Southeast Asian Digital Economies to Reach $263 Billion in 2023, AI to Fuel Growth
Report Highlights
The e-Conomy SEA report, jointly released by Temasek, Google, and Bain & Company, projects the Southeast Asian digital economy to expand to $263 billion in gross merchandise value (GMV) this year. The report also highlights the increasing importance of artificial intelligence (AI) in fueling the growth of the region’s digital economy.
Key Findings
- The region’s digital economy will be fueled by increasing user sophistication and the importance of cybersecurity.
- The profitability of the region’s digital economy is expected to reach $11 billion in 2024, up 24% from $9 billion in 2023 and 101% from $4 billion in 2022.
- Revenues are expected to climb 14% year-on-year to hit $89 billion in 2024, with GMV clocking a 15% increase from last year.
- The region has driven $30 billion in AI infrastructure investment in the first half of 2024, amid accelerated consumer interest in AI applications and searches about the technology growing 11 times over four years.
AI and Digital Economy Growth
- Southeast Asia offers an attractive market for AI-enabled products and services due to its younger and growing population, high digital literacy, and smartphone penetration.
- AI is driving value for the region’s digital economy through sector-specific and broader business use cases, such as AI-powered travel planners and generative AI-powered fraud detection.
- Pro-innovation policies that support AI growth and governance will help create more opportunities in the digital economy.
Cybersecurity and Digital Trust
- In an increasingly complex online landscape, building digital trust is essential to mitigate the risk of online scams and cyberattacks.
- Cybersecurity enhancements are needed to address the growing sophistication of cyberattacks, underscoring the role of AI in helping organizations keep up.
- Consumers in the region are showing more interest in the potential benefits of AI rather than concerns, with 42% seeking out issues related to AI’s advantages and 26% searching for issues related to AI-associated risks.
Conclusion
Southeast Asia’s digital economy will be shaped by increasing user sophistication, the growing importance of digital safety and security, and the need to unlock greater business value from AI. To fully harness the transformative potential of AI, businesses must advance beyond experimentation and invest in foundational elements, aligning AI initiatives with core business objectives to address real-world problems and create tangible value.
FAQs
Q: What is the projected growth of the Southeast Asian digital economy?
A: The region’s digital economy is projected to expand to $263 billion in gross merchandise value (GMV) this year.
Q: What is driving the growth of the digital economy in Southeast Asia?
A: Increasing user sophistication, the growing importance of cybersecurity, and the need to unlock greater business value from AI are driving the growth of the digital economy in Southeast Asia.
Q: How much investment has been driven in AI infrastructure in the first half of 2024?
A: Southeast Asia has driven $30 billion in AI infrastructure investment in the first half of 2024.
Q: What is the importance of pro-innovation policies in the digital economy?
A: Pro-innovation policies that support AI growth and governance will help create more opportunities in the digital economy.
Q: How can businesses harness the transformative potential of AI?
A: Businesses must advance beyond experimentation and invest in foundational elements, aligning AI initiatives with core business objectives to address real-world problems and create tangible value.
