Reaching new heights:

Navigating the path to profitable growth

 2

Reference Disclaimer
e-Conomy SEA is a multi-year research The information in this report is provided on an ‘as is’ basis.
programme launched by Google and Temasek in This document was produced by Google, Temasek, Bain,
2016. Bain & Company joined the programme as and other third parties involved as of the date of writing
lead research partner in 2019. The research and is subject to change. It has been prepared solely for
leverages Temasek insights, Bain analysis, Google information purposes over a limited period of time to
Trends, primary research, expert interviews, and provide a perspective on the market. It is not intended for
industry sources to shed light on the digital investment purposes. All financial analysis is derived or
economy in Southeast Asia (SEA). The estimated by Bain analysis using both non-Google
information included in this report is sourced as proprietary and publicly available information. Google has
‘Google, Temasek, and Bain, e-Conomy SEA not supplied any additional data for financial analysis, nor
2023’, unless otherwise specified. does Google endorse any financial analysis made in the
report. Where information has been obtained from
third-party sources and proprietary research, this is clearly
referenced in the footnotes. Projected market and
financial information, analyses, and conclusions contained
in this report should not be construed as definitive
forecasts or guarantees of future performance or results.
Google, Temasek, Bain, their respective affiliates, or any
other third party involved make no representation or
warranty, either express or implied, as to the accuracy or
completeness of the information in the report and shall not
be liable for any loss arising from the use of this report.
 3

8th edition of e-Conomy SEA by Google, Temasek, Bain:

Southeast Asia’s digital economy research programme

2016 2017 2018 2019 2020

Unlocking the Unprecedented SEA’s internet Swipe up and to the At full velocity:
$200B opportunity growth for SEA’s economy hits an right: SEA’s $100B Resilient and
in SEA $50B internet inflection point internet economy racing ahead
economy

SEA’s Digital Decade

2021 2022 2023 2030

Roaring ‘20s: Through the waves, Reaching new heights: Towards a

The SEA towards a sea of Navigating the path to sustainable
Digital Decade opportunity profitable growth digital economy
 4

e-Conomy SEA research methodology

Expert interviews2
Temasek insights Bain analysis Google Trends Primary research¹
& industry sources

With contributions from

Notes: All dollar amounts are in USD. Unless otherwise stated, all mentions of “Southeast Asia” or “SEA” in this report refer to these six markets: Indonesia, Malaysia,
Philippines, Singapore, Thailand, and Vietnam. (1) Google commissioned Kantar to run the e-Conomy SEA consumer survey. The research was conducted in metro
and non-metro cities across Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Data collection ran from 10/08/2023 to 01/09/2023 via a 25-minute
online survey. The survey was conducted among a total of n=7,881 respondents aged 18-64 who had made a transaction in at least one of the verticals covered
within a specified period of time. Each respondent was allocated to a maximum of two verticals, out of eight verticals covered, based on least fill quota.
(2) Bain and Temasek conducted interviews and a quantitative survey with SEA-focused venture capital investors from 06/2023 to 08/2023.
 5

e-Conomy SEA
covers 6 countries in
Southeast Asia… VIETNAM
99M

THAILAND PHILIPPINES

72M 117M

MALAYSIA

605M
34M

SINGAPORE
6M
total population
across the countries
INDONESIA
278M

Source: World Bank

 6

… and 5 leading sectors in the digital economy

E-commerce Transport & food Online travel Online media Financial services

Marketplaces Transport Flights Advertising Payments

Direct-to-consumer Food delivery Hotels Gaming Lending
Groceries Vacation rentals Video-on-demand Insurance
Music-on-demand Investments

Notes: E-commerce does not include informal commerce due to the lack of reliable data. Financial services are excluded
from market sizing estimates due to differences in units of measurement compared to other leading sectors.
 7

Content

01 02 03 04

Growing against Investors reset Monetisation Financial services at

global headwinds expectations on the rise an inflection point

05 06 07

Engaging Bridging the digital The path forward:

high value users economic divide profitable growth
Executive summary
8

SEA has weathered global macroeconomic headwinds with more resilience compared to other regions around the world. Gross
Growing against domestic product (GDP) growth remains above 4%, while inflation has come down to 3%. Consumer confidence is starting to
01
global headwinds rebound in H2 2023 after falling to lower levels in H1 2023.

Private funding in SEA has declined to its lowest level in six years, which is in line with global shifts towards higher costs of capital
Investors reset and issues across the funding lifecycle. Exits remain top of mind as SEA funds have returned less capital to investors than funds
02 focused on other regions. To leave the funding winter behind, SEA will need to prove its digital companies have a clear pathway to
expectations
profitability, and investors have dependable exit pathways.

Digital businesses have shifted their focus to monetisation in a bid to achieve profitability targets. In 2023, the SEA digital
economy is set to deliver $100B in revenue, growing at 27% CAGR since 2021 – 1.7X the rate of gross merchandise value (GMV)
Monetisation growth. E-commerce, travel, transport, and media contributed $70B in revenue. Remarkably, the focus on monetisation has not
03
on the rise come at the expense of consumer engagement and GMV growth. GMV is still expected to grow at 11% to $218B in 2023. Travel
and transport are on track to exceed pre-pandemic heights in 2024, while e-commerce is showing resilience.

Consumers are adopting digital financial services (DFS) at a rapid pace. Cash is no longer king, as digital payments now make up
Financial services more than 50% of the region’s transactions. High interest rates are tailwinds to deposits and wealth management but pose
04
at an inflection point challenges to lending. Non-performing loans remain under control. Sustainable business models are emerging among pure-play
fintechs, while traditional financial companies are accelerating the process of digitalisation to retain users.

As businesses pursue an accelerated path to profitability, engaging high value users has become critical to achieve sustainable
Engaging unit economics. The top 30% of SEA spenders account for more than 70% of digital economy spend – and they can be found
05 everywhere. This is accentuated in gaming, travel, and transport. In the longer term, companies will need to embrace a broader
high value users
set of customers to continue growing in a sustainable way and unlock the region’s full monetisation potential.

Digital inclusion has made inroads in the region over the past years. Connectivity has increased by as much as 3X since 2015 in
Bridging the digital some rural areas. Yet, as players focus on monetisation, consumers outside of metro cities are facing a widening digital economic
06
economic divide divide. Ecosystem investments are required to bridge the gap, which will in turn support long-term digital economic growth.

There remains significant headroom in SEA: favourable demographics, growing wealth, and an increasingly urbanised population
The path forward: set the stage for future digital economic growth. Competition is also expected to become more rational in the pursuit of
07 sustained profitability. SEA’s digital economy can reach its full potential given broadened digital economy participation, the
profitable growth
emergence of nascent sectors, physical infrastructure investments, and policy and regulation at the regional level.
 9

Growing against
global headwinds
 10

SEA has weathered

global macroeconomic
headwinds with more
resilience compared to
other regions around
the world.
 11

SEA has stood firm against global macroeconomic headwinds

GDP growth has stayed Inflation calms from Interest rate increases
relatively stable post-pandemic peaks have been relatively moderate

SEA GDP (YoY %) SEA inflation (YoY %) Change in interest rates¹

(% points, Jan ‘22-Jul ‘23)

4.7%
US fed funds 4.3
5.7% rate increase
4.5% 4.7%
4.0%
3.1
4.2% 3.6% 3.0
3.2% 3.1%

2.0% 1.8
2020 2021 2022 2023 2024 2025 1.3
1.1.%
0.5
-3.7%
2020 2021 2022 2023 2024 2025

Notes: Data is as of July 2023. (1) SORA used as a proxy for Singapore interest rates.
Sources: United Nations Population Division; S&P Global Market Intelligence; relevant central banks and monetary authorities; Bain analysis
 12

SEA’s economy sees encouraging upswings, especially in travel

+36% +32% 80% +40%

increase in regional increase in recovery in outbound increase in travel
FDI inflow¹ regional exports¹ passenger volume¹ demand¹

Notes: FDI = foreign direct investment. (1) Compared to 2019.

Sources: United Nations Conference on Trade and Development; Euromonitor; International Air Transport Association;
Destination Insights with Google; Bain analysis
 13

SEA’s GDP growth is

forecast to keep up Real GDP growth rate (YoY %)

with the world’s 2021 2022 2023 2024 2025

fastest-growing
economies 9.2
8.5

7.3

6.6
6.2 6.1
5.9
5.7 5.7

5.0
4.6 4.6 4.7
4.5
4.0 4.2
3.5
3.0
2.3
2.1
1.7 1.5
1.3
0.7
0.5

India China SEA EU USA

Note: Data is as of October 2023, and includes full-year estimates for 2023 and forecasts for 2024 and 2025.
Sources: S&P Global Market Intelligence; Bain analysis
 14

Inflation remains
under control Inflation rate (YoY %)

compared to other 2021 2022 2023

regions
8.9

8.0

6.7
6.0 6.1

5.1
4.7 4.7
4.1
3.6
2.7
2.0 2.0
0.9
0.5

India China SEA EU USA

Note: Data is as of October 2023, and includes full-year estimates for 2023.
Sources: S&P Global Market Intelligence; Bain analysis
 15

Consumer confidence in the economy has begun

to recover in Q3 2023 across most of the region
Consumer Confidence Barometer

We used search interest data to measure

consumer confidence in the economy.
Q1'20 Q3'20 Q1'21 Q3'21 Q1'22 Q3'22 Q1'23 Q3'23 Q1'20 Q3'20 Q1'21 Q3'21 Q1'22 Q3'22 Q1'23 Q3'23
Factors include:

● Economic uncertainty searches

(e.g. inflation, recession)
● Commodity price searches
(e.g. gas prices)
● Job opportunity searches
(e.g. new job openings)
● Job concern searches
Q1'20 Q3'20 Q1'21 Q3'21 Q1'22 Q3'22 Q1'23 Q3'23 Q1'20 Q3'20 Q1'21 Q3'21 Q1'22 Q3'22 Q1'23 Q3'23 (e.g. unemployment)
● Finance and investment searches
(e.g. investing strategies, mutual fund returns)

A higher score indicates that consumers are more

confident and have a more positive outlook on
the economy. A lower score indicates that
consumers are more worried and have a more
negative outlook on the economy.
Q1'20 Q3'20 Q1'21 Q3'21 Q1'22 Q3'22 Q1'23 Q3'23 Q1'20 Q3'20 Q1'21 Q3'21 Q1'22 Q3'22 Q1'23 Q3'23

Note: Data is as of August 2023. Data based on a three-month rolling window.

Sources: The Consumer Confidence Barometer combines search interest data based on multiple economic indication
searches, both positive and negative, to estimate consumers’ confidence in a country’s economic outlook
 16

Investors reset expectations

 17

Private funding in SEA has

declined to its lowest level in
six years, which is in line with
global shifts towards higher
costs of capital and issues
across the funding lifecycle.
Exits remain top of mind as
SEA funds have returned
less capital than funds
focused on other regions.
 18

Private funding reverts to 2017 levels Funding takes a dip after

record highs in 2021
The pace of funding in recent years has
been extraordinary: in 2016, we expected
$40B–$50B of investments that would
Private funding value ($B) take GMV to $200B in 2025. By 2022, the
region had raised double that amount –
$101B – as it hit the $200B GMV milestone
Average 10-year US Treasury Rate
three years ahead of schedule.
Deal count

Shift towards self-sufficiency

3.6%
3.5% Compared to past highs, the pace of
3.0% funding has slowed to a six-year low – also
due to higher costs of capital. As investors
2.4%
2.3% recalibrate their expectations, digital
27 players are looking to extend their runways
22 by spending more efficiently, in favour of
1.4%
healthier long-term growth.
14 13
12 12 1.2%
9
8
5 4 Deal environment remains
competitive
2016 2017 2018 2019 2020 2021 2022 H1 ’22 H2 ’22 H1 ’23
As high-quality investments are rare in this
811 858 1427 1546 1853 2697 2080 1233 845 564 environment, the competition for
high-quality deals remains robust.

