Southeast Asia’s e-commerce ecosystem is still in its “nascent stage,” with more companies forming in the region, according to Amit Anand, founding partner of Southeast Asian venture capital firm Jungle Ventures.
“I think Southeast Asia’s e-commerce is still at a very, very nascent stage,” Anand told CNBC’s “Squawk Box Asia.” “We’re talking about single-digit digital penetration, as compared to the overall commerce penetration.”
Anand added that e-commerce companies in the region like Grab, Sea, and Goto are “still in the opening act of this movie, and by no means I think the success or failure of one venture is going to determine the outcome of the overall industry.”
“The secular trends are obvious,” Anand explained. “The young demographics are 100%, 120% online, and Covid has only pushed more and more consumers, more and more enterprises to do things over the internet.”
Southeast Asia has seen a rise in the use of digital services like e-commerce, food delivery, and online payment during the pandemic, said a 2021 report from Google, Temasek Holdings, and Bain & Co.
Southeast Asia represented about 6% of EMQQ Global’s Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ) and roughly 15% of the Next Frontier Internet & Ecommerce ETF (NYSEArca: FMQQ) as of May 31.
“Southeast Asia is becoming a more important region for EMQQ Global as internet and smartphone penetration increases from a very low base,” said EMQQ Global founder and CIO Kevin T. Carter. “In many respects, it’s where China and USA were 20 years ago. The local internet champions should be able to ride that multi-decade wave.”
The largest tech company in the region, the previously mentioned Sea Limited, recently reported $2.9 billion in revenue for Q1, beating analysts’ expectations of $2.76 billion while the company’s earnings per share came in well ahead of projections.
In addition to being the largest tech firm in Southeast Asia, Sea is also the largest allocation in the region for EMQQ Global, according to Carter, who added that companies like the Singapore-based e-commerce and gaming giant “continue to hit critical mass as they build out the infrastructure for sustained growth.”
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