POTENTIAL for developing the Internet economy in the Philippines remains the biggest in Southeast Asia, according to an annual Google-led report that said the region can be expected to breach the $100-billion mark in gross merchandise value (GMV) this year.
The 2019 e-Conomy report released on Thursday, which Google conducted in partnership with Temasek Holdings Pte. and Bain & Co., said Southeast Asia’s Internet economy shot up almost 40% to break the $100-billion mark this year. Growth was fueled by online travel, e-commerce, online media and ride hailing sectors. “This pace of growth has exceeded all expectations. At this rate, the Southeast Asian Internet economy is on track to hit $300 billion by 2025, topping our initial projection in 2016 by $100 billion,” it said.
The report also showed that in the Philippines, the Internet economy now makes up 2.1% of gross domestic product (GDP), and could be equivalent to 5.3% of GDP by 2025.
“Of the six Southeast Asian countries, the Philippines has the most room for growth,” the report said, comparing the country to Vietnam, Thailand, Malaysia, Singapore and Indonesia.
While Indonesia and Vietnam were found to be the leaders in Southeast Asia’s robust Internet economy in terms of proportion to GDP, the Philippines’ young and English-speaking population buoys the country’s potential.
It said there is a “growth surge” in the country’s online media sector, which recorded a compound annual growth rate of 42% to $2 billion this year from in 2015. “Subscription Music and Video Streaming services are especially popular among young Filipinos who are well-acquainted with English content,” it said.
E-commerce also drove the increase in value of the country’s Internet economy, growing 47% to $3 billion in the same four-year period.
The report noted investments in the Philippines’ digital financial services grew sixfold to more than $300 million last year from $50 million in 2017, largely due to fund raising by Voyager Innovations, Inc., Coins.ph and First Circle Growth Finance Corp.
Ride hailing grew 35% to $1 billion in 2019 from in 2015, despite regulatory constraints, limited driver supply and lack of competition in the country.
The value of online travel likewise grew 16% to $2 billion.
However, the report noted growth of the Internet economy is still largely limited to Southeast Asia’s capital cities.
In the Philippines, for example, the Internet economy is valued at $273 per capita in Metro Manila, but is $39 per capita for cities beyond the National Capital Region.
The report said this only shows the “wider gap in living standards and infrastructure between those living in metros and elsewhere.”
But the Internet is seen to also drive opportunities for less developed regions. The report explained that as technology’s impact spills over to ride hailing and food delivery, the Internet economy can become a “powerful lever” to drive growth in regions outside major cities. “Central and regional administrations are taking notice and working to make the Internet economy a key plank of their policies, with the aim of promoting inclusion,” it said. — Denise A. Valdez