Note: Private funding value covers digital economy-related sectors, and excludes public financing deals e.g. PIPE, IPO, ICO.
Source: Bain analysis
 19

Funding declines cut across all stages;

late-stage deal flow slowed the most
Private funding value ($B)

Deal count CAGR

Early stage: Seed & Series A Growth stage: Series B & C Late stage: Series D & E+

-68% -76%

-77%
3.6 3.6 4.3 4.5 3.2

2.1 1.7
1.2 1.4
1.1 0.8
0.4

H2 ’21 H1 ’22 H2 ’22 H1 ’23 H2 ’21 H1 ’22 H2 ’22 H1 ’23 H2 ’21 H1 ’22 H2 ’22 H1 ’23

1084 914 495 358 101 100 46 51 17 18 11 4

Note: Private funding value excludes public financing deals e.g. PIPE, IPO, ICO, and undisclosed, growth, secondary or private equity deals.
Source: Bain analysis
 20

Declines from 2021–2022 peaks have been common across SEA

Private funding value ($B) CAGR

-52% -79%
-87%
9.1 1.1 1.0
0.9 0.9
0.8
4.4 5.1 0.6
3.2 3.3 0.5 0.5 0.4
0.4 0.4 0.3
1.8 0.2 0.2 0.2

’19 ’20 ’21 ’22 H1 ’22 H2 ’22 H1 ’23 ’19 ’20 ’21 ’22 H1 ’22 H2 ’22 H1 ’23 ’19 ’20 ’21 ’22 H1 ’22 H2 ’22 H1 ’23

-66%
-63%

12 12 1.3 2.6 -24%

1.0
7 7 0.6
5 5 0.5 0.9 0.9
3 0.3 0.1 0.7 0.7 0.2 0.6
0.2

’19 ’20 ’21 ’22 H1 ’22 H2 ’22 H1 ’23 ’19 ’20 ’21 ’22 H1 ’22 H2 ’22 H1 ’23 ’19 ’20 ’21 ’22 H1 ’22 H2 ’22 H1 ’23

Source: Bain analysis

 21

A growing portion of deal activity is funneled into nascent sectors,

signalling that investors are diversifying
Private funding value ($B)

27

21
33%

Nascent sectors¹
42%
Travel 13
12 12
Digital media
25% 41% 8
34%
Food & transport
45% 4
E-commerce
56%
DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 1546 1853 2697 2080 1233 845 564

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis
 22

Investors are facing difficulties across all stages of the investment

lifecycle, with exits and distributions being top of mind

Investors have been grappling with Investors have been increasingly urged to
dim prospects over the past 12 months realise exits, deliver returns, and distribute capital

Funds that started in the mid-2010s are

87% of investors find that fundraising
has become more challenging
now in the late stages of harvesting,
putting pressure on delivering returns

64% of investors have seen a drop in

diligence and top-of-funnel activity
50% of investors partially met or did
not meet their divestment targets

88% of investors feel they are facing a more

difficult exit environment
Realising returns and distributions
are a key fundraising challenge

Sources: Bain SEA Venture Capital Investors Survey, Q3 2023; Bain analysis
 23

Funds face challenges in returning

capital to investors SEA has lagged other regions in
investor returns
SEA-focused funds have seen significantly
lower distributions to paid-in capital
Median distribution to paid-in capital (X of paid-in capital)1 compared to funds that are focused on
other regions, suggesting difficulty in
realising returns for investors.

8-10 years Fund age 5-7 years

Distributions limited by scarce IPOs
2013-2015 Fund vintage 2016-2018 Distributions have been concentrated on a
few big-name listings, primarily on US
exchanges. But this has been affected by
interest rate hikes that have subsequently
reduced IPO appetite and the number of
listings on regional exchanges.
1.3X
1.0X Secondaries have seen
0.7X
0.6X valuation impact
0.5X
0.4X 0.4X
0.2X
0.1X While valuation discounts for secondary
0.04X
sales have widened, the valuations of
US Europe India China SEA US Europe India China SEA quality companies’ secondaries have been
comparatively more resilient.

Note: (1) Includes VC and growth funds only.

Source: Bain analysis
 24

Dry powder is still

on the rise despite Dry powder at year-end ($B)

investors becoming
increasingly cautious
amidst limited
opportunities

15.7
14.1
12.4
10.2
8.5
7.1

2017 2018 2019 2020 2021 2022

Notes: (1) Funds include both PE and VC funds. Dry powder refers to the amount of capital
that has been committed minus the amount that has been called for investment.
Source: Preqin
 25

To exit this funding winter,

digital businesses in SEA
need to prove that quality Realistic entry Proven monetisation
valuations model
deals with dependable Digital companies should prove Realisable monetisation
exit pathways are readily rational valuation multiples that
are built on business and industry
pathways and sustainable unit
economics have become key
available fundamentals, and that reflect
the current macro environment
requisites for SEA’s digital
businesses

Clear path Dependable

to profitability exit pathways
Every business needs to Assurance that there are clear
lay out a clear, realistic path and feasible exit pathways for
to profitability and long-term digital businesses, which could be
financial sustainability in the form of a more conducive
capital market environment and
supportive regulations

Source: Bain SEA Venture Capital Investors Survey, Q3 2023

 26

Monetisation on the rise

 27

Digital businesses have

shifted their focus to
monetisation in a bid to
achieve profitability
targets, and are starting
to see success.
At the same time, GMV
continues its upward
trajectory.
 28

The digital economy has flourished on top of widespread adoption;

monetisation is now accelerating, with visible progress
SEA internet users (%)¹ SEA internet consumers (%)¹ SEA digital economy GMV ($) SEA digital economy revenue ($) SEA digital economy profit ($)

70%–80%
50%–60%
218B

100B

2023 2023 2023 2023 2023

Users: Consumers: GMV: Revenue: Profit:

Widespread internet High activation, Resilient despite Monetisation Businesses inch closer
penetration across SEA increasing participation headwinds continues at full speed to profitability
As internet coverage expanded, Consumers across SEA have readily The pandemic spurred incredible Digital businesses have successfully The focus on profitability is
the number of internet users grew adopted digital products and services adoption over the past few years, monetised the SEA digital economy, intensifying across all digital economy
commensurately. Engaging these as internet coverage expanded, but especially in key sectors like whether through their core business sectors. Businesses are taking steps
users and turning them into active there is still headroom to grow and e-commerce. Despite global model or adjacencies. Revenue to improve their efficiency, exploring
consumers of digital products and expand depth of participation in the headwinds, growth remains strong, growth should continue outpacing new productivity drivers (such as AI)
services are key to digital economic digital economy, beyond metro cities though attention is shifting towards GMV growth as businesses expand to achieve sustainable and profitable
expansion. and high value users. monetisation and profitability. their top-line. long-term growth.

Note: (1) Refers to percentage of total adult population.

Sources: Google, Temasek, and Bain, e-Conomy SEA 2016-2022; Bain analysis
 29

As the focus shifts

from growth at all cost
to profitable growth,
new priorities are at play Business objectives Core metrics
Sustainable balance of user Revenue and EBITDA in addition
acquisition with monetising to acquisition-focused metrics
interactions (e.g. monthly active users)

Cost optimisation Competitive focus

Improved unit economics through More rational competition,
optimised spending, instead of instead of a ‘win users at any
pure revenue growth cost’ mindset

Note: EBITDA = earnings before interest, taxes, depreciation, and amortisation.

 30

The region has reached a key milestone: $100B in revenue

across all digital economy sectors – or 8X over the past 8 years
SEA digital economy total revenue ($B)

8X
100
81 Digital financial
services1

59

57 70 Core digital
economy sectors
~12 44
2016 2021 2022 2023

Note: (1) Includes revenue from payments (average merchant discount rates), lending (gross interest rates), insurance (annualised premium equivalent,
APE, for life and gross written premiums, and GWP, for non-life insurance), and wealth (mutual funds management fees and platform fees).
Source: Bain analysis
 31

Digital businesses derive revenue through direct sales,

or by functioning as an intermediary platform

Two key revenue models

Digital
in the digital economy E-commerce Travel
Food
Transport Online media financial
delivery
services

Direct revenue model

Seller Consumer

Revenue is the price of the goods or services sold, Brand.com Airline / hotels’ Food.com Online / game Insurance, etc.
or the underlying instrument channels own channels channels publishers

Third party platform model

Seller Platform Consumer

Revenue to these third party (3P) intermediary E-commerce OTA platforms Food delivery Transport Media Payments, etc.
platforms is a portion of the price of goods marketplaces platforms platforms platforms
or services sold, or the underlying instrument

Note: OTA = online travel agency.

 32

SEA consistently delivers on both GMV growth

and revenue growth – a remarkable feat
GMV ($B) Revenue ($B) Double-digit GMV and
revenue growth
Both GMV and revenue have grown
at impressive double-digit rates for the
past two years, suggesting that
16% 16% CAGR 27% monetisation and overall market growth
295
are not at odds.
Online media
34

11% 31 Food & transport 23% Revenue growth outpaced

20% 218 70
GMV growth
195 26 43 Travel 30%
57 As monetisation accelerated around the
24 24 26
161 E-commerce region over the past two years, revenue
23 30
22 44 is set to grow at 1.7X the rate of GMV.
18 24 2
19 This focus on monetisation has been
8 14 driven by the pursuit of financial
186 22 1
9 sustainability and better unit economics
130 139 1 across sectors.
112 3
28
23
18

2021 2022 2023 2025 2021 2022 2023

Notes: GMV = gross merchandise value; CAGR = compound annual growth rate.
Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
33

There is a trade-off between growth and Monetisation has increased

with further headroom

profitability as new entrants gain ground Revenue has grown faster than GMV as players
increase take rates and expand to adjacent
revenue streams (e.g. logistics, advertising,
etc.). This trend is expected to continue into
GMV1 ($B) Revenue2 ($B) the medium term.

Despite the focus on monetisation,

Grocery CAGR GMV continues to grow

Non-grocery GMV continues to grow even as players reduce

discounts and promotions to increase net take
22%
rates. Market leaders have expressed
willingness to begin re-investing profits to
16% defend their market share. This is expected to
24%
186
drive high GMV growth in the medium term.

24
6% New entrants driving some GMV growth
16%
139 New entrants have grown rapidly, gaining
130
18 market share at an incredible rate. They have
112 17 28 also driven some overall market growth
15
23
through shifting informal and unorganised
forms of e-commerce towards organised
162 18 e-commerce platforms.
113 120
97
Grocery e-commerce has potential upside
The grocery category shows potential for
growth given the sizable headroom and the
efforts put into overcoming logistical and
2021 2022 2023 2025 2021 2022 2023
economic challenges.
Notes: (1) Gross merchandise value: total value of physical goods sold to consumers through organised e-commerce platforms,
including the value of goods sold by merchants from their own inventories (first-party) or goods sold through the platform by
independent sellers (third-party); (2) Revenue spans first-party and third-party sales.
 E-commerce Travel Food delivery Transport Online media
34

Marketplace revenues have accelerated Commission rates have reached China’s

high-water marks
through higher commissions, ad sales, Market leaders have spearheaded ~3.0% to
~4.5% commission hikes in recent years, almost
and logistics fees reaching China’s high benchmarks. Given
regional purchasing power, commissions are
unlikely to increase further.

