Digital consumers to propel Asean
Report finds formal institutions in the region promote internet economy
published : 4 Mar 2023 at 08:29
newspaper section: Business
writer: Sirinnaree Ongsakul
A rapid increase in digital consumers is expected to be a major driver for Southeast Asia's economy, which is projected to grow by 4.7% this year, according to consulting firm YCP Solidiance.
A report by YCP Solidiance indicated Southeast Asia is on course to become the world's largest market by 2030, with an influx of investment and business set to benefit several industries, including the digital economy.
With a projected growth rate among the fastest in the world, the region's digital economy is projected to exceed US$300 billion by 2025 and $1 trillion by 2030, according to the "Investing in Asean 2023" report published by the economic bloc, in partnership with Allurentis.
According to the Asian Development Bank (ADB) and the International Monetary Fund, the regional economy is projected to outpace the 2.7% growth of the global economy in 2023. Data from ADB in 2022 indicated the digital economy accounts for 7% of Southeast Asian GDP.
"The driving force for digital consumption will be Millennials and Generation Z, accounting for 75% of consumers in the region," the YCP Solidiance report explained.
The consultancy attributed the growth of Southeast Asia's digital economy to formal institutions that support the region's digital development, noting that these organisations' significance involves creating centralised frameworks and initiatives that promote the internet economy.
The digital transformation of finance and the emergence of the financial technology sector are also among the factors helping to stimulate the regional growth of online economies and facilitate the entry of new investors from domestic and foreign sources.
"Through digital technologies and the internet, the digital economy has given business owners and independent players new ways to connect with clients, broaden their markets, as well as boost their earnings," said YCP Solidiance.
According to an HSBC study, digitalisation ranks at the top of corporate agendas, with companies willing to invest in the technology required to transform their businesses. Half of respondents said they would invest 5-10% of their operating profit to improve their digitalisation strategies, while 26% investing more than 10%.
"Potential investors and market entrants should consider the role of public-private sector collaboration as it will play a key role in Asean's digital economy," the report said.
- digital consumer