|
e-Conomy SEA is a multi-year research programme launched by Google and Temasek in 2016. Bain & Company joined the programme as lead research partner in 2019. The research leverages Temasek insights, Bain analysis, Google Trends, data from research partners, expert interviews, and industry sources to shed light on the digital economy in Southeast Asia (SEA).
Written in collaboration with
Written in collaboration with
Executive summary
Building the AI economy
- SEA-6 users have made generative AI mainstream in under three years
In SEA-6, 243 million people in SEA-6, or 58% of the working population, have adopted generative AI in less than three years, as the technology approaches the scale of the Internet as a whole. Among generative AI users, half consult it weekly, while almost a fifth leverage it daily. AI has become an everyday companion spanning work, study, and multiple consumer use cases.
- Though many are using generative AI, there remains immense potential for deeper usage
Quantified on a per capita basis, Southeast Asians use AI relatively little compared to their peers in developed markets: ~10% of US levels. This gap highlights the consumer-led, mobile-first nature of current AI activity, with substantial room for both consumers and enterprises to deepen their use of AI.
- Consumers initiate AI usage for the most part, but enterprises lead in mature markets
Across SEA-6, consumer use cases account for ~60% of regional AI usage. Users in Thailand and Vietnam are not far behind Malaysia in their AI usage, while Indonesia and the Philippines have the most headroom for future user growth. In Singapore and Malaysia, the two most AI-mature markets in SEA, enterprise workloads form the bulk of usage.
- AI monetization is nascent in SEA, with most users on free tiers and ads on the way
There is significant headroom for paid adoption to grow. Only around 1%–2% of the SEA-6 population are currently paying to use generative AI, compared to 3% of US households. In addition, ads have not yet been rolled out on standalone generative AI platforms, but are expected to arrive soon.
Strong growth through headwinds
- Sustained double-digit growth puts SEA on track for $1 trillion GMV despite headwinds
SEA’s digital economy is expected to post strong GMV growth of 17% this year, even as geopolitical and macroeconomic uncertainties loom. AI will continue its role as a key contributor to SEA’s trajectory in the long term, as growth dynamics are now firmly rooted in the value AI brings to interactions between businesses and consumers.
- Competition remains vibrant even as markets scale and consolidate
While core sectors consolidate around established platforms, emerging models based on quick commerce, commerce ads, and electric vehicles in mobility continue to open new competitive fronts. At the same time, AI gives consumers new ways to discover, research, and evaluate, creating opportunities for businesses to further innovate.
- Consumers now count on AI assistance in their purchase journeys
Across sectors, consumers turn to AI to save time and get personalized support: 69% of SEA-6 consumers use AI to compare product options, and 93% trust the recommendations they get from AI. Many users take further action on recommendations by seeking out more information on search engines, reviews on shopping platforms, and social media.
- AI creates new pathways for businesses to engage customers and monetize
On the front end, AI is supporting multimodal discovery, in-app conversational assistance, and hyper-personalized recommendations, delivering uplifts as large as 75% in order volume. Concurrently, players are deepening monetization by leveraging AI for commerce ads, conversion enhancement, seller tools, and more.
Funding the AI decade
- Corporate and infrastructure investments drive scale alongside private capital
Beyond traditional venture capital and private equity investments in the digital economy, balance sheet allocations from established digital champions and private investment into AI infrastructure have shifted the funding landscape.
- Digital economy funding stabilizes; late-stage deals shape regional activity
Digital economy deals landed at $8 billion, matching three-year run rates. AI-focused companies captured 80% of private deployment in the last six months, up from 30% in H2 2024. Most regional activity is happening in the late stage; this includes secondary transactions that provide early-stage investors with exit pathways.
- Infrastructure investments underpin further funding growth
Investments in digital infrastructure reached $20 billion over the last twelve months, led by the $11 billion acquisition of ST Telemedia Global Data Centre. Despite capacity additions exceeding 52% per year, vacancy in third-party operated data centres remains low, given robust demand from regional and global players.
- Public listing proceeds rebound, headlined by infrastructure
Initial public offering proceeds rebounded past $8.5 billion in the last 12 months, led by Singapore and Malaysia across sectors including digital infrastructure, digital applications and healthcare. Looking ahead, SEA’s public pipeline reflects a balanced representation of companies across sectors.
Trusted intelligence for all
- SEA users display pragmatic optimism about AI’s helpfulness
Trust in AI is rising, with 62% of SEA consumers saying that they now trust AI tools more than they did a year ago. This is due to increased usage and familiarity, better outputs, and stronger track records. SEA users view agentic capabilities with pragmatic optimism, indicating openness to trying them on condition of transparency, safeguards, and reversibility.
- User familiarity with automation precedes a strong appetite for agentic commerce
More than two-thirds of SEA users already relying on everyday automations like price alerts or automatic payments. Seventy-five percent are open to allowing AI agents to take action on their behalf by looking for the best price and making the purchase. This openness positions ecommerce as a suitable testing ground for autonomous workflows.
- Consumer confidence is built on top of privacy protections and first-hand experience
While consumers are open to delegating tasks to AI, they remain conscious of the associated risks. Privacy safeguards are essential table stakes, but it is first-hand experience of product utility that will convince them to make the leap. When users have clear visibility into AI capabilities, provided by brands that they already trust, they will be more likely to embrace autonomous execution.
- By 2030, people across SEA could be using AI up to 60 times as much as today
There is significant potential for AI usage to multiply rapidly in SEA as more people adopt the technology, use it more frequently, and perform more complex tasks. The acceleration of agentic adoption, improved inference efficiency, scaled AI infrastructure, and sustainable unit economics are key prerequisites for unlocking this scale.
|