E-commerce marketplace platform1 revenue growth drivers (% of growth) Adjacent revenue streams serve as a
long-term growth engine
Selling additional services (e.g. advertising,
delivery services, insurance, etc.) has become
an increasingly common way to bump up
revenue per order and overall revenue growth.
Advertising, specifically seller-funded in-app
43% ads to raise brand awareness and drive orders,
has proven successful and is expected to be
core to future monetisation.

100%
28% Expanding width and depth of user base is
key to continued growth
Players need to look beyond the high value
segment and increase both the size and
29% purchase frequency of their customer base to
drive long-term growth and profitability.
AI-driven recommendations can help increase
GMV impact Commissions Adjacent revenue 2021–2023 customer basket size, which can drive improved
impact impact revenue growth unit economics and economies of scale.

Notes: AI = artificial intelligence. (1) Also referred to as third-party platforms, or

online platforms where sellers can set up stores to sell goods to buyers.
Sources: We Are Social; Bain analysis
 E-commerce Travel Food delivery Transport Online media
35

Search interest surpasses pre-pandemic levels,

pointing to continued growth as capacity increases

SEA travel demand recovery (vs 2019 levels)

Outbound - Air Inbound - Accommodation Domestic - Air and accommodation

Demand is a leading
indicator for bookings
Interest in international
travel has revived to surpass
interest in domestic travel
over the past year,
suggesting that there is
2019
latent demand waiting to be
unlocked as international
flight capacity opens up.

Jan 2020 Jan 2021 Jan 2022 Jan

2023

Notes: Search volume is used as a proxy for travel demand; SEA average is a simple average across the six markets.
Source: Destination Insights with Google
 E-commerce Travel Food delivery Transport Online media
36

Flight passenger volume is progressing towards pre-pandemic levels

Domestic flights have recovered in some countries International flights have recovered by ~80%

Domestic RPK (indexed to Jan 2020) International RPK (indexed to Jan 2020)

150% Vietnam 100%

Thailand
100%
Philippines
50%
Malaysia
50%

Indonesia

0% Singapore 0%
Jan 2020 Jan 2021 Jan 2022 Jan 2023 Jan 2020 Jan 2021 Jan 2022 Jan 2023

Note: RPK = revenue passenger kilometres, a measure of total distance travelled by passengers who provide revenue.
Source: IATA
 E-commerce Travel Food delivery Transport Online media
37

Full travel recovery is expected in 2024,

with further headroom for growth
Travel expected to fully recover by 2024
GMV1 ($B) Revenue2 ($B) Despite fervent ‘revenge travel’ and
increased domestic demand, overall travel
GMV has yet to return to pre-pandemic
Accommodation3 CAGR levels. Ongoing tourism recovery should
see travel exceed pre-pandemic levels
Flights4 sometime next year.

Inflation accelerates revenue growth

21% 57% Flight ticket prices and room rates have
43 been rising post-pandemic due to supply
constraints. This has driven up revenue
despite lower flight volumes and
32.1 63% 14 occupancy rates.
30 241%
2019
118% 10 14 Further growth headroom available
18 International tourism, including from China,
5 9
remains well below pre-pandemic levels,
30
indicating significant headroom for growth
8
20 as the broader market continues to
3 13 recover. Increasing flight and
3
5 accommodation capacity will also
contribute to growth going forward.
2021 2022 2023 2025 2021 2022 2023

Notes: (1) Travel GMV consists of flights, hotels, and vacation rental bookings; (2) Revenue consists of both direct sales
(first-party sales) and OTA sales (third-party sales); (3) Accommodation includes online hotel and vacation rental bookings
made for in-country stays; (4) Flights are all outbound flights booked online, both international and domestic.
Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
38

OTA revenues are primarily driven Flights serve as traffic driver for OTAs
Despite flights representing about half of travel GMV,
by hotel commissions they account for only 10-15% of revenues. OTAs are
only able to apply a small commission (2-5%) due to a
consolidated airline market, and competition
between OTAs and airlines’ direct sales channels.

Accommodation is the largest OTA

revenue contributor
2023 OTA GMV and revenue ($B)
In a market where hotels fight for travellers’ attention,
OTAs are able to charge high commissions to give
them an edge over their competitors. OTAs are
Adjacent revenue streams
shifting from a broker-style model (handing over
0%–10% reservations) to a merchant model (managing
Accommodation
transactions) to increase their hold on hotel
commissions. Vacation rentals are a small but
Flights
growing segment, with hosts willing to pay high
45%–55% commissions to be featured on relevant platforms.

80%–85% Adjacent revenue streams provide

long-term upside for OTAs
Platforms are increasingly offering a wide range of
adjacent services, such as car rentals, airport
transportation, and activity bookings. There are also
45%–55% add-on services, such as travel insurance and
no-penalty flight cancellations, which saw increased
uptake during the pandemic and remain elevated
10%–15% today. In addition, they also offer advertising as a
service to suppliers. This broad range of services is
well-positioned to drive future growth for OTAs.
2023 GMV 2023 revenue

Note: OTA = online travel agencies.

Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
39

Consumer demand holds steady despite

the return to in-person dining and
increasing monetisation efforts Consumer demand remains sticky
Despite a return to in-person dining, higher
food prices, and a pullback in promotions,
GMV remains relatively stable as ordering
GMV ($B) Revenue ($B) habits remain sticky post-pandemic.

Inflation driving up order values

Increases in food and fuel costs are driving
CAGR
up the cost of meals as well as the cost of
delivery per order. This may impact demand
in the longer term if higher costs persist.

60%
0.8 Headroom to grow beyond metro cities

12%
At the same time, players will need to scale
20 their customer base. SEA remains
15% -4% N/A underpenetrated, with food delivery as a
17 16 0.5
15
percentage of total food service transactions
at about half the level in China. Unlocking this
14 opportunity will require pushing beyond core
30 high value users in metro cities.
13 20 9
5

-0.02

2021 2022 2023 2025 2021 2022 2023

Note: Revenue is net of partner incentives and consumer promotions.

Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
40

Revenue growth is driven by increased take Improving unit economics towards profitability
After years of focusing on user acquisition, players have

rates in the short term, and growth of users turned to improving unit economics, and are now
generating positive net revenue by optimising
commissions and promotion spend – the first step towards
and orders in the long term sustainable long-term profitability. Consolidation is also
under way, favouring the largest players with the clearest
paths to profitability.

Food delivery revenue drivers (% of total growth)

Limited headroom from commissions and incentives
Commissions and incentives have now stabilised at levels
on par with global benchmarks (take rates of 15%-20%) as
competition rationalises. As such, these rates are unlikely
to increase further, given the potential impact on partner
supply and consumer demand.

49% Focus on profitability and other revenue streams…

As overall take rates stabilise, players are increasingly
exploring adjacent revenue streams (e.g. dine-in bookings,
100% loyalty and subscription programs, etc.) to increase
monetisation. Advertising is also a huge revenue pool,
potentially reaching $100M ARR for some large players. In
46% addition, players are increasing delivery productivity
through AI-optimised order batching and route planning,
4% and by optimising back-office costs.

GMV impact Commissions Incentives 2021–2023 … leads to a broader customer base

impact impact revenue growth Cost efficiencies allow players to provide differentiated and
more affordable offerings (e.g., economy delivery option
with longer wait times) while maintaining margins. This
enables them to profitably scale up their customer base
and drive future revenue growth.
Notes: ARR = annual recurring revenue. Revenue is net of partner incentives and consumer promotions.
Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
41

Strong transport recovery with Full recovery expected by early 2024

successful monetisation Commuter demand has returned to

pre-pandemic levels and beyond in most
capital cities. There is also rising demand for
airport rides and transport to tourist
destinations.
GMV ($B) Revenue1 ($B)

Inflationary pressures drive

CAGR increased ride prices
Increased vehicle and fuel costs have driven
up average ride prices as platforms try to
47% maintain drivers’ earnings. These increased
1.1 costs have reduced driver supply, putting
additional upward pressure on prices.

61% Monetisation successful

0.7 and continues to stabilise
Revenue growth has outpaced GMV growth
18% as players optimise incentive spend. As take
10 rates reach a steady state, this gap will
0.5 14 begin to close.
30%
7.8
50% 7.3
9
5.6 Immediate and future
2019
30 headroom for growth remains
3.7 3
20 Rising income levels will support
13 longer-term growth trends. The introduction
5
of electric vehicles and autonomous driving
will spur additional growth for this sector in
2021 2022 2023 2025 2021 2022 2023 the much longer term.

Note: Revenue is net of partner incentives and consumer promotions.

Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
42

Monetisation model has stabilised; Monetisation reaching a stable point

The transport business model is reaching an
affordability will unlock profitable expansion equilibrium in terms of take rates. Despite some
recent increases from service fees, commissions

and long-term growth are already at a ceiling, with current rates

comparable to global benchmarks (20%–25%).
Incentives have also been optimised to a point at
which further reductions will negatively impact
driver supply and consumer demand.
Transport revenue growth drivers
Optimising the value proposition for users
As the margin structure stabilises, the next test is
whether players can scale up their customer base
while maintaining profitability. Carpooling,
3% 19% affordable fleets, AI-powered routing and surge
pricing, and proprietary mapping are being
introduced to increase driver productivity and
improve unit economics. These improvements will
help make transport services more accessible to a
100% larger market.

78% GMV increase is led Establishing profitable expansion

by post-pandemic beyond metro cities
recovery
As a result, players will be able to move into regions
beyond capital cities, where lower density of
demand and price points have traditionally made it
difficult to grow sustainably. This will help drive
GMV impact Commissions Incentives 2021–2023
longer-term growth for the industry as a whole.
impact impact revenue growth

Note: Revenue is net of partner incentives and consumer promotions.

Source: Bain analysis
 E-commerce Travel Food delivery Transport Online media
43

Advertising and streaming will drive Ads Resilience amidst advertiser caution

market growth in the long term Ads continue to grow, even as brands spend cautiously
while making profitability optimisations. Short-form
videos and marketplace ads are key growth drivers. AI
continues to help enhance targeting and personalisation.
Online media GMV¹ ($B)
Gaming New growth areas emerging
The return to offline activities and lower disposable
CAGR incomes have softened in-app purchases in the short
term. Casual games are emerging as a new pocket of
growth as developers explore optimal monetisation
models.

15%
Music Growth driven by adjacent trends
34
CAGR The halo effect of live music events and the return of
10% 2023–2025 office commutes are driving growth in music-streaming
7% 26
despite price increases. A growing focus on wellness is
24
also expected to have a positive impact on mood genre
22 Ads 15% listening.

Gaming 14%
30 Video Competition increases for watch time
Music 11% Global streaming platforms compete with long- and
20
5 13 short-form social media videos for users’ attention. They
Video 12% are balancing user acquisition through more affordable
plans with increased monetisation through crackdowns
on account sharing.

2021 2022 2023 2025

Note: (1) For media, GMV is equal to revenue.

Source: Bain analysis
 44

Financial services
at an inflection point
 45

Consumers are adopting

digital financial services
(DFS) at a rapid pace; cash
is no longer king.
High interest rates are
affecting DFS subsectors
differently. Digital natives
and traditional finance are
engaged in heated
competition.
 46

DFS adoption continues to grow healthily in SEA

DFS app usage continues … while a once-in-a-decade … impacted underlying financial

to grow at a rapid pace… Fed interest rate increase … services sectors differently

SEA user growth¹ Effective US fed funds rate

H1 2019–H1 2023 CAGR
Deposits grew due to
4.3% attractive rates. Asset

+40% Traditional banks

values rebounded as the
stock market picked up.

