Singapore’s internet economy is expected to grow by 35 per cent from US$11 billion in 2020 to US$15 billion this year.
By 2025, it is expected to reach US$27 billion, Google, Temasek, and Bain & Company said in the sixth edition of the e-Conomy SEA report released today (Nov 10).
Two-thirds of growth merchandise value (GMV) improvements is led by e-commerce. The segment rose 106 per cent compared to a year ago, with e-commerce showing significant innovation in e-grocery.
Overall, Singapore has the highest proportion of digital consumers out of all internet users in Southeast Asia, at 97 per cent. The region’s average is at 80 per cent. Singapore’s digital merchants are also more inclined to deepen their usage of digital services.
Recovery in sight for broader economy
The report also showed that pre-pandemic users have consumed an average of 2.9 times more services since Covid-19 began.
There is also stickiness in digital users coming back for more, with 99 per cent of users intending to continue using digital services going forward.
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.
The report noted that travel demand is showing early signs of recovery, as seen by a 28 per cent increase from US$1.8 billion in 2020 to US$2.3 billion in 2021. The improvement was boosted by the gradual easing of restrictions via schemes like the Vaccinated Travel Lanes (VTLs).
“On the day Singapore announced VTLs with Germany and Brunei, search trends for Germany jumped 700 per cent,” the report noted.
Digital merchants rely heavily on internet sales
In Singapore, 38 per cent of digital merchants believe that they would not have survived the pandemic if not for digital platforms.
“While digital merchants use an average of two digital platforms, profitability remains a top concern. Digital financial services are also becoming critical enablers, with 89 per cent of digital merchants now accepting digital payments,” the report said.
Meanwhile, 37 per cent of digital merchants are now adopting digital lending solutions.
Many are also embracing digital tools to engage with their customers, with 43 per cent expecting to increase usage of digital marketing tools in the next five years.
Funding here continues to reach new heights
Deal activity rebounded strongly in Singapore in the first half of 2021 and is on track to outpace the activity of recent years.
That’s as investors become accustomed to the “new normal” of dealmaking, via digital channels and meetings.
The report noted that Singapore added the most new unicorns this year, and continues to be an attractive hub for the regional digital economy.
“Investment appetite remains strong in digital services that surged as a result of Covid-19, such as e-commerce, e-commerce enablers, and FinTech,” it noted.
Singapore an integral player in driving funds into SEA
As for investor interest, a recovery is observed as the region’s deal value reached US$4.3 billion in the first half of 2021. That’s due to the interest in special purpose acquisition companies (SPACs) and the government’s focus on making Singapore the listing destination of choice.
Florian Hoppe, partner and head of digital practice, Asia Pacific, at Bain & Company said that Singapore’s internet economy demonstrates “long-term resilience and has emerged stronger after a contraction in 2020”.
“While we predict tremendous headroom for growth in the digital decade ahead, Singapore must lead and map the growth pathways as a leader in digital innovation for the region,” he said.
The continued growth of the internet economy has given rise to a new set of opportunities in Southeast Asia, and Singapore is “well-positioned to be a role model for Southeast Asian countries in preparing its talent, SMEs and start-ups for the digital decade,” added Stephanie Davis, vice president of Google Southeast Asia.
The Republic will continue to play an integral role in driving growth in the region’s internet economy with it being a tech hub and a gateway for funding and talent, according to Rohit Sipahimalani, chief investment strategist; head of South East Asia, at Temasek.
This is seen via efforts by the public and private sectors to foster innovation, build infrastructure, and develop talent, he said.
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