Vietnam has the fastest growing digital economy in SEA: e-Conomy report 2022
- According to Google, Bain and Temasek’s latest report, Vietnam has the fastest growing digital economy in Southeast Asia, with a 28% YoY increase in GMV.
- Led by a booming e-commerce sector, which hit US$14 billion this year, Vietnam’s GMV is expected to grow 31% from US$23 billion in 2022 to US$49 billion in 2025.
- High quality homegrown tech workforce has also been driving innovation in the country.
Not every economy in the world, let alone Asia, have reported economic growth during the first two years of the pandemic — but Vietnam did. Even in 2020, Vietnam came out as a top-performing Asian economy — a feat achieved without a single quarter of economic contraction at a time when many economies globally were scrambling to deal with the pandemic.
As we march into the third year since the pandemic first struck, Vietnam’s growth continues to surpass estimates and now, the Southeast Asian nation is the fastest growing digital economy in the region. According to the latest edition of the e-Conomy SEA report by Google, Temasek Holdings Pte and Bain & Co, led by a booming e-commerce sector, which hit US$14 billion this year, Vietnam is also anticipated to witness a 28% year-on-year (YoY) increase in gross merchandise value (GMV) to US$23 billion.
The annual report shares an update on how digital economy sectors are tracking across six countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. This time it projects that Southeast Asia’s digital economy is on track to hit US$200 billion GMV in 2022, three years earlier than was anticipated in the inaugural report shared in 2016.
Touching on what has been enabling Vietnam’s digital growth, Google, Temasek and Bain reckon it to be the growing penetration of new forms of commerce across urban and rural regions for businesses. To top it off, logistical infrastructure has improved to facilitate nationwide e-commerce transactions and there is a noticeably high quality homegrown tech workforce driving innovation in Vietnam.
The report also highlighted how SMEs in Vietnam are empowered to operate online businesses via provision of digital front-end and back-end solutions and support from the government. While traditionally Singapore and Indonesia are primary investment destinations, this year Vietnam, and the Philippines are seeing growing investors’ interest over the longer term, the e-Conomy report noted.
The e-commerce sector alone had raised an estimated US$230 million in the first half of this year, thus appearing to be investors’ favorite. The online media sector also saw a significant amount of investments pouring, US$190 million till date, as highlighted by Google, Temasek and Bain.
Overall, the Southeast Asian region has witnessed a striking rise in internet users. Out of its 460 million internet users, 100 million have come online in the past three years alone. “E-commerce adoption is high across both urban and suburban consumers while services offered by the remaining sectors are mainly used by people living in urban areas. Suburban adoption of sectors such as groceries, travel and music-on-demand remains nascent and offers headroom for growth,” the report noted.
What is worth noting is the fact that demand amongst Southeast Asian consumers have been tapering amidst global macroeconomic headwinds, reduced disposable income, skyrocketing prices, and lower product availability. For now, digital sectors such as food delivery and online media are facing slowdowns after peak periods triggered by the pandemic. “Food delivery returns back to trendline growth after tripling through the pandemic and is expected to hit 14% growth in GMV,” the report reads.
On the other hand, transport and online travel sectors are expecting strong recovery, 43% and 115% YoY growth respectively, as mobility exceeds post-pandemic levels and international travel resumes. However, the e-Conomy report noted that those sectors would face headwinds such as increasing fuel prices, supply shortages, and continuing travel restrictions in high-value corridors (e.g. China, Korea, Japan), while consumer demand is suffering from skyrocketing prices. Unfortunately recovery is expected to be gradual and it will take years to reach 2019 levels.
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