The Vietnamese internet economy has almost tripled in three years to reach US$9 billion in 2018, driven by e-commerce and online media, a new report released by Google and Temasek showed.

According to the report, titled “e-Conomy SEA 2018”, the internet economy is growing in all six Southeast Asian countries surveyed but the stage of development relative to the size of each country’s economy differs. It is most developed in Viet Nam, where the gross merchandise value (GMV) of the internet economy is 4 per cent of the country’s GDP.

With e-commerce almost doubling in 2018 from a year earlier, and with online advertising and gaming growing at more than 50 per cent year on year, the Vietnamese internet economy is booming. Amidst one of the lowest penetrations of online travel bookings in the region, the online travel market has huge room for growth.

While e-commerce is experiencing healthy growth in all Southeast Asian countries, Indonesia is leading the way, reaching $12 billion in 2018 and accounting for more than $1 in every $2 spent in the region. E-commerce adoption has also accelerated in Viet Nam, where it reached nearly $3 billion in 2018.

Online media is also growing rapidly in Viet Nam, reaching $2.2 billion. This is not surprising considering the country ranks among the top 10 globally in terms of user engagement on gaming, social media and video platforms.

According to the report, powered by a large, growing and incredibly-engaged internet user base, it is estimated that the Southeast Asian internet economy has reached $72 billion in GMV in 2018 across online travel, e-commerce, online media and ride hailing. Growing at 37 per cent from a year earlier, it has accelerated beyond the 32 per cent compounded annual growth rate (CAGR) that was recorded between 2015 and 2018.

With the addition of the new sectors of online vacation rentals, online food ordering and subscription music and video on demand, and amidst the accelerated growth observed across all sectors, the internet economy in the region is on track to exceed $240 billion by 2025 – $40 billion higher than previously estimated.

The GMV of the internet economy stands at 2.8 per cent of Southeast Asia’s GDP in 2018 – up from 1.3 per cent in 2015 – and is projected to exceed 8 per cent by 2025. To put that into perspective, Southeast Asia is still trailing almost 10 years behind the US, where the GMV of the internet economy already accounted for 6.5 per cent of GDP back in 2016. The gap, however, has started to narrow. — VNS