THAILAND’S Internet economy is expected to be worth US$43 billion in 2025, according to a study.
“e-Conomy SEA 2018: Southeast Asia’s Internet Economy Reaches an Inflection Point” conducted by Google and Temasek says that Southeast Asia’s Internet economy will be surge from $72 billion in 2018 to $240 billion in 2025. Thailand’s Internet economy in 2018 is estimated at $12 billion. It is the second largest in SEA with 22 per cent growth rate per year and is expected to be worth $43 billion in 2025.
Thailand’s Internet economy currently contributed 2.7 per cent of national gross domestic product (GDP), lower than China and the US’ 6.5 per cent in 2016, which means there is huge opportunity to accelerate growth.
Ben King, country manger of Google Thailand, said that according to research, the key driver of Thailand’s Internet economy is e-commerce and online media.
Thailand’s e-commerce in 2018 is valued at $3 billion and gross merchant values on all e-commerce platforms is the second largest e-commerce market in SEA behind Indonesia with $12.2 billion.
Online media is the distinguished sector since it is growing rapidly. Online media, included advertising gaming, and music and video subscription, is now about $2.4 billion, growing at 44 per cent per annum. It is expected to touch $7 billion in 2025.
The key factors driving online media are growth in Internet users, video streaming, paid video and music, and local developer and creators.
However, ride hailing in Thailand in 2018 saw a slowdown in growth due to consolidation but it is expected to pick up again in 2019. This year saw revenue of $700 million, up from $400 million in 2015. But it is expected to grow at 22 per cent per year to reach $4 billion in 2025.
Last but not least, online travel is another big sector for the Internet economy. Thailand’s online travel market in 2018 was worth $6.1 billion in gross booking value, as the second largest in SEA behind Indonesia with $8.6 billion. It is expected to grow at 18 per cent per annum to reach $20 billion in 2025.
This visible progress in Thailand’s Internet economy towards solving the ecosystem challenges identified in its previous research included funding, Internet, consumer trust, talent, logistic, and payment.
Consumer trust is rapidly increasing across sectors. For example, in 2018, active e-commerce users were 120 million; gamer active users were 164 million; ride hailing active users were 35 million, and online travel booking had 41 per cent penetration.
Meanwhile, the Internet economy directly created skilled jobs for 100,000 professionals in 2018 and is expected to create 200,000 jobs in 2025. It creates employment at 10 per cent compound annual growth rate.
Moreover, 2018 will be a record year for Internet economy fundraising in SEA. In the first half of this year alone, $9.1 billion were raised. In SEA, $24 billion has been raised since 2015.
Of the amount raised in the first half, around $6.5 billion went to SEA’s nine unicorns. Meanwhile, Grab has become the first decacorn, a company with valuation exceeding $10 billion, which is among less than 20 globally.
However, he said the Thai government should encourage overseas expansion of local Internet companies. SEA’s Internet economy could become a key driver of national economic growth, business development, and job creation.
The report also projects that the pool of skilled Internet economy professionals needs to expand by 10 per cent in the region every year to support the growth of local business.
Governments need to invest in training their people with the right skills for the Internet economy so that businesses have a pool of local developers, computer scientists, online marketing professionals and data analysts to draw from.
“e-Conomy SEA 2018” is the third edition of e-Conomy SEA by Google and Temasek’s research on Southeast Asia’s Internet economy.
The research covers four sectors of the Internet economy: e-commerce, online media, ride hailing and online travel, with four new sub-sectors added this year – video on demand, music on demand, online food delivery, and online vacation rentals.