Continued shifts in consumer and merchant behaviour, matched with strong investor confidence, have ushered Southeast Asia (SEA) into its “Digital Decade” – and the region is on its way towards $1 trillion gross merchandise value (GMV) by 2030, said an industry report on Wednesday.

“While SEA’s internet economy was resilient in 2020, a resurgence in 2021 has propelled the region upwards to $170 billion GMV. e-Commerce, food delivery and digital financial services remain primary growth drivers and we expect the internet economy to reach about $360 billion by 2025,” said the report, which was conducted by Google, Temasek, Bain and company.

According to the report, strong growth fundamentals, successful exits and supportive regulations have sparked an inpouring of global capital into SEA at an unprecedented scale.

“Deal activity has been at a record high, clocking $11.5 billion in the first half of 2021 alone, putting it on par with 2020’s full year value. e-Commerce and digital financial services have remained centre stage and are likely to continue attracting more investments,” it said.

Digital consumption is now ingrained as a way of life in SEA, and the region had added 60 million internet users since the pandemic.

The extraordinary shift in consumer behavior has also led to the rise of the digital merchant: native digital small and medium enterprises and early adopters who have embraced digital services end-to-end, it said.

According to the report, SEA saw 40 million new internet users come online in 2021, bringing the total internet users in the region to 440 million, and internet penetration in the region to 75 percent.

Among the SEA countries, Thailand and the Philippines have had the highest proportion of new users start consuming online during the pandemic.

Meanwhile, the report expects Indonesia’s GMV to surge 49 percent year on year to $70 billion in 2021, underpinned by a 52 percent growth in e-commerce.

Looking at 2025, the country’s overall internet economy will likely reach $146 billion in value, growing at a compound annual growth rate (CAGR) of 20 percent.

“Indonesia continues to be one of the most vibrant digital financial services markets due to its relatively open regulatory framework, and is showing rapid growth across FinTechs and digital platforms,” it added.

As for Malaysia, it expects its 2021 GMV to rise 47 percent year on year to $21 billion, supported by a 68 percent growth in e-commerce.

It projects the country’s overall internet economy to reach $35 billion in value at 2025, growing at 14 percent CAGR.

“Digital financial services were in focus this year as the race for new digital banking licences from Malaysian Central Bank heated up,” it noted.

According to the report, the Philippines was the fastest growing market in the region, driven by strict lockdowns as well as a tipping point on the adoption of certain digital services.

The Philippines’ 2021 GMV is expected to jump 93 percent year on year to $17 billion, underpinned by a 132 percent growth in e-commerce.

Looking at 2025, it said the overall internet economy in the country will likely reach $40 billion in value, growing at 24 percent CAGR.

Meanwhile, the report forecasts Singapore’s GMV to increase by 35 percent year on year to $15 billion in 2021, driven by a 45 percent growth in e-commerce, with significant innovation in e-grocery.

“Digital financial services also remained in focus, with four digibank licences awarded by the Monetary Authority of Singapore (MAS) and significant investments in the financial market infrastructure,” it said.

The report also foresees the country’s overall internet economy to reach $27 billion in value in 2025, growing at 16 percent CAGR.

As for Thailand, the report noted that its growth across internet sectors accelerated with double-digit year on year growth.

Thailand’s 2021 GMV is expected to climb 51 percent year on year to $30 billion, strengthened by its 68 percent growth in e-commerce.

Looking at 2025, the country’s overall internet economy will likely reach $57B in value, growing at 17 percent CAGR.

In Vietnam, most internet sectors also continued to grow strongly with double-digit year on year growth.

The report anticipates Vietnam’s 2021 GMV to grow 31 percent year on year to $21 billion, propped up by a 53 percent growth in e-commerce.

The country’s overall internet economy will likely to reach $57 billion in value, growing at 29 percent CAGR.

Facebook, Bain & Co Report: Southeast Asia’s digital consumer population to reach 380M by 2026