As global economies recover from the COVID-19 pandemic, early signs of the Association of Southeast Asian Nations (ASEAN) digital economy have indicated growth in Southeast Asia (SEA). During the 8th ASEAN Economic Community Dialogue on October 5, the association shared that the number of digital consumers in Southeast Asia had risen 20% over the pandemic, while also projecting economic growth of 5% and 5.3% in 2022 and 2023, respectively.
Given the promising digital economic activity in Southeast Asia, the region is primed now more than ever for an influx of investment across several industries.
Sustaining the Digital Economy Growth in ASEAN
Of the industries that will likely continue to see success because of the increased digital consumers in Southeast Asia, the e-commerce sector remains an enticing option for interested parties. As reported by Binh Duong News, the e-commerce industry in Southeast Asia is expected to generate revenue amounting to 130 billion USD in 2022, while also growing at a predicted rate of 15% until 2025.
Considering that the factors and key enablers contributing to the success of the e-commerce industry differ in each country within Southeast Asia, interested parties should instead focus on leveraging common drivers that bolster e-commerce growth throughout the region. Namely, potential investors should explore digitalization opportunities in e-commerce as it continues to play a significant role in the acceleration of the industry. Further, by pursuing digitalization initiatives directly related to e-commerce, potential investors will also have an opportunity to explore related industries like logistics and technology.
In Thailand, parties have been continually exploring investment opportunities in the logistics industry and how the digitalization of its services can better serve the purposes of the e-commerce sector. For instance, it has become common practice for e-commerce companies to outsource services like third-party logistics (3PL), which aids supply chain management and delivery fulfillment. E-commerce platforms have also been keen on collaborating with logistics players who can provide updated, real-time information to customers wherein features such as accurate product tracking and integrated shipping information are highlighted. Given that the logistics industry is integral to the function of e-commerce businesses, this trend will likely continue across the Southeast Asian region.
Meanwhile, e-commerce stakeholders in India have been utilizing digitalization to improve customer services as well as to better inform future business decisions. Specifically, there is an opportunity for smart technology firms as many companies are exploring the use of big data and analytics to provide actionable insight and trends, like consumer preference, spending behavior, product listing success, etc. In the coming years, more e-commerce platforms throughout Southeast Asia will likely follow their counterparts in India and seek out partnerships with technology firms.
Another industry essential to continuing the growth of the digital economy in Southeast Asia is financial technology or the fintech sector. Aside from the emergence of cryptocurrency trading, the fintech industry has experienced robust growth due to the popularity of digital transactions via methods like mobile payments and e-wallets. As such, most industries have integrated fintech capabilities into their operations and this has been integral to the development of the ASEAN digital economy. Fintech players should seek out partnerships across all industries as SEA businesses will continue to seek out an increase in digital transactions.
As the number of digital users increases in Southeast Asia, potential business opportunities will continue to emerge as many will look to capitalize on the growing market. The growth experienced will not be limited to one industry, but rather, it will occur across several industries. In the coming years, the ASEAN digital economy will mature through this holistic development.
To get insight into business trends relevant to the growth of the ASEAN digital economy, subscribe to our newsletter here and check out these reports:
- Overview of the ASEAN Consolidated Strategy on 4IR
- The Future of Technology in Social Infrastructure
- Navigating Cross-Border Transactions in Asia's E-Commerce Industry
- Post Pandemic Business Outlook in Southeast Asia