Global investors are becoming increasingly cautious amid rising interest rates.
Singapore:
Southeast Asia’s internet economy is expected to grow to $330 billion by 2025, an industry report said on Thursday, although it is a decline from previous forecasts due to economic uncertainty and greater pressure on tech companies to turn a profit.
Alphabet’s Google, Singapore’s state investor Temasek Holdings and global business advisor Bain & Company’s annual report lowered their forecast for 2025 from $363 billion reported last year.
“Amid the global macroeconomic headwinds, declining disposable income, skyrocketing prices and low product availability, there is a lack of demand from consumers in Southeast Asia,” the trio said in a joint release.
The region of 11 countries is one of the fastest growing Internet markets in the world due to a young population, widespread smartphone use and urbanization, and a growing middle class.
The report, which covers Indonesia, Thailand, Vietnam, Singapore, Malaysia and the Philippines, is still upbeat this year and the internet economy is expected to grow 20% to $200 billion in 2016 from three years earlier than estimated in an inaugural report.
All six countries are expected to register double-digit growth between now and 2025, with Vietnam being the fastest growing digital economy this year at 28%.
Indonesia, the region’s most populous country, saw its digital economy grow 22% this year to $77 billion, which contributes nearly 40% to Southeast Asia’s total online spending.
On the tech investment front, while early-stage deals continue with strong momentum, late-stage deals show a “more pronounced decline” and stagnation in plans to go public.
With global investors becoming increasingly cautious amid rising interest rates and declining stock valuations, the prospects of an initial public offering for the next 12 to 18 months are almost at a standstill, the report said.
The digital financial services sector is expected to overtake e-commerce and become the top investment sector in the sector, with the majority of deals being payments.
In the first half of 2022, the sector saw a record funding of nearly $4 billion.
Meanwhile, Vietnam, Indonesia and the Philippines are likely to attract more investors in the long term, the report said.
“Investors universally generally expect an improvement in deal activity from 2024 onwards,” said Falk Wai Hung, deputy head of technology and consumer and Southeast Asia at Temasek.
The report said that venture capitalists had $15 billion to maintain deals at the end of 2021.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)