+61% Digital banks

Growth in underlying
lending and life insurance

+50% 0.1.% 0.1% markets was muted due to

Pure-play fintechs
rising interest rates.
2021 2022 2023

Notes: CAGR = compound annual growth rate. (1) Monthly active user (MAU) growth.
Sources: US Federal Reserve; Bain analysis
 47

Irreversible offline-to-online behaviour shifts

are driving continued growth in DFS adoption Payments

The shift to digital has proven irreversible:

offline, digital payments via QR codes are now
CAGR
widely accepted, while online, more payment
methods have been integrated into the
Digital payments Digital lending checkout flows of popular apps.
1
GTV ($B) Loan book balance2 ($B)
Lending

13% There is tremendous growth despite the high

12% interest rate environment. Non-performing
21% ~2100 ~300
29% loans (NPLs) have remained under control as
1231 21% 26% fintech players continue to focus on credit
858 959 100
708
60 management capabilities.
40 48
2021 2022 2023 2025 2030 2021 2022 2023 2025 2030
Insurance
Digital insurance Digital wealth Strong overall growth is driven primarily by
non-life insurance, with support from
APE & GWP3 ($B) AUM4 ($B) country-specific government policies, such
as subsidised personal accident and health
insurance.
22% ~7.5 ~410
17% Wealth
11% 31%
3.1 15% 40%
1.8 2.1 93
Growth is strong due to the increase in digital
1.6 54
34 39 offerings from traditional banks and adoption
2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 of new fintech and digital banking platforms.
Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account
(A2A), and e-wallet transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans
(excluding credit card and mortgage) and SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health
under life insurance policies and GWP for non-life insurance; (4) Assets under management (AUM) for digital wealth includes
end-of-year mutual fund AUM balance.
Source: Bain analysis
 48

Lending is the single biggest driver Wealth

Revenue growth is largely driven by underlying
of DFS revenue volume growth. Still in its early stages, the sector
has seen some fee upside from mix shifts given
the faster rate of growth in emerging markets.
However, monetisation has remained nominal as
33% CAGR platforms are still in a user acquisition phase.
Revenue1 ($B) 2021-2023
~30
1 31%
Insurance
Wealth
2 14% The insurance market remains relatively
Insurance underpenetrated, but digital distribution channels
are gaining momentum and growth can be
Account-to-acc 7 12%
Payments expected, particularly in the non-life insurance
ount & e-wallet
space.
Lending ~15

CAGR 0.5 Payments

2 Merchant discount rates (MDRs) have been on the
decline – and are expected to continue – causing
5 revenue growth to trail gross transaction value.
19 46% This is driven by a combination of merchants
moving towards channels with lower MDRs, and
governments capping rates on some channels.

9
Lending
Lending is the largest contributor to DFS revenue,
and gross revenue (primarily from interest income
2021 2023 and fees) has risen sharply due to high lending
rates. On the flip side, the cost of funds has
Notes: (1) Revenue is measured using different metrics for each DFS sector. Lending: average effective interest rates plus servicing surged, while NPLs remain under control.
fees; Payment: merchant fees (based on merchant discount rates); Insurance: annual premium equivalent for life insurance and
gross written premium for non-life insurance; Wealth: annual management fees and platform fees.
Source: Bain analysis
 Payments Lending Insurance Wealth
49

Cash is no longer king; digital payment adoption

drives GTV and revenue growth Digital payments have crossed
the halfway mark
Cash is no longer king, as digital
GTV ($B) Revenue ($B) payments now make up 50% of total
transaction value. The shift away from
cash is expected to continue as digital
channels become the dominant means
Cards¹
of payment across SEA.
Account-to-account & e-wallet
MDR is in tight focus
Cash to total GTV -0.5
Merchants and platforms are
~2100 1.8 increasingly looking for ways to reduce
CAGR
costs, and are incentivising users
towards account-to-account (A2A) or
~800
e-wallet payments with lower MDRs
13% (e.g. discounts for the use of A2A
1231 payments).
12%
21% 6.7
959
858 550 5.3 A2A is gaining traction, with
708
447
strong long-term outlook
402
316 ~1300 A2A and e-wallet channels are gaining
traction off the back of government
681
456 512 regulations encouraging the adoption
392
of these payment channels (e.g. QRIS).

2021 2022 2023 2025 2030 2021 Payment Merchant 2023

revenue volume discount revenue
56% 52% 50% 45% 34% impact rate impact
56% 52% 50% 45% 34%

Note: (1) Cards include credit cards, debit cards, and prepaid cards.
Source: Bain analysis
 Payments Lending Insurance Wealth
50

Digital loans grew rapidly despite the Growing preference for digital channels

sharp increase in lending rates While high interest rates are keeping the overall loan
book relatively flat, digital lending is growing as
consumers shift online. Shifting consumer
preferences are also prompting the rapid
Digital loan book balance1 ($B) Revenue ($B) popularisation of buy-now-pay-later (BNPL)
services, the digitalisation of traditional financial
services players, the rise of digital banks, and
governments to push for digital innovation in the
SME
lending space, such as Vietnam’s fintech sandboxes.
Consumer
Strong lending rates help drive revenue growth
CAGR ~300
Digital lenders are taking advantage of higher
lending rates, leading to revenue growth.
5.6
~75 Meanwhile, consumer demand remains high as
underbanked consumers and small businesses are
participating more meaningfully in the digital
economy.
4.6

19.0
Regulatory oversight is tightening
29% High lending rates come with a higher cost of risk.
100 With NPLs under control, fintech players are working
~225
on strengthening their credit capabilities, though
26% 21 questionable collection practices are also on the
21% 60 8.9
48 rise. Governments are putting more robust
40 12 measures in place to protect consumers, most
9 79
6 notably in Indonesia. The country has introduced
39 48
34 new capital and equity regulations, in parallel with
an ongoing revamp of licensing requirements and
2021 2022 2023 2025 2030 2021 Loan Lending 2023 lending limits.
revenue volume rate revenue
impact impact

Notes: (1) Digital loan book excludes credit card and mortgage. SME = small-and-medium enterprises.
Source: Bain analysis
 Payments Lending Insurance Wealth
51

Adoption of digital insurance continues,

but market penetration remains low
Digital penetration is picking up
with micro-insurance
APE & GWP¹ ($B) Digital insurance accounts for a small portion of the
overall insurance market. Insurtech companies are
offering cheaper, pay-as-you-use insurance
Life products to lower-income segments of the
population. AI-driven premium calculations help
Non-life optimise prices for consumers. These products are
also more accessible and convenient for the user
CAGR ~7.5
(e.g. users can pay premiums via mobile bills) and
can be purchased on mobile devices. Life and
property insurance are least digitalised, offering
~2.5 long-term headroom for growth.

Embedded products expand across platforms

Traditional issuers are forming partnerships with
22% consumer platforms to offer insurance products
3.1 embedded with partner offerings. For example,
17% transport platforms are offering trip insurance to
11% 2.1 1.0 ~5.0 users and auto insurance to drivers. Travel insurance
1.6 1.8 has become ubiquitous among OTAs and airline
0.7
0.6 0.6 apps, and second-hand auto marketplaces now
2.2 offer vehicle insurance.
1.2 1.4
1.1

2021 2022 2023 2025 2030

Notes: APE = annualised premium equivalent; GWP = gross written premium; OTA = online travel agency; (1) APE for life insurance and
GWP for non-life insurance; different approach to last year’s split of life (APE), health (GWP), and general (GWP) to life (APE) and
non-life (GWP) where health premium is consolidated into life insurance premium (APE instead of GWP). We are assuming APE and
GWP are equivalent to revenue for this sector.
Source: Bain analysis
 Payments Lending Insurance Wealth
52

Digital AUM is expected to increase

alongside digital openness Increasing openness to digital
across segments
Customers across the wealth spectrum are
becoming increasingly open to using digital
Digital AUM¹ ($B) Revenue ($B) self-services to manage their portfolios. Adoption
growth is not limited to the masses, but also
among high-net-worth customers. In the long run,
CAGR
digital adoption should continue growing as
young, digitally-savvy users build up their wealth.

~410 Traditional financial institutions are moving

0.0 towards digital engagement
Beyond fintech platforms, traditional financial
institutions are investing in simplified digital
wealth offerings, and most have shifted client
0.3 engagements online or adopted a hybrid model of
offline advisory with online self-service. Some are
also integrating AI into investment planning tools
to improve the customer journey.
0.8
Continued digital adoption to fuel
31% future AUM and revenue growth
93 0.5
40% Revenue growth has stayed relatively in line with
15% 54 volume growth and will likely remain so, as fees
34 39 are expected to remain stagnant.

2021 2022 2023 2025 2030 2021 Volume Fees 2023

revenue impact impact revenue

Note: AUM = assets under management; (1) AUM represents wealth of all online mutual funds in the region.
Source: Bain analysis
 53

Survival of the fittest among

pure-play fintechs, while traditional Consumer tech platforms
Strong payments traction but limited success expanding to other DFS
banks accelerate digitalisation E-wallets have been a traditional stronghold due to their existing user base,
but the space is seeing increasing competition from national real-time
efforts to retain high value users payment rails. There has been limited success in cross-selling other financial
products. Embedded insurance is a potential growth avenue for these
players, with most establishing partnerships to sell insurance products
Stronger Stable Weaker Just launching alongside their regular products and services.

Pure-play fintechs Established consumer players

Strong traction, particularly in digital wealth and digital lending Limited traction in payments; little activity to enter other DFS
Pure-play fintechs have seen success in lending to the underbanked segment Traditional consumer companies (e.g. telcos, consumer retail) have found
and establishing a strong foothold via BNPL, with stronger credit scoring and limited success in digital financial services. They are leveraging their customer
underwriting capabilities. Robo-advisory players have also seen strong base to drive digital payments but have not been as successful compared to
traction, attracting customers through simplified offerings. The decline in consumer tech platforms, with more limited activity in expanding into other
funding has led to a ‘survival of the fittest’ situation, as players are compelled financial services offerings. These traditional consumer companies are
to focus on profitability. Those that are unable to compete for investor choosing to refocus on their core businesses.
funding risk mergers or closure.

