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Southeast Asia a multi-billion internet economy by 2025
July 30, 2017, 3:52 pm
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Many of the global tech forces are putting their mark — and money — into Southeast Asia’s internet economy and its nascent startup ecosystem.

Google, Facebook or Microsoft, along with an increasingly number of Chinese tech companies including Alibaba and Tencent, are just some of the firms importing large sums of capital and vast business experience into Southeast Asia’s web economy and its most promising startups.

Southeast Asia has long been an area of interest for business for its neighbors. Tech aside, Southeast Asia is home to more than 600 million consumers, with six primary markets — Singapore, Indonesia, Thailand, Vietnam, Malaysia and the Philippines — standing out for growing economies and rising middle-classes of consumers.

In today’s digital era, smartphones have been a key catalyst. Like India, Southeast Asia’s internet users are primarily on mobile, with most having skipped the PC altogether and jumping straight to phones and tablets.

A much-cited report co-authored by Google last year showed that Southeast Asia has 260 million internet users with 3.8 million more going online per month. That is tipped to grow the internet population to 480 million people by 2020. While this is definitely not he level of China, which has 731 million internet users, half of whom are mobile, it does mean that, alongside India, Southeast Asia is a region of serious tech development potential.

That same Google report forecasted that the region’s ‘internet economy’ — i.e. all business generated from the web — will be worth $200 billion by 2025. That is up 6.5-fold from 2015, when it was estimated to be worth $31 billion. E-commerce alone is tipped to rise from $5.5 billion in 2015 to $88 billion in 2025, of which half will originate from Indonesia, the world’s fourth largest country, according to the report.

Over the past year, it seems that Chinese companies have gone from scouting Southeast Asia to actively owning chunks of the internet industry in the region.

In April 2016, Chinese online giant Alibaba made a $1 billion investment in Lazada, an Amazon-like e-commerce company serving six countries in Southeast Asia. The deal represented the first major investment into the region from a Chinese company.

Meanwhile, another Chinese online heavyweight, Tencent, which has a long-standing investment in Thailand-based media company Sanook, recently invested $19 million in a joint media venture with Ookbee, another Thai company. On the product-side, it has aggressively pushed its free-to-play music service Joox in Southeast Asia as a rival to Spotify, while it recently invested in US karaoke app Smule which has strong traction in the region and plans to expand in Asia.

The two Chinese companies have also begun investments in the ride-sharing space. Alibaba is expected to be part of a group of investors behind a new funding round for Uber rival Grab which could reach $2 billion. But Alibaba is also rumored to have held talks with Go-Jek, a rival to Grab and Uber which is widely acknowledged as the market leader in Indonesia. However, in a twist, Go-Jek ended up agreeing to take investment from Tencent as part of an as-yet-unannounced $1.2 billion round that would value the company at $3 billion.

While Alibaba and Tencent are among the first (and heaviest) Chinese investors, many are predicting that others from China and beyond will soon follow into the region. 

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