Today, Google, Temasek, and Bain & Company’s collaborative effort unveiled the ninth edition of the e-Conomy SEA report, which focuses on the digital economy’s profitability.

This report showcases the impressive strides made by key players in the Southeast Asian (SEA) region towards profitability. This has been achieved through tighter commissions, targeted incentives, and the development of new revenue streams, leading to a remarkable 2.5 times increase in profits over the past two years.

The digital economy’s profitability has skyrocketed from US$4 billion in 2022 to an impressive US$11 billion in 2024. The report predicts the digital economy will reach a Gross Merchandise Value (GMV) of US$263 billion in 2024, marking a 15 per cent increase over the previous year. Revenues are also projected to reach US$89 billion in 2024, indicating a 14 per cent growth.

This data suggests that the digital economy in SEA can simultaneously achieve profitability and growth. The report further explores six digital sectors, offers insights into the current state and future prospects of technology funding in the region, and delves into the crucial factors necessary for fostering inclusive growth.

Despite a generally reserved approach from investors, there is a noticeable lean towards emerging industries, with approximately half of the investments going towards them.

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Although the exit environment still poses difficulties, early-stage companies in SEA have demonstrated impressive strides towards achieving profitability. There’s also a rising emphasis on fostering cross-border collaboration in exchange platforms and improving Initial Public Offering (IPO) regulations to enhance overall market conditions.

Last year’s report identified four key factors to revitalise the funding landscape: realistic entry valuations, established monetisation models, a clear route to profitability, and reliable exit strategies. The first three have been accomplished; however, developing dependable exit strategies remains a work in progress as market conditions present challenges.

Popular sectors such as e-commerce, poised to reach US$159 billion GMV by 2024, are now driven primarily by existing customers, who account for up to 70 per cent of expansion. This is a departure from past years when first-time shoppers drove growth.

The transport sector has surpassed pre-COVID-19 levels, with revenue projected to grow by 36 per cent YoY to US$1.5 billion, driven by rebounding demand and pricing. In comparison, GMV is expected to increase by 18 per cent to US$9 billion.

With the increasing popularity of AI

The SEA region is rapidly becoming a global leader in Artificial Intelligence (AI) innovation and adoption. The region’s strategic investments in AI infrastructure have fostered a vibrant ecosystem of startups, developers, and tech giants, positioning SEA to harness AI’s transformative potential across numerous sectors.

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This growth is evident in the substantial US$30 billion worth of AI infrastructure investments the region attracted in the first half of 2024. Additionally, there is an increasing consumer interest in exploring and adopting AI solutions with searches for AI growing by 11 times in just four years.

According to the report, with its young and growing population, coupled with high rates of digital literacy and smartphone penetration, SEA provides a large and receptive market for AI-powered products and services, from travel planners to fraud detection.

As a driving value for the region’s digital economy through sector-specific and broader business use cases, pro-innovation policies that support AI growth and governance will help create more opportunities in the digital economy, it concluded.

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The post The e-Conomy SEA report: SEA digital economy jumps from US$4B in 2022 to US$11B in 2024 appeared first on e27.