Southeast Asia (SEA) is racing ahead among the region in digital economy, according to the latest report conducted by market intelligence firm IDC and commissioned by global payments platform 2C2P and Ant Group.
According to the report, SEA leads in digital economy growth at 15.8 percent for the next five years, outpacing the United States (9.4 percent) and European Union (8.7 percent).
South Korea (12.7 percent) and Japan (10.2 percent) closely follow, unlocking significant commerce opportunities for Southeast Asia, South Korea, and Japan (SEAKJ).
Based on IDC estimates, the total digital economy of SEAKJ is set to grow from $501.7 billion in 2022 to $914.9 billion in 2027, a jump of 82 percent in five years.
With growth comes more intense competition in domestic markets, it opined that cross-border commerce opportunities appear to be more attractive.
IDC also sees change in terms of efforts from both the private and government sectors, which are predicted to add a total of $232.4 billion new cross-border revenue to the combined economies of SEAKJ in the five years from 2022 to 2027.
This is driven by impressive growth in both cross-border ecommerce revenue and offline tourism.
The report also showed the digital payments in SEA is accelerating with SEA anticipates a 100 percent expansion in the e-commerce market.
This is driven by accelerated digital payments growth, led by Buy Now Pay Later (38 percent), mobile wallets (18.9 percent), domestic payments (16.9 percent) and credit cards (14.4 percent).
It is noted that in SEA, domestic payments have consistently seen high growth, backed by government initiatives to reduce inefficiencies in the system caused by cash use, and to strengthen financial systems and oversight.
Mobile wallets and BNPL have also seen quick expansion in user numbers due to limited access to cards, which are widely used in more mature economies
With domestic ecommerce in markets such as South Korea approaching maturity, the report opined that cross-border commerce in Asia represents a new frontier which remains largely untapped.
It said continuous improvements to regional trade infrastructure will intensify the flow of cross-border goods in the region.
It also noted that there are significant opportunities for SEA businesses looking to extend their customer base to South Korea and Japan, and vice versa.
However, to be successful 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 fulfilment.
Tourism spending is also booming with offline tourism in SEAKJ is projected to grow by a remarkable 334 percent by 2027, contributing a substantial $171.4 billion to the region’s economy.
According to the report, one of SEAKJ’s key strategic pillars, the recovery of tourism post-pandemic, will be aided by more seamless payments across the region.
“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,” said Aung Kyaw Moe, Founder and Chief Executive Officer of 2C2P.
“Through our comprehensive payment solutions, we stand ready to partner with businesses to seize the exciting opportunities that lie within and across the region,” he added.
Douglas Feagin, Senior Vice President of Ant Group and Head of Alipay+ Cross-Border Mobile Payment Services, said that digitalization will have a significant positive impact across Asia, shaping the future of businesses and lifestyles.
He said the firm is committed to helping merchants, both large and small, to benefit from seamless digital payments, which are the foundation of future growth.
He noted that the rapid rise in the number and diversity of digital payment options does, however, present a challenge, especially for small to mid-sized merchants,
“By working with our partners to enable them to easily accept many different payment options through one easy-to-use interface, we have seen very encouraging results,” he said.
He said that this has been particularly important with the ongoing increase in online consumption and resumption of cross- border travel.
“From global online platforms to small street side merchants, it is now imperative for businesses to cater to these digital habits, and I believe that by working together, we can help more consumers and businesses benefit from digitalization,” he added.