Established financial services institutions Digital banks

Rapid digitalisation driving momentum in digital payments and wealth Still nascent, but with significant potential
Established financial services institutions have been successful and quick to Pure-play digital banks have significant potential to capture digital natives and
transition their large existing customer bases to digitalised services. They the underbanked population. Adoption has generally been strong across new
have benefited from countries adopting national real-time payment rails and digital banks. Most players are taking a cautious approach to growth as
mobile banking. Digital lending sees more traction in developed markets regulatory constraints have introduced some friction.
compared to emerging markets. Digital wealth is gaining traction as user
engagement increases, and there is significant headroom for future adoption.
 54

Engaging high value users

 55

As businesses pursue
an accelerated path to
profitability, engaging high
value users has become
critical to achieve sustainable
unit economics. Over the
long term, significant growth
headroom lies in onboarding
all Southeast Asians onto the
digital economy.
 56

High value users (HVUs) are defined as the top 30% of online
spenders1 with an outsized contribution to digital economy spend
Digital economy spenders1 in SEA
Based on total online spend across 7 verticals2

User Spend Income Geography

What we discovered…
Proportion Proportion Demographic3, Demographic3,
4
% who are affluent % who reside in
metro cities5
HVUs can be found anywhere
While many top online spenders or HVUs
Top
are higher-income, close to half are low-
HVU 30%
High value users 52% 76% to medium-income consumers. They are
also likely to be represented in both
Higher major and non-major metros, just as
lower spenders are. Lastly, this report
Next will also delve into how usage behaviour
Non-HVU 70% differs between HVUs and non-HVUs.
Non-high value 23% 65%
users
Lower

Notes: (1) Based on absolute online spend on digital services from the Google-commissioned Kantar e-Conomy SEA consumer survey, excluding digital
financial services (DFS); (2) Includes e-commerce, groceries, transport, food delivery, gaming, streaming, and travel; (3) Average composition across SEA;
(4) Affluent = high income; (5) Includes 35 metro locations surveyed out of 196 locations surveyed across SEA.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023- 01/09/2023 (n=2,368 HVU, n=5,513 non-HVU). Question A2, S3, S7: “Please estimate how much you think you spend online
in an average month across the below digital activities.” “In what region / area do you live?” “Which of the following best describes your regular monthly
household income situation before tax?”
 57

HVUs account for

nearly three-quarters Proportion of digital economy spend by HVUs

of digital economy spend1 Based on total online spend2 per user

73%
Average

78%
75% 74%
73%
70% 69%

Notes: (1) Based on absolute online spend on digital services from the Google-commissioned Kantar e-Conomy SEA consumer survey; (2) Excludes digital financial services.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and
digital economy spenders, 10/08/2023- 01/09/2023 (n >= 1,300 per country, n = 7,881 in total; HVU per country at least n >= 390, n=2,368 HVU in total).
Question A2: “Please estimate how much you think you spend online in an average month across the below digital activities.”
 58

HVUs spend more than 6X the amount non-HVUs Online spend concentration is

spend online, and are more likely to increase highest in discretionary

spending verticals
spending over time ‘Essential’ categories, including
groceries, food delivery, and
e-commerce, see HVUs outspending
non-HVUs by ~5 to 6X. The ratio
HVU spend vs non-HVU spend Change in spend increases significantly for higher
Based on average online vertical spend per user Averaged across verticals1 per user discretionary spend verticals, like
transport and gaming.
HVU
Gaming 11.0X
Non-HVU
Transport 10.1X Going forward, the spend gap
Travel 7.0X between HVUs and non-HVUs
will likely widen
Streaming2 6.9X
50% 52% HVUs’ spend has been on the upswing,
Groceries 6.1X and this is likely to continue. Their
33% 34%
Food delivery 5.7X spend increased the most on food
delivery and groceries over the last
E-commerce 5.2X
year, but travel and e-commerce is
6.5X Increased spend Intend to increase where they expect to be spending
weighted average3 over past 12 months spend over
next 12 months more in the next 12 months, reflecting
growing consumer optimism.
Notes: (1) Excludes digital financial services (DFS); (2) Streaming includes both video-on-demand and music-on-demand. (3) Based on
aggregate HVU user spend / aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet
users and digital economy spenders, 10/08/2023- 01/09/2023 (Spend ratio n=2,368 HVU, n=5,513 non-HVU; for spend change, HVU per vertical
at least n >= 1,724, and non-HVU per vertical at least n >= 2,623). Question A2, A5, A7: “Please estimate how much you think you spend online
in an average month across the below digital activities.” “Comparing this year to the previous year, how has your spend for the following
digital behaviours changed?” “Thinking about the upcoming year, how do you think your spend for the following digital behaviours will
change?”
 59

HVUs spend more across different channels

and across a higher number of verticals
HVU spend is significantly
Online vs offline spend1 Usage across verticals1 higher across all channels
Indexed to average HVU total spend Average number of verticals in which 54% of HVUs’ total spend happens
users spend online, 7 being the maximum
online, compared to 43%2 for
Offline
non-HVUs. Beyond online spend,
Online HVUs also spend more offline: 4X
compared to non-HVUs. Overall, HVUs
spend 5X compared to non-HVUs.

46% 5X
HVUs spend across more
verticals online
6.2
HVUs tend to spend across more
4.7
verticals than non-HVUs, though their
54% spend propensity compared to
12% non-HVUs is highest for streaming3,
9% travel, and transport.

HVU Non-HVU HVU Non-HVU

Notes: (1) Excludes digital financial services (DFS); (2) Based on non-HVU online spend (9%) / total spend (21%), indexed to average HVU total
spend; (3) Streaming includes both video-on-demand and music-on-demand.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users
and digital economy spenders, 10/08/2023- 01/09/2023 (n=2,368 HVU, n=5,513 non-HVU). Question A2, A2a: “Please estimate how much you think
you spend online in an average month across the below digital activities.” “Please estimate how much you think you spend offline / in-store in an
average month across the below activities, please only consider times you spent in-person, in-store or over the phone.”
 60

HVUs tend to be high spenders across verticals,

especially among related sectors
A HVU in one vertical is
HVU spend correlation across verticals Low High likely to be a HVU in others
correlation correlation
Based on online spend in a vertical Across the board, the likelihood that
y a HVU in one vertical is also a HVU in
rce ve
r 1
me ie s rt eli i ng another vertical is over 40%. HVUs in
om er po dd ing am l
-c oc ns o m e ve
E Gr Tra Fo Ga Str Tra food delivery are the most likely to
cross verticals, whereas travel has
E-commerce 100% 63% 55% 56% 50% 52% 50% the lowest replicability.

Groceries 58% 100% 56% 59% 51% 54% 52%

High cross-vertical usage
Transport 51% 57% 100% 58% 56% 58% 52% is observed across
related verticals
Food delivery 58% 66% 64% 100% 49% 55% 56%
A HVU in e-commerce is quite likely
Gaming 44% 49% 52% 42% 100% 62% 44% to also be a HVU in groceries, and
vice versa. The same goes for HVUs
Streaming1 46% 52% 55% 47% 63% 100% 48% in gaming and streaming1.

Travel 44% 50% 49% 47% 44% 47% 100%

Note: (1) Streaming includes both video-on-demand and music-on-demand.

Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users
and digital economy spenders, 10/08/2023- 01/09/2023 (HVU per vertical at least n >= 1,951). Question A2: “Please estimate how much you think
you spend online in an average month across the below digital activities.“
 61

HVUs are frequent online purchasers, but high expectations

mean 1 in 2 would switch platforms for a better experience
HVUs who seek an alternative platform when
Online purchase frequency (%) one fails to meet their expectations
Based on online spend within vertical Based on online spend within vertical
HVU

Non-HVU

Every
Every week Every month
6 months

52% 51% 50% 48%

44%
96 92
89 88 88 83 85 81
78 75 70 76
67
53

Food
Transport Streaming1 Groceries Gaming E-commerce Travel E-commerce Groceries Food delivery Transport Streaming2
delivery

Notes: (1) Streaming includes both video-on-demand and music-on-demand. (2) Includes only video-on-demand.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023- 01/09/2023 (Online purchase frequency HVU per vertical at least n >= 1,724, and non-HVU per vertical at least n >= 2,623;
for alternative platform switching, HVU per vertical at least n >= 501). Question A1, V21: “Thinking about the last year, how often do you typically do the
following activities online?” “When it comes to buying for the following digital activity, please select the statement most applicable to you.”
 62

Across verticals, HVUs tend to care less about

price than non-HVUs when shopping online
Importance of price against other factors when shopping online
Based on online spend within vertical

HVU

Non-HVU Most important attribute HVUs are more inclined to

other than price value non-price benefits
E-commerce Price
56% 44%
Convenience More so than non-HVUs, many HVUs
64% 36%
value the superior experience and
Groceries Price
57% 43%
Convenience
convenience of purchasing digitally,
61% 39%
which lead to higher online spending
53% 47% and frequency of usage.
Transport Price
65% 35%
Speed

22% 78%
Food delivery Price Value at a fair price
36% 64%

35% 65%
Gaming Price Quality
43% 57%

41% 59%
Streaming1 Price A platform that suits my needs
51% 49%

Note: (1) Streaming includes both video-on-demand and music-on-demand.

Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users
and digital economy spenders, 10/08/2023- 01/09/2023 (HVU per vertical at least n >= 501, non-HVU per vertical at least n >= 880). Question V21:
“When it comes to buying for the following digital activity, please select the statement most applicable to you.”
 63

However, getting the best price is key

to keeping HVUs loyal to a platform
% of HVUs who cite price as reason to switch digital platforms
Based on online spend within vertical

HVUs choose the platform with

E-commerce 56%
the best deals
Groceries 54% Across verticals, HVUs show a high
propensity to use multiple digital
Transport 58%
platforms and switch between them to
find more reasonable prices or fees.
As they spend more overall, they are
Food delivery 56%
motivated to get the most out of their
spending.
Gaming 61%

Streaming1 46%

Travel 56%

Note: (1) Streaming includes both video-on-demand and music-on-demand.

Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users
and digital economy spenders, 10/08/2023- 01/09/2023 (HVU per vertical at least n >= 501). Question V17: “Thinking about buying for the following
digital activity, which of the reasons below are most likely to influence your decision to switch your final channel for a transaction?”
 64

Ensuring a reliable and accessible online experience can

overcome barriers and spur higher usage and spend

Top barriers to spending more online

Based on online spend within vertical

Common barriers among all users Distinct barriers among non-HVUs

In e-commerce, Delivery issues, including Inability to guarantee a Minimum order A preference to see or
groceries, and slow delivery and high product’s authenticity or requirements in food touch the product has
food delivery delivery costs, are top quality is a key hindrance delivery is also a common been holding non-HVUs
barriers. in e-commerce and constraint. back.
groceries.

In transport, gaming, High prices are the top Inaccurate or long wait Hidden transaction fees Streaming incurs a An inability to compete
streaming1, and travel barrier in transport, times are a perennial issue and online security recurring cost, which they with high spending
gaming, and streaming. for transport consumers. concerns are common prefer to save. gamers deters non-HVUs
issues among travelers. from gaming.

Note: (1) Streaming includes both video-on-demand and music-on-demand.

Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users
and digital economy spenders, 10/08/2023- 01/09/2023 (HVU per vertical at least n >= 501, non-HVU per vertical at least n >= 835)
Question V16: “Thinking about buying for the following digital activity, what are some of the barriers from spending more online?”
 65

Addressing barriers to online spending can

be a significant opportunity for digital players, HVUs could be spending more
with higher uplifts expected for non-HVUs across all categories
The biggest potential uplifts are in
categories where major barriers are
% increase in online spend if major online barriers were removed more addressable: groceries, gaming1,
e-commerce, and food delivery. These
Based on online spend within vertical
are largely related to distribution,
HVU supply, or security issues from
purchasing online.
Non-HVU

The growth opportunity for

+73% non-HVUs is 1.9X that of HVUs
Non-HVU average
107 Non-HVUs would spend more online
92 or start spending online if key barriers
+39% 72 72 were resolved. However, non-HVUs
HVU average 58
50 46 also face barriers, such as needing to
41 40
35 35
21 touch and feel products, which may
require creative workarounds.
E-commerce Groceries Transport Food delivery Gaming1 Travel

Note: (1) Only includes purchase of games and not in-game purchases.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet
users and digital economy spenders, 10/08/2023- 01/09/2023 (HVU per vertical at least n >= 501, non-HVU per vertical at least n >= 726)
Question V16a: “Earlier you mentioned that you spend the following in an average month when buying for the following digital activity. If all
your barriers were removed, how much of your total would you spend online?”
 66

For non-HVUs who only purchase offline: lower prices,

trust in the platform, and ease of use can change behaviour

Top reasons to start spending online1 (% share of fully offline non-HVUs)

Based on online spend within vertical

18%
15%
14%
12% 12% 12% 12%

If I can get the same If I trust the platform If the platform or app If more products or If my friends and If I can get the product If there is a variety
products or service online or app is easy to use services are available family do it or service faster of payment options
but at lower prices on platforms or apps

