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Southeast Asia's digital providers are on the rise because the coronavirus pandemic stored folks at house

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Grab Holdings Inc.'s GrabFood offering customers and drivers will collect orders from a Pisang Goreng Bu Nanik store in Jakarta, Indonesia on Monday, July 15, 2019. Globally, the online grocery ordering industry has become a highly competitive field that has led to consolidation as companies look for a greater than $ 300 billion share of restaurant deliveries. Photographer: Dimas Ardian / Bloomberg via Getty Images

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SINGAPORE – Southeast Asia saw an increase in the use of digital services such as e-commerce, grocery delivery and online payment due to the coronavirus pandemic, according to a new report from Google, Temasek Holdings and Bain & Company.

Up to 40 million people in six countries in the region – Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand – went online for the first time in 2020, the report said. That brought the total number of internet users in these Southeast Asian countries to 400 million – or nearly 70% of the population, the report said.

According to the report, many of the new users came from non-urban areas in Malaysia, Indonesia and the Philippines.

$ 100 billion in 2020

Global growth faces an unprecedented challenge this year as tough lockdowns have hit businesses and jobs around the world.

However, the report predicted that Internet sectors in Southeast Asia could see strong growth and could reach $ 100 billion in gross product value (GMV) in 2020, with e-commerce growing 63% while online travel shrinking 58% . GMV is a metric most commonly used in e-commerce that measures the total dollar value of goods that have been sold over a period of time.

Overall, the region's internet sectors remain on track to exceed $ 300 billion in GMV by 2025 – that prediction was first made last year before the coronavirus pandemic.

Aardash Baijal, head of digital practice in Southeast Asia at Bain & Company, told CNBC that while the pandemic pushed more people to transact online this year, it doesn't necessarily mean they would spend more money by 2025. The annual forecast for the value of the Southeast Asian internet economy remained largely unchanged.

Still, if there are signs of a remarkable economic recovery, the region is "quite possible" to pass the $ 300 billion mark before 2025, Baijal said.

Permanent habits

"We have been profoundly affected by the global coronavirus, but it was encouraging and encouraging to see the resilience of Southeast Asia's digital economy persist," said Stephanie Davis, vice president of Southeast Asia at Google, on CNBC's "Squawk Box Asia" "Tuesday the official publication of the report.

Davis stated that Covid-19, which has infected more than 50 million people worldwide, has been a major driver of decision making for consumers across Southeast Asia. She added that there is encouraging evidence that much of this shift to digital consumption will stay here.

"When we ask consumers why they chose to use e-commerce as just one example during the coronavirus, they are telling us that it should avoid possible exposure to coronavirus. But what really matters is that it is almost the same Percentage of people stating this. " is because it's efficient and they found it helpful, "said Davis.

The report looks at five major sectors of the Internet economy in Southeast Asia, including e-commerce, transportation and grocery delivery, online travel, online media, and financial services. The 2020 version – the fifth edition – also added health technology and educational technology as categories after the pandemic accelerated its growth.

Some of the results of the 2020 report include:

1. Digital financial services are gaining momentum as more and more small and medium-sized businesses become receptive to accepting online payments. The number of digital payments is set to rise from $ 600 billion in 2019 to $ 620 billion in 2020 as the average number of cash transactions falls and could reach $ 1.2 trillion by 2025. The digital payments defined in the report include mobile wallets, account-to-account transfers, and credit and debit cards.

2. The health technology and educational technology sectors received a boost from the pandemic as many people turned to online health counseling while schools switched to distance learning. Investments in these sectors are increasing.

3. The online travel and transportation sector was hardest hit when the international pandemic stalled while many people started working from home or were concerned about transportation sharing. However, the report predicts that online travel will climb back to $ 60 billion by 2025.

4. Regional technology investments increased 17% between the first half of 2019 and the first half of 2020. However, the total business value decreased from $ 7.7 billion to $ 6.3 billion. Investors are investing more money in financial technology, where the transaction value rose from $ 475 million to $ 835 million in the first half of 2020.

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Katherine Clark