The total digital economy of Southeast Asia (SEA), which stands at $210 billion, is expected to grow at a 15 per cent compound annual growth rate (CAGR) to reach $430 billion and Indian startups looking to expand overseas should consider Southeast Asia, a report showed on Monday.
The population of over 650 million and 70 million SMEs in Southeast Asia are rapidly becoming more affluent and digitally savvy, creating a high demand for innovative products and services.
"It's an ideal time to explore and expand into the region as it is an attractive geography with tremendous growth potential," according to market research firm Redseer Strategy Consultants. The region's economy has been on a stellar growth trajectory, reaching an impressive $3.2 trillion in 2021.
While the usual categories such as e-tailing, travel, ride-hailing, and food tech will contribute to the whole, a bigger chunk of the next $220 billion would come from emerging categories such as online content, gaming, agritech, classifieds, etc.
"The rising prominence of SMEs, growing e-commerce offshoots, and concentrated pockets of opportunities in the urban centres in the region will further contribute to the digital economy," the report said.
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While Singapore has been a gateway to the region, emerging markets such as Indonesia, the Philippines, and Vietnam are fertile ground for digital startups owing to its higher spending power and digital penetration.
The GDP growth despite macroeconomic pressures is expected to be around 5 per cent in 2023 making a strong case for the growth spurt the region is about to witness.
"Furthermore, 95 per cent of all registered establishments or entities are MSMEs opening up enormous opportunities for startups and investors looking to enter the SEA market," the report mentioned.