Note: (1) Excludes digital financial services (DFS), averaged response per non-HVU who currently do not spend online in one or more verticals.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and
digital economy spenders, 10/08/2023- 01/09/2023 (n = 2,706 non-HVU; n = 462 to 646 responses for Ride Hailing, Food Delivery, and Groceries; n =
1,006 to 1,704 responses for Gaming, Streaming, and Travel; n = 150 responses for Ecommerce; across all verticals, across all verticals, differences from
the average are negligible and not statistically significant, with notable exception to groceries which was higher than average, and where speed of
delivery is more important. Question A8: “Earlier you mentioned that you have never done the following online activities. What would entice you to do
the following activities online?”
 67

Bridging the digital

economic divide
 68

Digital inclusion has made

inroads in the region over
the past years.
Yet, as players focus on
monetisation, consumers
outside of metro cities
are facing a widening
digital economic divide.
 69

Last year, we outlined four enablers for a sustainable digital economy;

this year, we deep dive on digital inclusion

Towards a sustainable digital economy

Path to profitable growth Environment, Digital inclusion Data infrastructure

Social, Governance and regulation
Connectivity continues
The digital economy is on the ESG has temporarily taken a back to make inroads, with Improvements in infrastructure
path to profitable growth, with seat as players double down on and security continue, with
more users now online.
32% of GMV transactions profitability metrics. responsible artificial intelligence
captured as revenue. (AI) guidelines coming into focus.
Rising costs are also widening the However, profitability puts
Sectors that have proven to be consumer ‘say-do’ gap, despite short-term pressure on Rather than a reactive measure
profitable in the past will likely see the general rise in ESG to ethical concerns, this could be
digital participation, as it
a reinvigoration of growth. awareness. a potential source of competitive
remains challenging to advantage.
operate efficiently beyond
metro cities.

Source: Bain analysis

 70

Digital economic growth happens

as a result of digital inclusion and
the active participation of digital users
1 Digital inclusion

An effort to provide all segments

Total population
of society with equitable access
to digital technologies so everyone
Digital population can participate meaningfully in the
digital economy.

Digital consumers

2 Digital participation

Active involvement in the digital

economy through consumption of
products or services across sectors
of the digital economy (including
content and entertainment).
 71

SEA has seen good progress on digital inclusion,

making inroads into rural areas to bridge connectivity gaps

% households with internet access (urban vs rural)

2015

2022
Urban Rural
Some metro cities Clear signals that the urban
are nearing the digital and rural connectivity gap is
1.3x penetration saturation point narrowing
1.4x
1.8x
2.2x 2x With the commoditisation of 4G Years of investment in connectivity
networks, falling costs of data and infrastructure are finally bearing fruit,
97 92 mobile devices, and rising smartphone as more last mile challenges have been
89 3.7x 89 86
76 74 ownership, digital penetration has addressed across the region. Rural
64 reached an all-time high across major Indonesia, the Philippines, and Vietnam
49 metro cities like Bangkok, Kuala still have headroom for improvement.
41 42
20 Lumpur, and Jakarta.

Source: ITU; World Telecommunications/ICT Indicator Database

 72

We assessed demand and supply at a provincial level

to understand the digital economic divide

e-Conomy Opportunity Index The digital economic divide

A growing gap between demand and supply for

digital services can result in a digital economic
divide. Areas beyond metros are particularly
Demand Supply vulnerable given the challenging unit economics
and lower purchasing power.

While consumers in these areas might have access

Proxy: Indexed search Proxy: Number of delivery to the internet, they are not able to participate and
interest per capita1 at drop-off points per 1,000 contribute to the digital economy meaningfully.
a provincial level residents2 at a provincial level

Notes: (1) An indication of how much e-commerce demand there is, calculated based on the e-commerce-related search interest indexed to
census population per province, indexed at the country level; (2) An indication of the e-commerce fulfillment coverage, calculated based on the
concentration of courier, delivery, freight forwarding, mailing, and shipping services within provinces, indexed at country level.
Sources: Google internal data, ID, MY, PH, TH, VN, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, ID, MY, PH, TH,VN,
as of September 2023; WorldPop & Landscan Population; Bain analysis
 73

The current demand and supply gap outlines a potential risk

of a digital economic divide in the e-commerce sector
Low retail High retail Low drop-off High drop-off
E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023 drop-off points per capita

Hanoi Hanoi

Manila Manila
Bangkok Bangkok

HCM City HCM City

Kuala Lumpur Kuala Lumpur

Jakarta Jakarta

Notes: (1) An indication of how much e-commerce demand there is, calculated based on the e-commerce-related search interest indexed to census population
per province, indexed at the country level; (2) An indication of the e-commerce fulfillment coverage, calculated based on the concentration of courier, delivery,
freight forwarding, mailing, and shipping services within provinces, indexed at country level.
Sources: Google internal data, ID, MY, PH, TH, VN, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, ID, MY, PH, TH,VN, as of Sep
2023; WorldPop & Landscan Population; Bain analysis
 74

The gap could

widen further if Ratio of metro to non-metro online spend per user1

players focus solely

on monetisation

Average: 1.5X

1.98X
1.59X 1.52X
1.37X 1.37X 1.26X 1.17X

Travel Gaming Transport Food delivery Streaming Groceries E-commerce

Note: (1) Excludes Singapore.

Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet
users and digital economy spenders, 10/08/2023- 01/09/2023 (n=4,052 metro, n=2,526 non-metro). Question S3, A2: “In what region/area do
you live?” “Please estimate how much you think you spend online in an average month across the below digital activities.”
 75

Addressing
these gaps is Investors Digital businesses

the collective ● Take a digital inclusion and a participation lens

when evaluating new opportunities, while also
● Design new innovations, products, and
services that facilitate wider digital participation

responsibility of optimising for the company’s offerings and

unit economics
(e.g. easier to use or more affordable products)
● Build trust with consumers outside of metro
all stakeholders ● Encourage portfolio companies to support digital
inclusion and address digital participation issues
cities (e.g. cash on delivery services, refund
policies, etc.)

Government Nonprofits / NGOs

● Roll out education initiatives to improve digital and ● Identify and call attention to digitally excluded
financial literacy to enable individuals to participate populations to drive action across all stakeholders
meaningfully and safely in the digital economy ● Support businesses and governments in their
● Invest in connectivity and physical infrastructure identification of gaps across society
to support digital inclusion and accessibility of ● Execute targeted education programs to ensure
digital services these populations become more digitally literate
● Upskill MSMEs to help them use digital tools
(e.g. AI to improve efficiency) to scale services
and improve reach
 76

A policy agenda for responsible

Digital businesses and governments can progress in AI development:

explore the application of new technologies, Invest in innovation and competitiveness

Invest in AI research, create shared AI research
such as AI, to support these efforts resources, and establish public-private partnerships
to build and maintain high-quality datasets.

Create a pipeline of AI-ready talent

Not exhaustive Expand pre-tertiary STEM and digital training
programmes, fund more research fellowships to
promote AI and technology literacy, and expand
Digital businesses can explore relevant tertiary education programs (e.g. computer
Customer service: AI-powered science and AI-related curricula). Encourage
AI-driven use cases to benefit chatbots and virtual assistants can upgrading AI skills in the workforce through
consumers and themselves provide 24/7 customer support and
micro-certifications and e-learning.
answer customer queries quickly
and efficiently. Promote balanced legal frameworks
for AI innovation
Inventory management: Optimised Personalised content Develop privacy laws to protect personal information
inventory levels reduce storage and recommendations: AI-driven video, and enable trusted cross-border data flows.
inventory costs, ensuring that products song, or article recommendations can
Develop copyright systems enabling appropriate and
are available based on predicted help consumers find relevant content
demand while minimising wastage. much more quickly, improving their fair use of copyrighted content, while giving publishers
overall engagement. and content creators choice and control over the
reproduction of their works.
Route optimisation: Driver schedules Fraud detection and prevention: Promote globally-interoperable
and routes can be further optimised to Understanding individual buying
AI governance frameworks
maximise driver and vehicle utilisation, behaviour or access patterns to detect
and prevent credit card fraud or identity Develop common standards, shared best practices,
reduce fuel costs, and minimise the time
customers spend waiting or travelling. theft, increasing security for consumers and proportional risk-based regulation through a
and merchants. multi-stakeholder approach to ensure that AI
technologies are developed and deployed responsibly.
 77

To encourage digital participation, challenges need to be

addressed with each of the drivers

Digital literacy Drop-off points Road density

Per 10,000 population Kilometres per square kilometre

38% ~2 ~2.2
23%
~0.5 ~0.6

Metro Non-metro Metro Non-metro Metro Non-metro

Digital literacy is necessary Cost-efficient supply models Physical infrastructure

to foster trust must be created can improve cost-to-serve
Consumers’ digital literacy (i.e. their To facilitate digital participation, players need Investments in physical infrastructure are
familiarity with digital services and ability to to identify business models that deliver needed to make serving additional areas
protect themselves online) needs to be better unit economics while serving a more cost-effective for businesses.
improved to foster trust and drive demand. broader set of consumers.

Notes: Metro is based on the weighted average across SEA capitals (Singapore as a whole, Bangkok, Kuala Lumpur, Manila, Jakarta, and Hanoi).
Drop-off points refer to the points to drop off delivery parcels to logistics companies and is a proxy to how well an area is served by digital services.
Sources: World Bank; Government statistics; UN; UNICEF; AIIB; Google Maps; Bain analysis
 78

The path forward:

profitable growth
 79

There remains significant

headroom in SEA for future
digital economic growth.
SEA is forging ahead
towards its long-term
ambitions, without losing
sight of profitable growth.
 80

Despite the ebbs and flows, SEA has substantial headroom

for long-term growth

Growing working population Room for income growth Remaining urbanisation potential

Working population growth rate1 GDP per capita Current urban population2
(2023-2028 CAGR) (‘000 USD, 2022) (% of total population)

1.1%
0.7% 76
83%
38 76%
0.1% 0.0% 65%
54%
-0.5%
36%
13
5.3
2.4

US EU India China SEA US EU India China SEA US EU India China SEA

Notes: Data is as of August 2023. (1) Population age 15+; (2) Urban population refers to people living in urban areas, as defined by national statistical offices.
Sources: United Nations Population Division; S&P Global Market Intelligence; World Bank; Bain analysis
 81

The digital economy will continue to be a major growth driver in SEA

Digital economy GMV vs GDP growth

Expected digital economy CAGR Expected nominal GDP CAGR

12% 20% 18%

10%
9% 15% 13% 8% 14% 8%
7%
8%

2023-2025 2025-2030 2023-2025 2025-2030 2023-2025 2025-2030

11% 20%
17% 17% 10%
13% 13%
5% 8% 6% 6%
5%

2023-2025 2025-2030 2023-2025 2025-2030 2023-2025 2025-2030

Source: Bain analysis

 82

GMV will continue its upward trajectory through the rest of the decade

Digital economy GMV ($B) CAGR

14%
15% 16% 7%
45-70 20% 80-150
20% 8% 210-360
31% 13%
30
109 19 22 23 35
63 76 82 22 24
17

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

13%
12% 17%
32% 20%
40-65 16% 100-165 90-200
2% 19%
29 38%
20 22 49 43
15 30 31 36 30
18 25

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: GMV projections from 2021 to 2030 exclude digital financial services due to differences in GMV definition; 2030 projection includes
ballpark estimates for nascent sectors such as healthtech, edtech, AI, etc.
Source: Bain analysis
 83

These developments have the potential to be game-changing

as SEA navigates the path to profitable growth
Long-term market growth $1T GMV is within reach More digital consumers More digital businesses
prospects remain strong provided these come to through bridging the divide in as offline and nascent sectors
digital economy participation cross the threshold
fruition
Directly addressing barriers to participation Sectors beyond those covered in this

GMV ($B)
Includes $1T in the digital economy will accelerate the report can drive substantial growth in the
nascent rate of consumer adoption across the digital economy as their adoption reaches
sectors region. By tapping into this latent demand, critical mass. For example, the emergence
the growth of digital penetration can be of nascent sectors, such as online grocery,
increased significantly. healthtech, edtech, property and car sales
all hold potential to drive GMV growth in
the longer term.

