has proved to be a lifeline during the pandemic has surged from USD38 billion in value last year to USD62 billion this year and expected to reach USD172 billion by 2025

Here are some key highlights of the report:

• Eight out of ten people across the region said technology helped them get through the virus
• Sectors like education, groceries and loans saw the biggest jumps
• The demand for (and access to) digital services continue to expand beyond Southeast Asia's biggest cities. More than half the people new to digital services live in non-metropolitan areas of Indonesia, Malaysia and the Philippines.
• The average proportion of cash transactions declined from 48 percent of the total pre-COVID to 37 percent post-COVID. Given this, the value of total digital payment transactions across Southeast Asia will almost double to USD1.2 trillion by 2025
• At the peak of the pandemic and during lockdowns, leading health apps were being used four times as much as they were before the pandemic and education technology app installations had increased three-fold.
• Funding for companies valued at more than USD1 billion has dropped from USD5.6 billion in 2019 to an estimated USD3.5 billion in 2020. For startups with strong ideas and business plans, there's an available pool of capital worth almost USD12 billion

According to the report, COVID-19 has accelerated digital adoption that was projected to happen over several years in Southeast Asia. While five out of the six barriers to Internet economy growth have seen progress this year, talent (shortage of workers with the right skills) may hold back the growth.