According to a new report published by Google and Temasek, Bain & Company in 2019, Southeast Asia’s Internet economy has surpassed the $100 billion in 2019. Sendo is Vietnam’s representative in the list of startups “aspiring unicorn” fueling the booming digital economy.
The internet economy growth is booming in Southeast Asia
Southeast Asia’s internet economy (including areas such as online travel, e-commerce, online media, car-hailing) has just reached a new milestone, reaching the threshold of US$ 100 billion for the first time this year, increased by 40% over the same period last year. One noteworthy point is that Google has revised Southeast Asia’s digital economy forecast in 2025 from $240 billion predicted in 2018 to $300 billion, showing the region’s galloping growth, with young and dynamic population.
The pillar for the internet economy growth is a stable GDP growth rate (at an average of 5% a year for the past 5 years, approximately 2% higher than the world average). Second, Southeast Asia is the region with the highest percentage of mobile Internet users in the world. There are 360 million Internet users in the area and 90% of them connect to the Internet mainly via mobile phones. We will see a rapid growth when compared to a decade ago, 4 out of 5 people do not have access to the Internet in Southeast Asia.
Table 1. Statistics of internet users in Vietnam
In 2019, Vietnam has 61 million internet users, the average Vietnamese spends 3 hours and 12 minutes using the internet on mobile devices such as smartphones. In proportion, the group of social networking and communications applications (52%), video watching apps (20%) and games (11%), and business applications.
Vietnam and Indonesia are two outstanding markets in the trend of developing a digital economy compared to the rest of the region, with a growth rate exceeding 40% a year. The report shows that the internet economy in Vietnam will reach 12 billion USD in 2019 and will reach 43 billion USD in 2025 (With a 38% growth from 2015 to 2019 and a forecast of 29% growth from 2015 to 2025, ranked second in Southeast Asia, after Indonesia). With the GMV share of the internet economy expected to account for 5% of GDP in 2019, Vietnam is emerging as the largest internet economy by interm of GDP proportion in the region.
E-commerce is the driving force behind the internet economy
E-commerce has surpassed online travel to become the largest category in the internet economy. In just four years, e-commerce has grown exponentially, soaring seven times from the US $5.5 billion in 2015 to the US $38 billion in 2019. E-commerce will surpass the US $150 billion in the year of 2025, 50 billion more than the prediction made a year earlier.
In Vietnam, e-commerce reached US $5 billion in 2019 (According to GMV), an increase of 81% compared to 2015. The size of the e-commerce industry is forecast to reach US $23 billion, up 49% compared to 2015. Compared to other industries in the internet economy such as online tourism, online media, and online car hailing, e-commerce has achieved the fastest and strongest growth value.
While online shopping in the past was about buying a big-ticket item such as a television or a smartphone on the cheap, e-Commerce today has become a regular shopping experience, with over 5 million orders coming in on an average day. Groceries, personal care and beauty products are becoming standard items in Southeast Asians’ online shopping baskets.
In terms of investment, with record growth, e-commerce and online ride-hailing have accounted for the majority of the call-making capital in the region, attracting two-thirds of the capital raised since 2016. E-commerce continues to lead the investment wave, attracting US $9.9 billion in investment since 2016.
Sendo Vietnamese representative in the list of “Aspiring Unicorn”
If Southeast Asia only has 11 unicorn startups, there are already 70 startups valued from $100 million to under $1 billion. The group, known by Google as “Aspiring Unicorns,” attracted about $1.1 billion in the first half of 2019, surpassing the US $900 million raised in the same period in previous year. Reports from Google, Temasek, Bain & Company have selected 14 typical startups among 70 startups.
Singapore has the most representatives with eight representatives: Carousell – e-commerce platform model C2C, ONE Championship, Zilingo – e-commerce platform for fashion. Another one is Carro, automotive industry and PropertyGuru, specializing in real estate, Ninjavan – logistics, Gobear and Shopback in Fintech. Indonesia has two representatives: Akulaku (Fintech), Halodoc (Medtech). Thailand and Malaysia contributed one representative, eCommerce and paid movie service Iflix, respectively. In particular, Vietnam has two representatives, Sendo and Tiki, focusing on the domestic market. While Southeast Asia’s Unicorns aim to expand regionally and to diversify into multiple sectors, Aspiring Unicorns are still focused on their specific sectors or markets.
In Industry 4.0 Summit, commented on the trend of E-commerce, at CEO Sendo, Mr. Tran Hai Linh – CEO of Sendo said that Asia is the region with fastest growth in e-commerce in the past 10 years. In 2019, Vietnamese e-commerce businesses attracted US $889 million, pumping to two major e-commerce companies Tiki and Sendo. Commenting on the Vietnam market, he said: “A year earlier, we had only attracted $400 million in this area, but 2018 attracted twice as much. We think this is a sign to show that investors are choosing Vietnam as the next destination for 2019, 2020, 2021.”
Mr. Tran Hai Linh added: “Looking at the amount of Vietnamese capital attracted over the past time is quite small compared to countries like India and Indonesia. But this is a very encouraging signal. This is a sign that investors are very interested and trust in the Vietnamese market and appreciate the openness of the Government.”
The CEO of Sendo commented on the growth prospects of Vietnam’s e-commerce industry: “In fact, investors assess that Vietnam’s e-commerce market will grow at more than 40% per year, achieving highest growth rates throughout Southeast Asia. And by 2023, we are expected to become the second-largest e-commerce market in Asia, just behind Indonesia. At this point, we are very close to becoming the second-largest e-commerce platform in Southeast Asia.”
Thus, after only one year with the remark: “Vietnam’s Internet economy is like a dragon waking up” in 2018, Google, Temasek, Bain & Company reports showed remarkable breakthroughs in 2019 of Vietnam’s internet economy and bright prospects in the future.
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