Fierce Competition Expected Over Southeast Asia’s Booming Internet Economy
Southeast Asia is powering towards some of the best growth rates that many countries in the region have seen in years. The MCSI ASEAN Index is at its highest rate in seven years, and estimates from Morgan Stanley put expected returns from ASEAN markets as high as 10%.
Manufacturing is growing heartily, and high rates of investment along with low interest rates have driven huge amounts of growth this year.
However, while part of this is held up by China’s resilience and trading power, Southeast Asia has also become a hotbed for economic growth through its spiking demand for e-services.
Demand for more e-commerce, e-finance, better mobile service, and better logistics to facilitate it all have given rise to the beginnings of what will likely be a fierce competition.
Google and Temasek Holdings recently released a study, in which they predicated enormous growth potential in Southeast Asia. Southeast Asia is currently the third largest region in the world for internet usage; however, as soon as next year the region could be number one the world for mobile internet usage.
The two companies also gave expectations that the regions internet economy will reach $50 billion by the end of 2017, and by 2025 will be valued at $200 billion – an increase of 6.5-fold from an earlier estimate.
With anticipations of around 480 million daily internet users by 2020, it is unsurprising that giants like Amazon, Alibaba, and Tencent have begun to carve up the market.
Alibaba has already spent $1 billion on investing in Lazada, an Amazon like company in Southeast Asia, to expand upon its infrastructure and directly halt Amazon’s growth.
This comes alongside billions also being spent to expand Ant Financial – Alibaba’s financial services affiliate – to expand their reach in East and Southeast Asia.
Tencent, a bitter rival of Alibaba, has meanwhile invested millions in acquiring and partnering with various media companies in the region.
Amazon for its part has had a slower start, delaying its Singapore debut until later this year. But now, with its Amazon Prime Services launched in internet savvy nation, they are expecting strong growth and to spread quickly.
E-commerce is not the only battleground though. Google finds itself in competition directly with Baidu for market share, as well as Huawei to provide Data Center investment. Alibaba has also made its presence known through its considerable Alibaba Cloud service.
The data services market is expected to hit $32 billion in value by 2022, which is driving the furious battle to claim users as quickly as possible.
While Western companies are currently viewed most optimistically by people in the region, the aggressive pushes from Chinese companies might swing things in their favor should they plan well enough.
Certainly though, it will be a hard-fought battle, as all sides through enormous sums into the market.
Meanwhile, Southeast Asia experiences much needed growth on the back of this battle, and its people enjoy the explosion of e-services.