For the last 10 years, Asia has been leading the world in terms of economic growth by a notable margin. Much of that growth can be attributed to countries that make up Southeast Asia, with a combined GDP of nearly US$3.5 trillion amounting to the sixth-largest economic region in the world.
As Asia’s economies have matured, industries have diversified away from agriculture, energy, and tourism to more of a wide range of product and service-based industries. Despite the recent global economic slowdown due largely to the spread of COVID-19, Southeast Asia is still showing promising signs of growth across a number of industries that will continue to thrive in the distant future.
As the 570 million people that constitute Southeast Asia grow less dependent on the economies of neighbouring China, we will see greater economic sustainability backed by pro-innovation governments in the region. Here are three industries that are expected to see high-growth in Southeast Asia.
Internet economy
The internet economy in Southeast Asia is on pace to hit US$240 billion by 2025, per a Google-Temasek Holdings study, as smartphones consume the region. Just last year, the region’s internet economy grew by 39 per cent annually to top USD$100 billion for the first time ever. Studies in 2018 showed that over 90 per cent of Southeast Asians connected to the internet primarily through their smartphones, denoting the region’s population as ‘the most active mobile Internet users worldwide’.
E-commerce is expected to be the fastest-growing sector of the internet economy, accounting for approximately US$150 billion of the estimated US$240 billion 2025 figure. Prominent e-commerce companies that have made a significant gain in the region include Shopee, Lazada, and Tiki. Both Shopee and Lazada are headquartered in Singapore, have been topping the mobile app charts on a monthly basis, and they both operate across all of Southeast Asia.
Other internet economy sectors that have fuelled this momentous growth include the adoption of digital financial services as well as on-demand services such as transportation and food delivery. In fact, over the last four years, over US$37 billion of capital was raised by startups in the region, with e-commerce and ride-hailing businesses pulling in two of every three dollars raised since 2016. With APAC governments laying out five-year plans to “co-create a connected digital future” for the region at large, we expect to see many more developments to come in the years ahead.
Gaming
A recent report by Newzoo stated that the games market in Southeast Asia is expected to generate over US$4.3 billion in revenue annually, growing at over 14 per cent year over year. And with over 90 per cent of the population accessing the internet via mobile, it is no wonder that mobile gaming revenue accounts for 69 per cent of the region’s overall game revenue.
In fact, with the numbers that the region has attained, Southeast Asia is the fastest-growing mobile game market on the planet. The mobile-first nature of the population has led publishers to focus on mobile gaming experiences over other gaming experiences.
As the population continues to grow and mature in Southeast Asia, the number of PC gamers looks to jump from 154 million to over 186 million in the next five years. This is expected to have a major effect on esports in the region as 95 per cent of current PC gamers already self-identify as either playing or competing in e-sports.
While the e-sports landscape is currently being dominated by the likes of South Korea, Japan, and China in greater Asia, Southeast Asia is primed to be the next major market looking to embrace e-sports and make the multi-billion-dollar industry even bigger.
Outside investment into gaming in SE Asia is also growing, as Chinese Giant Tencent doubles down on its investment and focus in growing the popularity of its games in the region. The company is squarely focused on developing mobile-friendly versions of their most popular games, while others, such as ZlongGames, are promoting their mobile titles in hopes of gaining their share of mobile gamers.
Blockchain
A recent research report by Frost & Sullivan cited that global blockchain marketing is forecasted to reach $23.3 billion by 2023, representing an 81 per cent compounded annual growth rate since 2018. The same report cited that Southeast Asia is looking to stand to benefit from the progress being made in the region at the regulatory and fintech level.
And with a larger contingent of the population that is either ‘unbanked’ or ‘underbanked’, estimated near 100 million, there is a true opportunity to expand financial inclusion. Over the last five years, there have been a number of notable blockchain milestones in the region, including back in late 2016 when Singapore-based OCBC Bank became the first bank in Southeast Asia to use blockchain technology for local and cross-border fund transfers.
In August of 2017, Singapore announced that the country considers digital tokens as legal securities and they would be subject to the same legal regulations as stocks, bonds, and derivatives. And just this past March, the National Bank of Cambodia announced plans to become the first central bank to use blockchain technology in its national payment systems.
Given Southeast Asia’s favourable view on blockchain, the region has seen a swarm of activity in the space with many companies vying to lead the region in the development and consumer application. A few names that continue to capture headlines in the region include Bluezelle (a decentralized database for application data storage), Electrify (an energy platform for democratized clean energy), Curate (style discovery decentralized app), and DACSEE (decentralized ride-sharing).
Other promising blockchain companies from greater Asia are also entering the Southeast Asia market, such as QURAS. QURAS is a next-generation blockchain protocol built for mainstream and enterprise adoption. The protocol enables anonymous, privacy-protected transactions in a regulatory compliant manner. Founded in 2017, the company sees a vast opportunity in SE Asia to grow its developer base with a focus on building applications for major growth industries in the region such as finance, medical data, supply chain and gaming. QURAS’ CEO and Founder, Shigeki Kakutani recently moved to Kuala Lumpur and said that “QURAS is focusing many of our go-to-market efforts on Southeast Asia as we look to launch our main network by early April.”
With the blockchain industry gaining significant achievements and attention in the region, one can expect more collaboration between governments and private enterprises to grow this industry further and drive global investment in Southeast Asia.
