17 JUL 2020

3 reasons digital service providers need to expand to booming South-East Asia

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Ken Suriafur

Business Development Manager, Fortumo

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The spread of COVID-19 has resulted in the most significant decline in the global economic growth in the past decade. But not all sectors affected by the pandemic. In the digital economy, some sectors have succeeded in growing and developing in the current situation, including streaming, video gaming, e-sports, e-commerce and delivery services. 

The growing digital Economy in South-East Asia

In SEA, the digital economy has grown from $32 billion in 2015 to $100 billion in 2019, and is predicted to reach $300 billion by the year 2025.

South-East Asia (SEA) is the region with the fastest-growing digital economy in the world. In SEA, the digital economy has grown from $32 billion in 2015 to $100 billion in 2019, and is predicted to reach $300 billion by the year 2025.

For companies operating in the segments mentioned previously, expanding into the SEA region helps accelerate the increase in user base and revenue even faster. However, SEA is slightly different from core Western markets. Here are some of the factors digital service providers need to factor when planning for their expansion.

Population 

In SEA 578 million people and around 380 million of them are connected to the internet.

This region is inhabited by around 578 million people and around 380 million of them are connected to the internet. The digital economic growth in SEA is influenced by this large number of internet users. While the urban population in the region is just around 15%, 52% of the digital economy growth is driven by urban users.

For example in Indonesia (population 278 million people) the country’s active internet users jumped dramatically from 92 million in 2015 to 152 million in 2019, 50% of those who spend most of their social and commercial activities through various digital platforms. Indonesia leads the digital economy growth in the region, growing at about 40% per year. 

Technology 

The digital growth has primarily been driven by the development of inexpensive internet network technologies that provide internet access also to difficult to reach rural areas. Progress in the field of internet network technology (including 5G) is an important factor in the digital economic growth in SEA.

Changes in consumer behavior 

A decade ago, if someone in Indonesia wanted to buy chili powder from Korea, he had to find someone or go directly to a store that provided that rare ingredient. Nowadays, online commerce platforms have made it very easy for people who live in non-metropolitan areas to find and purchase anything, anytime, and from anywhere.

Google has examined this consumer behavior every year. In 2019, the proportion of people searching e-commerce related topics shifted towards non-metropolitan areas, while searches in the travel category came mostly from metropolitan areas. 

Groceries, personal care, and beauty products are becoming standard items in SEA online shopping baskets. The food delivery service sector has also become highly developed and the demand highly increases when the COVID-19 pandemic spreads. 

In esports, mobile gaming has exploded and continues to grow rapidly followed by social distancing campaigns such as work-from-home, stay-at-home etc, which results in people having less access to other entertainment options and more time to play mobile games.

Demographic, technological and consumer behaviour trends are all pointing towards South-East Asia becoming the dominant region of the world for digital service providers. If you are not yet active in the region, now is the time to start planning your expansion.

Want to learn more about the digital ecosystem of South-East Asia? We have compiled a market report on 10 countries in the region (Indonesia, Pakistan, the Philippines, Vietnam, Thailand, Myanmar, Malaysia, Taiwan, Cambodia and Singapore). 

Enter your contact details below and download the report to learn more about the local audience.

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