Malaysia's digital economy to reach US$21bn, eCommerce an investor favourite

Malaysia's digital economy grew by 13% year-on-year this year reaching US$21 billion gross merchandise value (GMV). This is fuelled by S-shaped growth of eCommerce and U-shaped recovery of online travel. According to the seventh edition of the e-Conomy SEA report by Google, Temasek and Bain & Company, eCommerce raised US$340 million in the first half of this year, outpacing digital financial services as an investor favourite.

ECommerce was also identified as one of the key enablers for digital economy growth. The report noted that there is growing penetration of digital services across urban and rural, stimulated by new entrants in eCommerce, transport and food delivery.

Malaysia also witnessed eCommerce average order value expansion in tier-one cities, and there is also rapid digitalisation across SMEs on the front-end. More than 60% of digital consumers intend to maintain their usage of transport (66%) and food delivery services (69%) in the next 12 months. More than half plan to maintain the same usage across eCommerce (53%) and groceries (57%).

At the same time, 19% of Malaysians spend over an hour daily on online media (gaming, video streaming and music streaming), compared to the regional average of 12%. The report found that there are 39% video streams at least once a week in Malaysia, slightly higher than the Southeast Asia average of 33%. On the sustainability front, Malaysian digital consumers are also willing to spend 5% more for a sustainable product or service.

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Southeast Asia's digital economy is on track to hit US$200 billion GMV this year, three years earlier than was anticipated in the first report shared in 2016. 

Across the border in Singapore, the country's economy is predicted to grow by 2% to reach US$18 billion this year, with the potential of reaching about US$30 billion in 2025. Singapore's GMV growth will be driven by eCommerce, a US$9 billion recovery in online travel as well as high digital adoption in eCommerce and food delivery.

It also remains one of two primary investment destinations in the region, alongside Indonesia, with deal value growing from US$4 billion during the first half of last year to US$7 billion during the same period this year.

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