Nationwide COVID-19 lockdowns across many Southeast Asian countries this year has led to a surge in digital services in the region. Services such as e-commerce, food delivery and online payment have increased manifold, according to the e-Conomy SEA 2020 report by Google, Temasek and Bain & Company.
The report, which covers Singapore, Thailand, Indonesia, Malaysia, Vietnam and the Philippines, said as many as 40 million users logged onto the Internet for the first time in 2020. In Singapore, 30% of all digital consumers were new and 91% of them intend to continue using digital services post-pandemic. Meanwhile, the transport and travel sectors suffered.
Although stringent lockdown measures across the region have affected business and employment, the report predicts that certain internet sectors could witness strong growth. Businesses that have an online presence will continue to thrive despite the economic downturn as the region’s overall internet sectors remain on track to cross $300 billion in gross merchandise value by 2025.
The internet economy is projected to emerge from the pandemic stronger than ever and certain sectors are poised for growth. Here are 4 business sectors that will be the fastest growing in Singapore and the region.
#1 Online Groceries And E-commerce
Lockdowns have spurred the purchase of groceries online. In fact, the report said consumers who have used online grocery services have doubled, with over 75% stating that they will continue to do so post-COVID-19. As such, businesses should attempt to capture the surge in demand. Moreover, the adoption of e-commerce is expected to last and with increased merchant onboarding – especially from merchants that have held out but eventually forced to adapt – there will be more diversity in online marketplaces.
#2 Digital Financial Services Gaining Momentum
Merchants should consider integrating digital payments for consumers as this service is expected to continue post-COVID-19. According to the report, both consumers and SMEs became more receptive to online payments during the lockdown and this behavioural change is set to stay. Moreover, there had also been increased trust in online payments.
The report found that the annual value of total digital payment transactions across Southeast Asia will almost double to $1.2 trillion by 2025. e-Wallet adoption had also increased from 18% to 25% this year. Other digital financial services such as lending, insurance, investment and remittance are all projected by the report to grow by 2025. With continued innovation from regulators, the report said there could be accelerated growth in the digital finance sector.
#3 Health Technology
The pandemic raised people’s awareness on how crucial the healthcare sector is and the essential role it played during lockdowns. Although initially a nascent sector within the digital realm, the pandemic has spurred the growth of health tech and partnerships with other digital consumer platforms. With new impetus being injected into this sector, health tech is projected to take off in the near future.
During lockdowns, many users turned to online medical consultations, boosting the health technology sector by as much as four times. It has also managed to retain its users post-lockdown. As more commercial players, such as banks, insurers, consumer platforms and hospitals, enter the scene to capitalise on the opportunity, the health tech sector is well-poised for wider commercial adoption, said the report.
#4 Education Technology
Lockdowns had forced students from kindergarten to tertiary students, and even lifelong learners and corporate trainees to participate in online studies, EdTech adoption witnessed a record growth this year as it became the only option available to students and teachers. EdTech app installations spiked from 6 million installations during pre-COVID-19 to 20 million during COVID-19.
There is still room for growth in the EdTech sector as educators have yet to tap into the full potential of online learning, said the report. Only simpler methodologies such as video conferencing were adapted for use but relatively innovative techniques such as gamification or multimedia have yet to be adopted in e-learning. Areas such as smart whiteboards, analytics, artificial intelligence, reporting and tracking, student management and content management are areas that could be expanded in the future. Technology still has much to offer in the education sector.
According to the report, investments in technology have remained strong and attention will be shifted towards the HealthTech and EdTech sectors.
One of the challenges that will set back the growth of the internet sector is talent, particularly a shortage of workers with the right skills. There is an urgent need for workers to upskill or reskill themselves to find jobs in the internet sector.
Despite ongoing retrenchments in Singapore, these people may not easily find jobs in the digital economy. Besides a lack of talent, another challenge is logistics, such as issues with delivery.
What remains certain is that digital consumers are here to stay. About 90% of new digital service users during the COVID-19 pandemic intend to continue using digital services post-pandemic.
Also, investments in technology remain strong and digital adoption or usage for both consumers and SMEs will be hyper-accelerated. Plus, the report found a healthy market competition, meaning there will still be ample opportunities for innovation within an open ecosystem.
Albert Einstein once said: “In the midst of every crisis lies a great opportunity.” This is an opportune time for businesses to relook their business model and to adopt digital services urgently, or look into partnerships or collaborations with growing sectors such as e-commerce, financial services, health and education.
Need Financing Support During This Period?
From now till 31 March 2021, SMEs can enjoy extra financing support of up to $5 million through the Temporary Bridging Loan Programme.
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