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Unicorns and e-commerce driving SE Asia’s internet economy towards $200bn value

South East Asia’s internet economy has undergone ‘unprecedented’ growth this year and is predicted to be worth US$200 billion by 2025, according to a joint report by  Google and Temasek Holdings.

In the ‘e-Conomy Southeast Asia Spotlight 2017’ report, the region’s internet value was said to be worth US$50bn this year due to the gargantuan rise of e-commerce and start-ups worth more than US$1 billion.

Moreover, South East Asia’s current online user base of 260 million people is forecasted to grow to 480 million users by 2020.

Fuelling this value is the rise of major e-commerce giants such as ​Lazada,​ ​Shopee,​ ​and​ ​Tokopedia, which are driving the region towards hitting $10.9bn​ ​in​ ​gross merchandise volume​ ​in​ ​2017​ – a growth of 50 per cent over the last two years.

According to the report, South East Asia’s mobile internet users are among “the most engaged globally”, spending on average 140 minutes per month on e-commerce platforms versus 80 minutes per month in the United States.

Also driving growth is investment in the region from venture capitalists and unicorns – start-up companies valued at more than $1 billion.

The region is currently home to seven internet unicorns: Go-Jek, Grab, Lazada, Razer, Sea. (formerly known as Garena),10 Traveloka, and Tokopedia.

Of the US$12bn of capital invested in South East Asia since 2016, three quarters of the amount was raised by its unicorns, the report added.

However, the report cited a shortage of “local, homegrown talent, particularly in senior engineering roles” as posing a challenge to further growth.

Ride-hailing players like Grab and Go-Jek have opened tech hubs in China, India and the US where there are wider pools of engineering talent.

In addition, start-ups were said to be struggling to attain both high employee morale and high revenue performance, and were at the same time unsure of “how to shape a company culture that will best promote their vision”.

“In Southeast Asia, unlike in Silicon Valley, there is not a deep reservoir of executive experience around these topics,” the report stated.

“Companies that have been pursuing controlled growth strategies in relatively uncompetitive markets are finding they need to rapidly raise their games, as they increasingly encounter competition from international players and better-funded local firms. Companies pursuing hyper growth strategies have always felt this pressure, and they are pushing harder than ever to build world-class management teams that can stay ahead of the company’s growth curve,” it added.

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