More profitable sectors More geographic coverage More interconnected regional

as companies focus on unit as infrastructure expands activities through trade and
~600 economics beyond metros digital agreements
As companies adjust their monetisation Investments in digital and physical The development and harmonisation of
models and focus on increasing efficiency infrastructure, as well as economic relevant policies and agreements across
(e.g. through the implementation of development plans, can help make it ASEAN will benefit both businesses and
~300
AI-driven use cases), profitability will feasible for digital businesses to extend consumers. Trade and data governance
195 218 improve across the board, driving up the services to areas outside metro cities agreements, as well as infrastructure
162
availability of resources for market growth where demand for digital products and policies and standards, will remove barriers
and the attractiveness of different digital services is growing. The right investments to cross-border digital economy activity
economy sectors. will lower cost-to-serve and accelerate and stoke growth across the region.
2021 2022 2023 2025 2030 digital penetration.

Notes: GMV projections from 2021 to 2030 exclude digital financial services due to differences in GMV definition; 2030 projection includes
ballpark estimates for nascent sectors such as healthtech, edtech, AI, etc.
Source: Bain analysis
 84

Country spotlight: Indonesia

 85

Indonesia

Country Growth and inflation Sticky customers make up for

are expected to normalise the loss of price-sensitive users
overview As the economy normalises, Indonesia’s GDP growth E-commerce, food delivery, and transport players
will likely moderate from 2022’s inflation highs. have reduced the number of promotions and
Fortunately, inflation is easing more quickly than incentives on offer in view of balancing growth and
expected as input prices ease and government profitability. Growth has slowed as price-sensitive
interventions take effect. Indonesia is still expected to consumers seek alternative options, but sufficient
grow faster than the regional average and drive a numbers have stuck around, offsetting slower market
significant portion of digital economy growth. growth with higher net revenue growth.

Mobility restrictions finally Regulators will drive the

removed at the end of 2022 trajectory of the digital economy
As pandemic-related mobility restrictions lifted at the Regulators heavily influence the direction of key digital
end of 2022, there was a resurgence in offline economy sectors. On one hand, nationwide digital
activities. Various digital economy sectors, including payments standards and frameworks have sparked a
food delivery and e-commerce, are seeing growth steep incline in digital payments adoption. On the
dwindle, but transport is thriving. Travel is also seeing other hand, a new rule banning e-commerce imports
encouraging upswings, both from a domestic demand below $100 to support local merchants may have a
and business travel perspective. negative impact on the overall market.
 86

Indonesia

Despite ripples from macro headwinds, Indonesia is expected to

bounce back and reach ~$110B in 2025, largely fueled by e-commerce

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR
~20
15%
13%
20% 7% ~160 15% -8%
9
7 8 7
82
48 58 62

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

15%
210-360 Online travel Online media
8%
20%

21% 12%
109 5%
6%
82 68% ~15 ~15
76
63 69% 9 8
6 6 6 7
2 3

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

 87

Indonesia

Jakarta leads in digital participation; gaps widen beyond capital

Low retail High retail Low drop-off High drop- off

E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023 drop-off points per capita

Jakarta Jakarta

Notes: (1) Indication of how much e-commerce demand there is, calculated based on the e-commerce-related search volume, indexed to census population
per province, indexed at the country level; (2) Indication of the e-commerce fulfillment coverage, calculated based concentration of courier, delivery, freight
forwarding, mailing, and shipping services within provinces, indexed at country level.
Source: Google internal data, ID, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, ID, as of September 2023; WorldPop &
Landscan Population; Bain Analysis
 88

Indonesia

DFS: Lending and wealth expected to rise rapidly from a low base

CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

15%

10% ~760 ~40 ~1.0 ~40

22% 50% 27%

417 32% 39%

27% 29%
286 313 85% 104%
234 15 0.3 31%
0.2 0.2 7
3 5 6 0.1 1 2 4

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
 89

Indonesia

HVUs spend 6.8X vs non-HVUs; highest delta in travel

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
3
Based on total online spend per user Based on average online vertical spend per user Averaged across verticals3 per user

Travel 10.4X
59
Groceries 7.2X
30 34
15 21 18 21
2 Streaming 6.6X
Affluent Metro Young digital On a
mainstream natives budget
Gaming 6.3X 51 53

HVU composition1 by geography (%) Food delivery 6.0X 37

34
3
Based on total online spend per user Transport 5.8X

E-commerce 5.6X
77
57
23
43 6.8X Increased spend over Intend to increase spend
past 12 months over next 12 months
weighted average4
Metro Non-metro

Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income; Young
digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user spend /
aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,302 Indonesia) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
 90

Indonesia

Funding dropped sharply across sectors to less than $1B in H1 2023

Private funding value ($B) 9.1

Nascent sectors1 5.1

4.4
Travel
3.2 3.3
Transport & food

Digital media 1.8

E-commerce
0.4
DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 355 437 649 501 302 199 100

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis
 91

Country spotlight: Malaysia

 92

Malaysia

Country Domestic demand stands resilient The return to offline routines has not
despite external headwinds shaken up sticky digital behaviours
overview Household spending is on the rise, in tandem with Foot traffic in shopping malls has recovered or, in
employment and wages. As a result, domestic some areas, even exceeded pre-pandemic levels. The
demand will drive economic growth in the market. food and beverage industry is experiencing a similar
However, investments in Malaysian digital companies uptick. But even with this resurgence, Malaysian
decline to the lowest levels in years, in line with consumers have held onto the habits that make their
regional and global trends, suggesting slower growth lives easier, like e-commerce and food delivery.
in the near term for the digital economy.

Return of tourism to Digital payments continues

uplift economic growth to be a focus area
While tourism levels have been slower to recover, the Cash is no longer king in Malaysia as QR codes and
pace of recovery is expected to accelerate and is other forms of digital payments become ubiquitous.
likely to exceed government targets by year end. The government has supported e-wallet adoption,
Outbound travel demand remains elevated, providing distributing benefits to lower-income communities
support for continued recovery and near-term growth through e-wallets. Other digital financial services such
in the digital travel industry. Online transport services as lending, insurance, and investment have also seen
like ride-hailing are also benefiting from the trend. increased adoption, driven by local and regional
pure-play fintechs and financial institutions.
 93

Malaysia

Online travel recovery drives the digital economy to $23B in 2023,

and e-commerce acceleration required to hit ~$30B by 2025

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR 10%
~5
4% -4% 13%
36% 16%
~25 4
3 3
16
13 13 13 2

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030
14%

7%
16% 45-70 Online travel Online media

30 28%
14%
22 23 4% 7%
19 49% ~10
~5
148% 7 4
4 3 3 3
3
1

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

 94

Malaysia

Kuala Lumpur leads in digital participation; gaps widen beyond Selangor

Low retail High retail Low drop-off High drop- off

E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023, drop-off points per capita

Kuala Lumpur Kuala Lumpur

Notes: (1) Indication of how much e-commerce demand there is, calculated based on the e-commerce-related search volume, indexed to census population
per province, indexed at the country level; (2) Indication of the e-commerce fulfillment coverage, calculated based concentration of courier, delivery,
freight forwarding, mailing, and shipping services within provinces, indexed at country level.
Source: Google internal data, MY, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, MY, as of September 2023; WorldPop &
Landscan Population; Bain Analysis
 95

Malaysia

DFS continues its upward trend, largely supported by

the government’s push for digital payments adoption
CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

12%

9%
24%
~330 ~60 ~1.5 ~80
22%
27% 35%
207 22%
165 25% 14%
152 35% 61%
123 0.7 40%
16 19
10 0.4 0.5
6 8 0.3 5 7 10

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
 96

Malaysia

HVUs spend 5.3X vs non-HVUs; even distribution of HVU demographics

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
3
Based on total online spend per user Based on average online vertical spend per user Averaged across verticals3 per user

Gaming 13.4X
40 40
35
Travel 5.5X
24 20 19 16
5 Streaming 5.5X
Affluent Metro Young digital On a
mainstream natives budget
Groceries 5.1X

HVU composition1 by geography (%) Transport 5.0X 44 45

3
Based on total online spend per user
Food delivery 4.4X 31
29
E-commerce 3.8X
64
55
45
36 5.3X
weighted average4
Metro Non-metro Increased spend over Intend to increase spend
past 12 months over next 12 months
Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income;
Young digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user
spend / aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,300 Malaysia) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
 97

Malaysia

Funding declines across the board, including in previously

popular sectors like e-commerce and DFS
1.1
Private funding value ($B)
0.9

Nascent sectors1 0.6

0.5 0.5
Travel
0.4
Transport & food

Digital media 0.2

E-commerce

DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 147 202 236 159 77 82 47

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis
 98

Country spotlight: Philippines

 99

Philippines

Country Healthy expansion set to continue Infrastructure investment to fuel

transport growth in outer cities
overview In addition to rising domestic demand, a recovery in
the services sector (including services exports) will Both domestic and regional transport providers
drive growth over the medium to long term. Meanwhile, are expanding to outer cities to fuel long-term
private consumption will see an uptick driven by lower growth. To capture these segments, businesses
unemployment rate, increased remittances from have started growing their two-wheeler offerings
overseas, and tourism recovery. The country is as a more affordable alternative. Sustained
expected to reach upper-middle income status by 2025, infrastructure investments are expected to
further supporting healthy digital economy growth. support this by making transport more efficient
and accessible in these regions.

