e-Conomy SEA Report 2021: Malaysia’s internet economy crosses US$21 bil
By Digital News Asia December 2, 2021
- Malaysia’s internet economy expected to hit US$35 bil by 2025
- Pandemic the catalyst for 81% of internet users consuming digital services
Malaysia’s overall internet economy is estimated to reach US$21 billion (RM88.6 billion) in Gross Merchandise Value (GMV) this year, and is expected to hit US$35 billion (RM147.7 billion) by 2025, the latest edition of the e-Conomy SEA Report revealed.
[RM1 = US$0.237]
The report by Google, Temasek and Bain & Company highlighted growth observed across all sectors of the country’s internet economy.
Titled e-Conomy Southeast Asia (SEA) Report - Roaring 20’s: The SEA Digital Decade, the report provides new insights into the Internet economies of six countries within Southeast Asia, covering Malaysia as well as Singapore, Indonesia, Philippines, Thailand and Vietnam. It dives into trends across seven Internet economy sectors: five leading sectors comprising e-commerce, transport & food, online travel, online media and digital financial services, as well as two nascent sectors comprising healthtech and edtech.
Along with the rest of the region, the report indicates that Malaysia is moving into a new way of life as the pandemic has led to a permanent shift in digital adoption. The steep 47% growth of Malaysia’s digital market from US$14 billion in 2020 to US$21 billion in 2021 was driven by a significant 68% surge in e-commerce, which is expected to grow to US$19 billion by 2025.
The transport & food and online media sectors also observed double digit growth at 35% and 14%, respectively, the report said.
Marc Woo (pic), managing director for Google Malaysia said despite the lockdowns, businesses have turned to digital platforms to survive and many are expecting to increase usage of digital tools in the next five years.
“Malaysia’s 2021 GMV is projected to hit $35 billion by 2025 and we’ve seen how the pandemic has led to a permanent shift in digital adoption in Malaysia with 81% of all internet users now consuming digital services.”
March points to initiatives such as MyDigital to transform the country into a digitally-driven nation and a regional digital economy leader by 2030 as among various encouraging developments.
Rohit Sipahimalani, chief investment strategist; head, South East Asia, Temasek said the pandemic has led to enduring digital adoption in Southeast Asia, which has propelled its internet economy to new heights.
“Temasek looks forward to increasing our investments in Southeast Asia’s digital champions, using our capital to catalyse digital solutions and accelerate economic growth and job opportunities for our local communities,“ he added.
“We saw a sticking shift in Malaysia’s digital consumer behaviour as a result of lengthy lockdowns.” said Willy Chang, Associate Partner at Bain & Company. “In addition to the strong growth of its internet economy, H1 2021 also saw record deal activity - coupled with the anticipated digital bank licenses, we are optimistic about the growth potential ahead.”
Three other key insights from this year’s report on Malaysia include:
- Exponential growth in digital consumers
The pandemic has led to a permanent shift in digital adoption in Malaysia. 94% of pandemic consumers are still using the services till today and 98% intend to continue going forward. Pre-pandemic users - those who used the services before the pandemic have used an average of 4.2 more services since the pandemic began, and amongst all users, satisfaction with the services sit at 76% across verticals.
- Digital merchants are getting tech-savvy
In Malaysia, 43% of digital merchants believe that they would not have survived the pandemic if not for digital platforms - the highest in the region given the strict lockdowns in the past year. This, however, has accelerated digital adoption by merchants, with 98% now accepting digital payments and 72% now using digital lending solutions. Many are also embracing digital tools to engage with their customers, with 70% expecting to increase usage of digital marketing tools in the next five years.
- Funding on track to reach new heights
As investors become accustomed to the ‘new normal’ in dealmaking, deal activity rebounded strongly in the first half of 2021 and is on track to hit the highest record in recent years. Investment appetite remains strong in the digital services that surged as a result of Covid-19, such as in e-commerce, fintech, healthtech and edtech. With the emergence of Malaysia’s first unicorn this year, the outlook for continued funding growth is optimistic.
Related Stories :