The Philippines internet economy is projected to reach $40 billion in value by 2025, making it the fastest growing digital economy in ASEAN, a report by Google, Temasek and Bain & Company showed.
The dating site was compromised after Black Shadow hacked CyberServe, an Israeli internet service provider whose clients include public transportation firms, museums and a travel company. (AFP/File)
The sixth edition of the Google, Temasek and Bain & Company’s e-Conomy South East Asia (SEA) Report – Roaring 20’s: The SEA Digital Decade released Wednesday, Nov. 10, provided key insights and analyses on the internet economy in Southeast Asia, across its six largest countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Providing a ten-year outlook for the first time, the report highlights that the region is on the path to become a $1 trillion digital economy by 2030. Propelled by a fast-growing base of digital consumers[1] and merchants, acceleration in e-commerce and food delivery, SEA is estimated to reach $174 billion in GMV by the end of 2021. The region’s digital economy is further expected to reach more than $360 billion by 2025, outgrowing the earlier projection of $300 billion.
For the Philippines, the report said that the country’s overall digital economy is at growing 24 percent in compounded annual growth rate that is likely to reach $40 billion in value by 2025.
Based on the study, the Philippines was the fastest growing market in the region, driven by strict lockdowns as well as a tipping point on the adoption of certain digital services.
The report noted that that SEA internet economies–Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam–are showing double-digit growth with the Philippines leading the way.
From 2020 to 2021, the Philippines recorded the region’s highest growth rate of 93 percent, predicted to grow from $9 billion to $17 billion, and by 2025, it is expected to reach $40 billion. The Philippines has one of the region’s highest proportions of new users who started consuming online during the pandemic, with 20 percent of the country’s digital consumers using a digital service for the first time since March 2020.
Much like the rest of the region, the Philippines is entering its digital decade as the internet increasingly becomes an integral part of the consumers’ daily lives. The growth of the digital market in the country was driven by the explosive 132 percent growth in e-commerce and double-digit growth across all sectors including food delivery services.
The report showed that the Philippines has seen 12 million new digital consumers since the start of the pandemic (up to first half of 2021), of which 63 percent are from non-metro areas and 99 percent said that they intend to continue using these services going forward. Pre-pandemic users–those who used the services before the pandemic–have consumed an average of 4.3 more services since the pandemic began and 95 percent of pandemic consumers are still consumers today.
Despite rapid growth in the last 18 months, there remains significant headroom since the Philippines has the lowest digital consumer penetration in the region, with only 68 percent of internet users consuming online services.
In addition, the report noted that 39 percent of digital merchants in the Philippines believe they would not have survived the pandemic if not for digital platforms. Digital merchants now use an average of two digital platforms, but profitability remains a top concern. Digital financial services saw very rapid growth this year, not only from e-wallets but also from the national payment rail. Of the digital merchants surveyed, 97 percent now accept digital payments, while 67 percent have adopted digital lending solutions. Many are also embracing digital tools to engage with their customers, with 68 percent expecting to increase usage of digital marketing tools in the next five years.
Rohit Sipahimalani, chief investment strategist and head of South East Asia, Temasek, noted that Philippines has very active smartphone ecosystem and people have been online but which had not historically translated in that much ecommerce shopping. But the lockdowns, these have forced heavy adoption of digital payments.
“The Philippines has really taken off,” said Sipahimalani.
Among ASEAN countries, he said, Indonesia is surging forward now at 70 GMB. The Philippines though has a catching up to in terms of digital penetration but the lockdown situation due to the pandemic has pushed a “huge surge in the Philippines GMb” while Vietnam and Thailand and also growing fast.
Sipahimalani also cited companies payment platforms like Paymaya and education drives focusing on consumers. “We’ve seen ecommerce truly search in Philippines and we expect it to continue over the coming years,” he added.
“Philippine ecommerce thing is actually more exciting story that has really come into its own before this
repeatedly from a number of the players in Southeast Asia this year,” he said.
“The digital adoption we’ve seen in the Philippines since last year has contributed to the accelerated growth of the country’s internet economy, magnifying its vast potential. The findings of the e-Conomy Southeast Asia (SEA) Report are encouraging, especially with the Philippines as the fastest growing digital economy now in the region. Google is committed to helping Filipinos maximize the opportunities of going digital and helping the country shape an internet economy that is equitable, safe, and inclusive through programs and products that improve lives,” said Bernadette Nacario, Country Director, Google Philippines.
Meantime, Willy Chang, associate partner at Bain & Company noted that the Philippines’ internet economy is the fastest growing in SEA as a result of strict COVID-19 restrictions and a large number of new digital consumers.
“There remains ample headroom for growth as long as digital enablers continue to develop. For example, we saw a strong adoption of digital payment methods such as e-wallets and national real-time payment rails which facilitated the growth of the internet economy.”
Google Southeast Asia Vice-President Stephanie Davis even said that the Philippines is expected to surpass Malaysia’s digital economy by 2025 because of strong adoption to digital economy.
Across the region, Davis reported that 8 out of 10 SEA’s internet users are digital consumers for a total of 350 million, including 40 million new users in 2020 and another 20 million in the first half of 2021.
