The clear signs of an e-commerce boom in Singapore failed to prevent its Internet economy – or business conducted online – from taking a hit from the Covid-19 pandemic.
Online travel – Singapore’s star digital performer last year – slumped by about 70 per cent this year to US$2 billion (S$2.7 billion) in gross merchandise value (GMV), stricken by lockdowns and travel restrictions.
This contributed to a 24 per cent, or US$3 billion, drop in the overall Internet economy to US$9 billion in GMV this year, according to a report by Google, Temasek and consulting firm Bain & Company.
The report struck a note of optimism, however, saying Singapore’s Internet economy is on track to reach US$22 billion in GMV by 2025 as sectors severely disrupted by the pandemic are expected to rebound.
The annual e-Conomy South-east Asia study, first published in 2016, covers Singapore, Malaysia, the Philippines, Thailand, Vietnam and Indonesia. The latest was released yesterday.
It looks at trends and data across seven Internet economy sectors: e-commerce, transport and food, online travel, online media, digital financial services, and the newly added sectors of health technology (healthtech) and education technology (edtech).
Excluding travel, Singapore’s Internet economy grew 20 per cent to US$7.6 billion.
Its e-commerce sector is the new leader, swelling by 87 per cent to US$4 billion in GMV as more people stayed home and made online purchases this year, although this was not large enough to offset the US$4 billion decline in travel.
Mr Aadarsh Baijal, partner and head of digital practice in South-east Asia at Bain & Company, said Singapore’s e-commerce segment has overtaken online travel and is expected to grow over the next few years to be the largest sector here.
“Travel is expected to recover, but in the next few years it will remain muted, so sectors like e-commerce will become larger,” he said.
As expected, people here are spending more time online – 30 minutes more compared with the pre-pandemic’s 3.6 hours, the study found.
Among the sectors covered in the report, nearly a third (30 per cent) of all digital service consumers in Singapore were new to the service. More than nine in 10 of new consumers are expected to continue using at least one digital service even after the pandemic ends.
Meanwhile, the transport and food sector shrank 26 per cent to US$2 billion this year as more people work from home and some shunned shared transportation.
With more time at home, people took to more videos, games and other products, propelling the online media segment by 24 per cent to US$1.8 billion.
They also gave a boost to digital financial services, with more turning to mobile banking apps as well as robo-advisers and online wealth management platforms.
South-east Asia’s growing digital economy is creating demand for a digitally skilled workforce. Singapore has led the way in growing its talent pool through a government and business ecosystem committed to skilling Singaporeans for the opportunities that lie ahead.
The total value of investments in Singapore’s Internet economy rose to US$2.5 billion over 325 deals in the first half of the year, up from US$1.8 billion in the second half of last year.
The report noted that Singapore continues to be a regional hub for various digital economy sectors such as fintech due to its strong start-up ecosystem. The city-state houses the regional headquarters of e-commerce unicorns such as Lazada and Shopee owner Sea.
Ms Stephanie Davis, Google’s vice-president for South-east Asia, said: “South-east Asia’s growing digital economy is creating demand for a digitally skilled workforce. Singapore has led the way in growing its talent pool through a government and business ecosystem committed to skilling Singaporeans for the opportunities that lie ahead.”
The report said South-east Asia’s Internet economy as a whole is set to exceed US$300 billion in GMV by 2025, fuelled by e-commerce and online media consumption.
The nascent sectors of healthtech and edtech also played crucial roles in countries across the region, including Singapore.
The number of users on telemedicine platforms grew by four times, and these platforms retained users even after lockdowns ended. Meanwhile, the number of students who installed the top five edtech apps in South-east Asia increased by more than three times.
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