Foreseeable high growth given E-wallet and account-to-account

emerging digital participation (A2A) nab the largest share of growth
While internet users in the Philippines are amongst the As digital payments gain traction, e-wallet and A2A
most engaged in the world, digital participation across payment rails will see the fastest growth due to lower
sectors remains lower. This signals sizable headroom costs to merchants. Informal A2A payments, in
for digital economic growth over the medium to long particular, are expected to grow in merchant adoption
term as incomes grow. E-commerce is also expected as they look to sidestep formally registration of
to benefit from the shift of informal, unorganised business accounts with digital payments providers.
commerce to organised e-commerce platforms.
 100

Philippines

Philippines is expected to continue its double-digit climb

towards ~$35B by 2025, largely fueled by e-commerce

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR ~5
19%
21% ~60 37% 16% 3
29% 5% 2
2
24 2
12 15 16

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

20%
80-150 Online travel Online media

13% 18%
31% 19%
88%
35 ~5 8% 13% ~10
22 24 207% 4
17 3 5
3 3 3
1
0.5

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

 101

Philippines

Metro Manila leads in digital participation;

gap widens beyond capital
Low retail High retail Low drop-off High drop- off
E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023, drop-off points per capita

Manila Manila

Notes: (1) Indication of how much e-commerce demand there is, calculated based on the ecommerce related search volume indexed to census population
per province, indexed at the country level; (2) Indication of the e-commerce fulfillment coverage, calculated based concentration of courier, delivery, freight
forwarding, mailing and shipping services within provinces, indexed at country level.
Source: Google internal data, PH, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, PH, as of September 2023; WorldPop &
Landscan Population; Bain Analysis
 102

Philippines

Steep DFS growth projected to continue from a low base

CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

16%

16% 17% ~220

49% 30% ~0.5
~30
~20 37%
126 21% 62%
58% 48%
80 93 378%
69 63%
7 0.1 0.1
1 3 0.0 0.1 0 0 1 4
2
2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
 103

Philippines

HVUs spend 6.3X vs non-HVUs; transport is a key differentiator

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
3
Based on total online spend per user Based on average online vertical spend per user Averaged across verticals3 per user

Transport 21.8X
59
26 34 Gaming 11.0X
28
18 14 12 9
Affluent Metro Young digital On a
Travel 8.0X
mainstream natives budget
Groceries 5.2X
39
37
HVU composition1 by geography (%)
E-commerce 4.7X
Based on total online spend3 per user 27 26
Food delivery 3.9X

84 Streaming 3.7X
73

16 27 6.3X Increased spend over Intend to increase spend

Metro Non-metro weighted average4 past 12 months over next 12 months
Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income; Young
digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user spend /
aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,302 Philippines) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
 104

Philippines

Funding dropped substantially from pandemic highs,

including previous heavyweight DFS

Private funding value ($B)

1.0
0.9

0.8

Nascent sectors1

Travel

Transport & food 0.4

Digital media 0.2 0.2

0.2
E-commerce

DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 72 73 125 106 68 38 23

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis
 105

Country spotlight: Singapore

 106

Singapore

Country Low but steady growth, with the Reaffirming status as a regional hub
digital economy in the front seat with international travel recovery
overview Weaker domestic demand and higher costs of living Singapore’s star status as a business and transit hub
have squeezed discretionary income. Nonetheless, set the pace for its strong travel recovery. Of all SEA
the country has managed to avoid recession, with economies, Singapore saw the swiftest bounce
both the consumer and tourism sectors expected to back in travel. The country has also established itself
pick up. In the long term, the ageing population and as a hub for major concerts, events and business
relatively developed economy is expected to maintain conferences, all which play a key role in attracting
course. The digital economy will continue to drive a tourists into the region.
growth premium versus GDP.

High penetration across Room for growth across digital

digital economy sectors wealth and insurance
Singapore is home to the highest digital penetration in Digital payments in Singapore are relatively mature:
SEA, across multiple digital economy sectors. Given 90% of consumer payments happen via digital
the country’s 100% urban rate, internet saturation, and channels. Other financial services, like wealth and
well-developed physical infrastructure, its consumers insurance, however, remain ripe for growth. The
boast the highest e-commerce penetration and rapid digitalisation of wealth offerings and the
willingness to spend on other digital services, increasing availability of embedded insurance
including online media. products are expected to further fuel growth.
 107

Singapore

Travel is now the second largest sector in the digital economy,

e-commerce acceleration required to hit ~$30B by 2025

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR
14% 11% ~10
2% 34% 11%
-3% 6
~15 4 5
10 3
8 8 8

13% 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

12%
32% 40-65 Online travel Online media
14%
29
38%
22 14%
20 191% 11%
~10 12%
15 9 ~5
7 4
5 2 3
2
2

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

 108

Singapore

Significant headroom remains as traditional financial institutions

continue to grow digital offerings
CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

7%

9%
~150
19% 22%
~190
145 15% 18%
20%
128 9% ~70
3%
117 0% 39
98 7% 3% ~1.5
32 26
22 22 24 0.6 22 22
0.4 0.4 0.4

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
 109

Singapore

HVUs spend 8.4X vs non-HVUs: the highest multiple in SEA

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
3
Based on total online spend per user Based on average online vertical spend per user Averaged across verticals3 per user

Gaming 18.4X

Streaming 13.0X

Transport 11.3X

Groceries 8.4X
53 54
52
Food delivery 8.0X
40
36
E-commerce 6.7X 31
28
26
21
14
Travel 5.9X
9
4 8.4X
Affluent Metro Young digital On a Increased spend over Intend to increase spend
weighted average4
mainstream natives budget past 12 months over next 12 months

Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income; Young
digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user spend /
aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,303 Singapore) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
 110

Singapore

Funding continues a steady decline in 2023,

setting the tone for the wider SEA region

Private funding value ($B)

12.3
12.0

Nascent sectors1
7.5
7.1
Travel

Transport & food 4.9

4.5
Digital media
2.8
E-commerce

DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 675 852 1213 1002 572 430 318

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis
 111

Country spotlight: Thailand

 112

Thailand

Country Moderate growth driven by Growth in digital infrastructure

economic pick-up fuels digital participation
overview Growth is expected to pick up due to increases Thailand observed rapid growth in digital
in private consumption and the gradual return of infrastructure since the pandemic, benefiting
international tourism. Exports are contracting slower the digital economy at large. It currently has the
than expected, with the government projecting a largest subscription video-on-demand market in
slight rise by the end of 2023. Overall, Thailand’s SEA. Despite requirements for localised content,
growth will be relatively moderate compared to the Thai consumers are very willing to purchase
rest of SEA, with promising long-term fundamentals. video- and music-on-demand subscriptions.

Slower international tourism Regulators pushing DFS sector

recovery hinders economic growth towards the underserved
Inbound travel may have been on the rebound, but at The central bank plans to issue new digital banking
a slower pace than expected. Thailand’s heavy licences in 2024 that are designed to provide better
reliance on tourism revenues means that the country customer experiences and increase the reach of
has been more adversely affected than the rest of the financial services across Thailand. The PromptPay
region, especially as arrivals from China remain below A2A system expansion will support this effort,
pre-pandemic levels. Nevertheless, new government connecting more Thais to financial infrastructure.
policies, such as visa waivers for Chinese visitors and
other initiatives by the Tourism Authority of Thailand,
are paving the way to a full recovery by 2024.
 113

Thailand

Travel recovery to drive near-term growth, but e-commerce remains

the power driver towards a ~$50B digital economy in 2025

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR ~10
16% 15%
-1% 10% ~60 7% 1%
4
3 3 3
30
21 20 22

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

17%
100-165 Online travel Online media
16%
2%
26%
16%
49
85% 2% 12%
36 ~15 ~15
30 31
34% 8 7
5 5 5 5
2 3

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

 114

Thailand

Bangkok leads in digital participation; gaps exist beyond capital

Low retail High retail Low drop-off High drop-off

E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023 drop-off points per capita

Bangkok Bangkok

Notes: (1) Indication of how much e-commerce demand there is, calculated based on the ecommerce related search volume, indexed to census population
per province, indexed at the country level; (2) Indication of the e-commerce fulfillment coverage, calculated based concentration of courier, delivery, freight
forwarding, mailing, and shipping services within provinces, indexed at country level.
Source: Google internal data, TH, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, TH, as of September 2023; WorldPop &
Landscan Population; Bain Analysis
 115

Thailand

Regulators’ focus on underserved will continue to support DFS growth

CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

~110
15%
~65 39%
20%
31%
13% ~310
17% 60%
16% 65%
7% ~2.5
176 43% 33%
134 21 23
118 12 0.8 1.1 12
102 7 0.6 0.7 8
5 6

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
 116

Thailand

HVUs spend 7X vs non-HVUs; intent to grow spend highest in SEA

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
3
Based on total online spend per user Based on average online vertical spend per user Averaged across verticals3 per user

Transport 10.8X
49
24 31 35 26
Gaming 10.1X
13 15 7
Streaming 7.8X
Affluent Metro Young digital On a
mainstream natives budget
Travel 7.2X 63 64
1
HVU composition by geography (%)
Food delivery 6.6X
Based on total online spend3 per user 35 37
Groceries 5.4X

60
E-commerce 5.3X
55
45 40
7.0X Increased spend over Intend to increase spend
weighted average4 past 12 months over next 12 months
Metro Non-metro
Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income; Young
digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user spend /
aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,300 Thailand) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
 117

Thailand

Funding returns to more typical levels after a spike in H2 2022

Private funding value ($B)

1.6

1.3

Nascent sectors1

Travel

Transport & food 0.6

0.5
Digital media
0.3
E-commerce 0.2 0.2

DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 110 107 174 78 42 36 24

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis
 118

Country spotlight: Vietnam

 119

Vietnam

Country Manufacturing and exports Local players propelling growth

will be key to growth in digital media
overview The weakening of export demand severely Vietnam’s thriving digital media scene is supported by
moderated growth momentum in H1 2023. While strong local demand and many local players.
Vietnam will continue playing a significant role as Gaming, especially mobile gaming, is growing
global companies diversify their supply chains, particularly quickly, with some local developers finding
securing public investment to address infrastructure international success. Local music-on-demand
constraints will be key to unlocking growth. Wages streaming providers also continue to be prominent,
and employment will continue to have a cascading even as piracy poses challenges to subscriptions.
impact on the digital economy.

Domestic travel uplifts Cashless payments continue to

broader industry flourish
Full recovery in the travel sector is expected this Digital payment continues to grow in Vietnam driven
year, driven primarily by sharp growth in domestic by strong support from the government, investment
travel. The launches of new airlines and an increase in from commercial banks, and the widespread
the number of international routes have enabled this popularity of QR codes. This trend is expected to
uptick, despite the delayed return of Chinese accelerate as the state bank promotes cashless
tourists. payment services in rural and remote areas.
 120

Vietnam

The digital economy is on track to reach ~$45B by 2025,

fueled by strong expectations of economic growth

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR ~10
16%
24% 10%
22% 4
~60 3 3
37% 11% 2
24
11 15 16

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

20% 90-200
Online travel Online media

19%
38% 21% 15%
43 13% 11%
82%
30 ~10 ~10
25 198%
18 7 7
5 4 5 5
3
1

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

 121

Vietnam

Top 3 metro cities lead in digital participation; gaps widen beyond

Low retail High retail Low drop-off High drop- off

E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023, drop-off points per capita

Hanoi Hanoi

Danang Danang

HCM City HCM City

Notes: (1) Indication of how much e-commerce demand there is, calculated based on the ecommerce related search volume, indexed to census population
per province, indexed at the country level; (2) Indication of the e-commerce fulfillment coverage, calculated based on the concentration of courier, delivery,
freight forwarding, mailing, and shipping services within provinces, indexed at country level.
Source: Google internal data, VN, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, VN, as of Sep 2023; WorldPop & Landscan
Population; Bain Analysis
 122

Vietnam

Steep growth in DFS on top of a low base

CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

13%

19% 28%
~290 55% ~2.0
29% 51% ~40 ~0.5
42% 36% 34% 71%
160 50%
126 29%
82 105 10 0.2 0.3
2 3 4 0.1 0.1 0.1 0.0 0.1 0.1

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
 123

Vietnam

HVUs spend 5.4X vs non-HVUs; most positive change in spending outlook

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
Based on total online spend3 per user Based on average online vertical spend per user Averaged across verticals3 per user

Gaming 6.7X
50
42 Transport 6.1X
32 27
24
16
2 8 E-commerce 5.5X
Affluent Metro Young digital On a
mainstream natives budget
Food delivery 5.1X
57
1 52
HVU composition by geography (%) Groceries 5.0X 45
41
Based on total online spend3 per user
Travel 4.9X

Streaming 4.8X
87 78

22 5.4X Increased spend over Intend to increase spend

13
weighted average4
Metro Non-metro past 12 months over next 12 months
Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income; Young
digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user spend /
aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,374 Vietnam) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
 124

Vietnam

Slight rise in private funding in H1 2023,

driven by activities in the nascent sector

Private funding value ($B)

2.6

Nascent sectors1

Travel

Transport & food 0.9 0.9

0.7 0.7
Digital media
0.6
E-commerce
0.2
DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 151 140 233 206 148 58 48

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis