As economies across the globe go digital, Southeast Asia (SEA) is surpassing the US, China, and Europe and taking the lead. Over the past few years, SEA’s digital economy has achieved astounding success and reached $143 billion in 2021. What’s more, this number is forecast to increase by more than 17% and hit $314 billion by 20261.
But what are the factors that contribute to such rapid evolution, and what makes Southeast Asia the engine of global digital economy growth? Keep reading to find out!
SEA is a geographical region that consists of eleven countries, namely:
Such impressive figures are the result of the combined efforts of two major parties:
1. Private Sector
In Southeast Asia’s private sector, there are three key services promoting digital economy growth:
Governments of Southeast Asian countries also play a fundamental part in the active development of the region’s digital economy.
One example of a great government-level initiative is the Singapore Quick Response Code (SGQR), which was developed to unite all digital payment services under one centralized QR code.
In addition, SEA countries are expected to boost their digital economies even more by linking their real-time payment systems, starting with Thailand, Malaysia, the Philippines, Indonesia, and Singapore. As other territories follow suit, the Southeast Asia region will reap the benefits of instant, frictionless, and secure payments across borders.
SEA governments are also looking into central bank digital currencies (CBDCs), as they promote a freer flow of funds and decrease associated costs. Currently, more than 50% of Southeast Asia’s governments are involved in CBDC-related research.
While SEA is a new leader in digital economy growth, there are still some difficulties that businesses tend to encounter in this region, such as:
With that said, SEA countries’ joint efforts toward achieving interoperability and implementing unified payment standards are likely to effectively address and resolve these challenges in the foreseeable future.
All in all, SEA offers plenty of potential to digital businesses. However, companies that wish to enter this market need to be fully aware of its peculiarities, challenges, and trends to be able to achieve long-term success.
1, 2, 3 - 2C2P - How Southeast Asia Buys and Pays 2022
4 - Google - Creating sustainable growth for Southeast Asia’s digital economy
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