PH internet economy still the smallest in Southeast Asia

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The Philippines has the biggest potential to expand economic activities online as it remains the smallest internet economy among six countries in Southeast Asia, according to a report.

Metro Manila (CNN Philippines, October 4) — A Google-backed study showed the Philippines with the smallest "internet economy" in Asia, but showed the biggest capacity for growth as more people surf through their mobile phones.

The joint e-Conomy SEA 2019 report published by Google, Temasek, and Bain & Company valued Philippine online economic activities at $7 billion, which grew from $2 billion in 2015.

Combined with the internet economies of Malaysia ($11 billion), Singapore ($12 billion), Vietnam ($12 billion), Thailand ($14 billion), Indonesia ($40 billion), the regional size has ballooned to $100 billion in 2019, tripling in four years. By 2025, the sector is seen expanding into a $300-billion space — 10 times its size in just a decade.

Across Southeast Asia, buoyant economic growth and increased connectivity boosted online transactions, with residents dubbed as the "most engaged mobile Internet users in the world." There are an estimated 360 million Internet users in the region, according to the report.

All online economies showed "no signs of slowing down," but the Philippines showed the brightest potential.

"Of the six Southeast Asian countries, the Philippines has the most room for growth," the report read, noting that the internet economy accounts for just 2.1 percent of the country's gross domestic product.

READ: PH e-commerce industry sees more growth in 2019

There are 68 million Internet users in the Philippines, with e-commerce or online purchases valued at $3 billion. This is followed by online travel arrangements like booking budget hotels ($2 billion), online media ($2 billion), and ride-hailing and food deliveries ($1 billion).

By 2025, the share of all online-based transactions is expected to hit 5.3 percent of the Philippine economy. Leading the growth are music and video streaming subscriptions — like Spotify and Netflix — which have grown by 42 percent yearly since 2015.

Filipinos go online for about four hours per day, the second-longest Internet users next to Thailand at an average of five hours and 13 minutes in a day. The Philippines has made the leap from being the texting capital into the social media capital of the world.

READ: PH takes top spot as heaviest internet users worldwide — report

Gains made by non-bank companies offering digital payments have also boosted investments in online financial services, the report added.

With more people now online, the next challenge for companies is to improve user engagement. Their goal is to have more people staying on their platforms longer, thinking it would also increase sales.

Another challenge is evenly spreading connectivity, with most transactions happening in urban areas, according to researchers.