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Five Factors Driving Digital Expansion in Southeast Asia

Digital infrastructure is diversifying. Online-only banks began shaking up financial services, new fintech and crypto-tech players emerged, and touchless cross-border transaction formats were trialed. Several markets are preparing to follow Cambodia and launch their own Central Bank Digital Currencies (CBDCs).


Startup B2B players, especially in fintech, marketplace services, and logistics, are mushrooming. Meanwhile, a steady flow of high-profile IPOs, acquisitions, and mergers illustrated the growth potential of Southeast Asia’s digital economy.


The e-Conomy report describes the new “Roaring 20s” as Southeast Asia’s “digital decade”. By 2026, the region’s digital consumer population could reach 380 million, according to Southeast Asia, the home for digital transformation report by Facebook and Bain & Co. By 2030, 50 percent of all retail spending in the region will be online, up from around 10 percent in 2020, says the e-Conomy SEA 2021 report, by Google, Temasek, and Bain & Co.


Here are five factors to consider:


1. Rise of the Supper Apps



The term super app emerged in China in the late 2010s. It describes digital eco systems that offer a suite of on-demand lifestyle services, such as shopping, food, travel, entertainment, and finance, via a single platform. The first mover Chinese super apps included WeChat, Meituan, Fliggy, and Trip.com.


Southeast Asia has adopted various online consumption models from China, and Chinese investors such as Alibaba, jd.com, and Tencent now invest in the region. This is spurring rapid growth in digital infrastructure, while home-centric pandemic lifestyles have resulted in more mobile phone users shopping more often via apps.


As a result, the region is building its super app portfolio. In 2021, Singapore-based lifestyle services and fintech app Grab was listed on the US Nasdaq. Meanwhile, Malaysia-based airline AirAsia unveiled its super app transformation “from a digital airline into a comprehensive lifestyle platform” and shopping portals like Shopee expanded into groceries and online food deliveries.



  • Super apps use stripped-down taglines, like Everything Every day (Grab) and We Help People Eat Better, Live Better (Meituan), to underscore their 24/7 appeal
  • The race for super app status grabs the media headlines, but these high-profile unicorns are also inspiring digital start-ups to dream big
  • Consumers shift seamlessly between super apps in search of new products and services, discount promotions, and enhanced value


2. Indonesia: ASEAN's Emerging Mega Market


Indonesia is Southeast Asia’s largest market with a population of over 275 million and has the region’s largest economy. Its digital economy is expanding with eye-watering speed. Indonesia’s online consumer population is forecast to grow from USD 70 billion in 2021 to USD 146 billion in 2025, according to the e-Conomy SEA 2021 report.


An increasingly diverse appetite for online shopping amongst Indonesian consumers is making it a hotspot for eCommerce investments and stock market listings. In 2021, online marketplace Bukalapak recorded Indonesia’s largest-ever IPO. Meanwhile, ride-hailing and home delivery app GoJek merged with eCommerce giant Tokopedia to create GoTo. Interestingly, this deal occurred after merger talks between Gojek and Grab to create a Singaporean-Indonesian super app were shelved.



  • Online spending continues to soar. Indonesia’s digital economy is projected to more than triple in size between 2020 and 2025
  • More homegrown eCommerce and consumer technology startups are expected to list on the Indonesian Stock Exchange in 2022
  • Indonesia is a vast archipelago, and 72 percent of its new online consumers since the pandemic began are in non-metropolitan areas


3. Big Populations. Shifting Economic Momentum



After Indonesia, the three markets with the next largest populations are also primed to create upward online growth curves. Vietnam, with a population of approximately 97 million is forecast to see its digital economy reach USD 57 billion by 2025, followed by Thailand (72 million) reaching USD 56 billion. The Philippines (120 million) is expected to hit USD 40 billion. Across the region, this growth is projected to be driven by eCommerce expansions.


Digital economies in each market will adapt regional marketplace trends, while bespoke innovations and services will be tailored to meet local consumer needs and desires. These factors point to the possibility of a change in economic direction. During the 2010s, the travel and tourism sectors helped fuel economic expansion, job and wealth creation, consumer spending, and taxation revenues. This decade could see the digital economy deliver a similar transformative effect. 



  • Southeast Asia counts more than 350 million consumers who have purchased online, and this figure will continue to increase
  • In Singapore and Thailand, digital consumers account for more than 90 percent of all internet users, while in Malaysia and Indonesia they account for 80 percent or more
  • With the Philippines and Vietnam well below the ASEAN average of 80 percent, these markets present significant opportunities for marketplace sales growth


4. Startup Investment Surge


Spiraling consumer demand for smartphone app shopping is reshaping the region’s competitive landscape. Many eCommerce marketplaces are introducing interactive and gamified promotions that are social and engaging. These tactics are designed to increase the size of customers’ online carts and encourage repeat purchases.


Overall digital economy expansion is also boosting the thriving digital startup sector. In 2021, a rise in investment interest was evident from across Asia and beyond. Indonesia accounted for around half of the region’s USD 4.4 billion in tech startup investment in the first half of 2021, with Singapore claiming 32 percent.


Deal-making is everywhere. Singapore-based Carousell Group recently secured around USD 100 million in funding. In Malaysia, AirAsia acquired ride-hailing app Dacsee and food delivery platform Delivereat to bolster its 24-hour online offerings. Investors are also targeting B2B marketplace start-ups. Indonesia-based Ula, for example, raised over USD 100 million from investors including Tencent and Flipkart.



  • Acquisitions and mergers will continue to define the changing marketplace landscape in 2022
  • Large funding rounds will see the value of digital startups rise considerably
  • The race for super app status among fast-growing marketplaces is aligned to the major objective to launch an IPO


5. B2B Service Innovations



The region’s eCommerce marketplaces mostly focus on selling directly to individual consumers and, in some cases, group buyers. As digital economies diversify, more B2B marketplaces are gaining traction. These platforms create pathways to connect companies, suppliers, and customers, and respond to shifting expectations among businesses that trade online. Well-funded B2B startups want to reshape supply chains, distribution, and delivery networks.


Indonesian digital unicorn Bukalapak is seeing strong growth for Mitra Bukalapak, its online-to-offline platform for micro retailers and warung businesses. Digital tech firm Sirclo develops fintech analytics to help emerging brands expand their online reach.


Hong Kong-based on-demand logistics platform Lalamove has established a strong presence across Southeast Asia but faces strong competition from local players. In Indonesia, RaRa Delivery delivers products to online shoppers for marketplaces like Grab, Blibli, and Sayurbox and plans to expand across the region.


Mirroring a global trend, the B2B online groceries and fresh foods segments are fiercely competitive. In Vietnam, Kamereo is a food-tech start-up that connects farmers with restaurants and hotels catering to consumers concerned about sustainable sourcing. It reports strong growth in recent months as more customers seek organic fresh foods.



  • B2B marketplaces and service providers are reshaping value chains and delivery networks across Southeast Asia
  • Potential growth areas for B2B online services include fintech, e-payments, online store management, fresh foods, and healthtech
  • Express delivery, logistics, and distribution technology will be a key battleground as smartphone-enabled marketplace shopping further expands



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