Entitled “Through the waves, towards a sea of opportunity,” this year’s e-Conomy Southeast Asia (SEA) report projects that the Philippine digital economy is on track to hit US$20B Gross Merchandise Value (GMV) in 2022, after growing at 22% over the past year. By 2025, the local digital economy is projected to reach US$35B GMV, growing at a 20% Compound Annual Growth Rate (CAGR), and possibly will hit US$100B to US$150B GMV by 2030.
The annual report, which combines Google Trends, Temasek insights, and Bain & Company’s analysis in addition to industry sources and expert interviews, spotlights the digital economies of six countries in Southeast Asia (SEA): Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
At the rate of 17% growth from the previous year, eCommerce is expected to reach US$14B GMV by 2022 and US$22B GMV by 2025 as it continues to propel the local digital economy. Despite the partial resumption of in-store shopping, eCommerce accounted for 70% of the overall Philippine digital economy.
eCommerce, food delivery, and video-on-demand are the top three digital activities of Filipinos showing an adoption rate of 88%, 69%, and 58% respectively among digital urban users.
Key insights into the Philippine digital economy include:
- Transport and food delivery are projected to reach US$1.9B GMV in 2022 and continue to grow at 29% CAGR to hit US$4B GMV in 2025. Demand growth is normalizing as more people eat out. The gradual return to the office, increase in brick-and-mortar shopping, and the resurgence of tourism are driving recovery from lockdown lows for Transport.
- Travel is back, with 180% YoY growth to hit US$1B GMV in 2022. As recovery to pre-pandemic levels is likely to be gradual, travel is growing at 44% CAGR by 2025 where the sector is expected to reach US$4B GMV.
- Online media which comprises music, video streaming, and online gaming is projected to grow at US$3.1B GMV in 2022, with YoY growth at 17% since the pandemic peak last year. Highest in Southeast Asia, 37% of paying users in the Philippines said that they play online games at least once a week.
- Digital financial services show sustained growth, with lending and remittance hitting $6 billion this year. Remittance is expected to deliver US$4B in Gross Transaction Value (GTV) at 32% YoY growth. In 2022, digital payments will drive $75 billion GTV and keep growing at 18% CAGR to reach US$123B GTV in 2025.
The Philippines Attracting More Investors
With the Philippines as the second fastest growing digital economy in SEA (next to Vietnam) in 2022 (at 22% YoY) and between 2022 to 2025 (at 20% CAGR), the country will be a hot investment hub across sectors including digital financial services.
According to the report, the country has the fastest-growing digital investments sector this year in SEA, at a 63% growth rate from 2021 to 2022. Seventy-three percent (73%) of investors (second highest in SEA after Vietnam) are expecting deal activity to increase in the country’s local digital economy in the period of 2025 to 2030 as compared to the current situation.
“The Philippine digital economy remains resilient despite headwinds and continues to provide boundless opportunities as it is projected to reach $20 billion GMV by end of year. This year’s e-Conomy SEA report also suggests that the country will be a leading investment destination with over 70% of investors expecting deal activity to increase in the period of 2025 to 2030. Google is committed to help the Philippines sustain the growth momentum of its digital economy through local partnerships, programs and products that aim to improve the lives of Filipinos,” according to Bernadette Nacario, Country Director of Google Philippines.
Digital financial services are soaring high and the sector continues to attract investor interest, capturing 56% of total investor funding in 2022 and raising roughly US$450M in the first half of 2022 alone. Both Filipino unicorns Mynt and Voyager are in the fintech space.
“The Philippines’ digital economy is one of the more attractive investment hubs in the region. Across internet sectors there remains tremendous whitespace for growth as the ecosystem drives greater digital inclusion in the country, particularly outside of metro areas. We expect growth to come from not only the physical goods and services internet sectors, but also digital financial services across payments, lending, and other Fintech products,” said Willy Chang, Associate Partner at Bain & Company.
Web 3.0 has attracted sizable investor funding raising US$90M in the first half of 2022 with investors bullish on cryptocurrency adoption in the Philippines which is considered one of the fastest growing in the world.
“The seventh edition of the e-Conomy SEA report shows that the digital future of the Philippines is bright as it has the fastest growing digital investments sector this year in the region. The Department of Trade and Industry is committed to digitalize our MSMEs and work closely with our private sector partners like Google to help reach the full potential of the country’s growing digital economy,” said Alfredo Pascual, Secretary, Department of Trade and Industry.
The 2022 e-Conomy Southeast Asia (SEA) report is available here.