Southeast Asia Leads In Digital Economy Growth

Southeast Asia is poised to lead in digital economy growth at 15.8% over the next five years, surpassing both the US (9.4%) and the EU (8.7%), according to the latest report from market intelligence firm IDC, commissioned by global payments platform 2C2P and Ant Group.

Based on IDC estimates, the total digital economy of SEAKJ is expected to grow from US $501.7 billion in 2022 to US $914.9 billion in 2027, marking an 82% increase over five years.

In a report for Vietnam Times, Rosy Huong stated that the Republic of Korea (12.7%) and Japan (10.2%) are closely following, creating significant commerce opportunities for Southeast Asia (SEA), the RoK, and Japan (SEAKJ).

Based on IDC estimates, the total digital economy of SEAKJ is expected to grow from US $501.7 billion in 2022 to US $914.9 billion in 2027, marking an 82% increase over five years. With growth comes intensified competition in domestic markets, making cross-border commerce opportunities more attractive.

The report also revealed that digital payments in SEA are accelerating, with SEA anticipating a 100% expansion in the e-commerce market. This growth is driven by accelerated digital payments, including Buy Now Pay Later (38%), mobile wallets (18.9%), domestic payments (16.9%), and credit cards (14.4%).

Domestic payments have consistently seen high growth, supported by government initiatives to reduce inefficiencies in the cash-based system and strengthen financial systems and oversight.

According to the report, cross-border e-commerce revenue is also expected to grow by a remarkable 70% to $148.1 billion by 2027, outpacing the growth of domestic e-commerce revenue.

As domestic e-commerce markets, such as the RoK, approach maturity, the report suggests that cross-border commerce in Asia represents a largely untapped frontier.

Continuous improvements to regional trade infrastructure are expected to intensify the flow of cross-border goods in the region. The report also highlighted significant opportunities for SEA businesses looking to expand their customer base to the RoK and Japan, and vice versa.

However, success in cross-border commerce requires understanding key buying drivers, purchasing preferences, and product competitiveness, as well as seeking partners who can simplify the entire cross-border process, from payments to fulfillment.

Tourism spending is also booming, with offline tourism in SEAKJ projected to grow by an impressive 334% by 2027, contributing a substantial $171.4 billion to the region's economy.

Seamless payments across the region can aid the post-pandemic recovery of tourism, leading to increased spending and unlocking further value from tourism opportunities, especially for small businesses.

Aung Kyaw Moe, Founder and Chief Executive Officer of 2C2P, said, "Our mission at 2C2P is to empower businesses to navigate and thrive in the ever-evolving payment landscape in Asia. We hope the findings of this report encourage businesses to unlock the immense potential of Asia's digital economies by tapping on existing public- and private-sector initiatives and tools. Through our comprehensive payment solutions, we stand ready to partner with businesses to seize the exciting opportunities that lie within and across the region."

Vietnam's online retail sales reached US $16.4 billion in 2022, accounting for 7.5% of the country's total retail sales of consumer goods and services. This rate is expected to increase to 10% by 2025.

Vietnam was the third-largest digital economy in the Southeast Asian region, with US $23 billion, following Indonesia and Thailand, according to the Department of E-Commerce and Digital Economy under the Ministry of Industry and Trade, citing data from the report.

A survey conducted by the department showed that around 78% of Vietnamese internet users purchased goods through e-commerce platforms in 2022.

Furthermore, the logistics market serving the country's digital economy maintained its growth momentum, ranking among the top 10 fastest-growing countries in the world. The sector is expected to have a value of US $4.88 billion by 2030 with a growth rate of 24.1% during 2022-2030.

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