Singapore digital economy reels from travel crash amid Southeast Asian boom

Its digital economy shrank 24 per cent this year as some neighbours saw double-digit growth, says a report by Google, Temasek, and Bain & Company

However, the decline is ‘short term’ and Singapore has an ‘important role’ in driving the next phase of growth in the region’s internet economy, the report says

Reading Time:3 minutes

Singaporeans spent an estimated S$34 billion on international travel in 2018. Photo: AFP

Published: 3:39pm, 10 Nov 2020Updated: 3:39pm, 10 Nov 2020

While Southeast Asia continues to see a boom in its digital economy, Singapore recorded a stark contraction this year, according to a new report, primarily due to the decline in online travel as the coronavirus pandemic kept international borders shut and brought the world to a standstill.

The city state’s digital economy shrunk by 24 per cent, bringing in US$9 billion in gross merchandise value, down from the US$12 billion last year. Conversely, other economies in the region, such as Indonesia and Vietnam, are clocking double-digit growth, at 11 and 16 per cent, respectively.

These were among the findings of an economic report launched on Tuesday by Singapore’s state investment firm Temasek, Google and management consultancy Bain & Company.

People at a street cafe in Hanoi. About 70 per cent of Southeast Asia’s population is now online, the report says. Photo: EPA-EFE

The report – now in its fifth year – noted that the decline in Singapore’s digital economy was “short term”. It cited how almost 50 per cent of the island republic’s digital economy last year was from online travel, which plunged by some 70 per cent year-on-year.

Aadarsh Baijal, partner and head of digital practice in Southeast Asia at Bain & Company, said the concentration of Singapore’s internet economy in online travel was in part because it was the “most mature sector”.