The e-Conomy Southeast Asia 2024 Report with Sapna Chadha, Fock Wai Hoong & Florian Hoppe
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The key message of the report, and that is the fundamentals of this region are critical, they're clear, and businesses are

doing exactly, I think, what we're needing to do for us to move ahead. But given one of the other themes we highlighted this year is trust, given the trust part of the equation, I think having a strong regulatory foundation and having good constructs around that for digital financial services is critical to unlock the next wave of growth here. All 10 ASEAN nations have announced their own national strategic AI initiatives.

or plans, and ASEAN itself has actually released, I guess, a report and a guide on AI governance and ethics. So I think you put all that together, it's very natural that Southeast Asia is quite frankly well positioned to capitalize on the AI trend.

Welcome to Analyze Asia, the premier podcast dedicated to dissecting the pulse of business technology and media in Asia. I'm Bernard Leung, and this is the fourth time in a row that I will be doing the Economy Southeast Asia Report 2024 by Google, Temasek, and Bain & Company. And I can actually do this using Google LM, which I actually did use to prepare for this report. But

But I decided to go retro today and bring all my guests into a single studio to do the report in a conversational style. So with me today, Samna Chatha, Vice President Southeast Asia Google, Florian Hope, partner Bain & Company, and...

Fok Wai Hong, head of Southeast Asia, Temasek. Welcome to the show today. So I'm going to start. Can you just briefly give us a short introduction of yourself, your current role and coverage? Maybe we'll start with Sapna first. Okay. I'm Sapna. I lead our Southeast Asia and South Asia frontier business at Google. I am responsible for growth and impact in this region, everything from government affairs coverage to driving growth of the business. Lauren?

Florian with Bain & Company, a consulting firm. I cover technology for Bain in the region. I've been out here in Asia for going on 20 years. Cool.

Hi everyone, my name is Wai Hung. I wear two hats at Temasek. I lead our Southeast Asia business and I also lead our technology and consumer investments across Asia Pacific. Before we go forward, I think there are some very interesting key takeaways on the report. Thank you for giving the report in advance. So one, I think the first few things is today Southeast Asia's digital economy actually has actually proved that it can balance both robust growth and profitability.

So this year we actually seen some remarkable achievements like with the sector reaching a gross merchandise value of $263 billion, reflecting a 15% year-on-year increase, along with $89 billion in revenue and $11 billion in profits, which is a figure that's more than doubled over the last just two years.

I think the other numbers I thought was interesting was Southeast Asia is becoming a powerhouse for AI. The region is attracting significant attention as a global AI hub with about $30 billion invested in AI infrastructure just in the first half of 2024 alone. And of course, we've seen a dynamic, robust ecosystem of startups and developers, and that includes myself.

and we're actually positioning us to compete in areas of digital applications and also data centers. It is worth noting that, just to give some fun fact, Singapore, Malaysia, and the Philippines are now among the top 10 countries globally in AI-related searches. What it means is it demonstrates the enthusiasm to and digital literacy that's fueling the trend and creating a right market for AI-driven solutions. Last but not least, the last data

data point I thought was interesting was the e-commerce, which is actually re-accelerating because of the rise of video e-commerce. The video e-commerce format has actually grown to account for 20% of the e-commerce GMV, up from less than 5% in 2022. Quite a testament to the thriving creative economy and a clear signal of the evolving digital landscape here. So given all these key numbers,

What would you say are the most significant takeaways from the report for businesses and investors operating in Southeast Asia? Sure, I can start. You've done an excellent job summarizing all the key points. And you've been doing this for four years. I think we've been at this for nine now. This is our ninth edition of the report. And we've come a long way in terms of what we've been looking at in terms of metrics.

We started with GMV, which you mentioned, which was growing very much in leaps and bounds. Some of our predictions we were behind on, right? We've seen now the incredible growth in GMV. Last year, we introduced revenue for the first time. And this year, we went even a step further in profitability. I think this is the main message of the report is profitability growth.

The businesses in Southeast Asia have done an incredible job of looking at things from tightening incentives, looking at commissions.

How are they using online advertising in a really interesting way? And that has led to, you said it, it's growth from in the last two years, $4 billion in 2022 to $9 billion last year. And now this year, $11 billion, which is just tremendous. So that is the key message of the report. And that is the fundamentals of this region are critical. They're clear. And businesses are growing.

doing exactly, I think, what we're needing to do for us to move ahead. The AI piece is the other part that I think is really interesting. And AI will help in this profitability journey. What we're seeing is that businesses can

reach a return on investment in just 12 months of investing in AI, that's really incredible, right? So 71% of businesses are reaching positive ROI from their investments. So we're seeing them do really interesting things to make sure that their businesses continue to be healthy. And I think we're just in this really excellent region, which has a tech savvy young population. Governments are very positive around the

the positivity around AI and we're just getting started. So that's what I would say to start us off. Florian, any thoughts? No, I think Sapna summarized it well. And what we're impressed by is the continued dynamics of this industry. Despite all the headline news you may be hearing about issues in various pockets of the digital economy, we're still seeing double-digit growth in GMV. We're seeing double-digit growth in revenue, and we're seeing actually even higher double-digit growth in profitability.

So, while this part of the economy in Southeast Asia has definitely matured and it's coming into its own, it's still on a significant growth trajectory and doing really well across the region. It's true for all markets here. So, all markets in Southeast Asia are also showing double-digit growth on these metrics.

quite excited that this continues to go well. Now the funding landscape is obviously still a bit more challenging, but with our companies hitting profitability and developing their own level of growth, we're actually quite positive where this is going over the coming years. Well, how would you see like from the investor lens?

Yeah, so thanks. I think Sapna and Florian have both summarized it pretty well. I'd say if there's anything to add, if there's one thing that investors should probably take away from the report, I think it's the sense of quiet optimism that the co-authors have for the digital economy. Last year, we spent a lot of time talking about the funding winter. Now, this year, we look across the last 12 months. Well, as Florian mentioned, the funding environment remains reasonably subdued. Having said that, we are seeing some green shoots.

and some positive funding momentum. If you look at seed through series C, for the first half of 2024 versus the last half of last year, we're seeing total funding values go up about 8%. And if you actually look and double click into that into the average deal sizes, there is greater conviction behind the companies that are doing well. So average deal sizes have gone up about 20%, half on half.

Now, I think underlying all that is there's a continuing sense of innovation and entrepreneurship across the region. With core digital economy verticals starting to mature a little bit, you are seeing some newer, more nascent sectors start to spark investor interest. Areas such as enterprise software, areas such as sustainability tech, I think are actually coming up and actually beginning to track some investment dollars.

So I think you combine all of that together, that sense of innovation and entrepreneurship, the notion that business fundamentals are improving, profitability is moving in the right direction. All that is really what gives us that sense of quiet optimism. Now, I don't think we're ready to make the call that spring has sprung, but I do think that it's certainly getting warmer. We're in the right direction then. Based on this Southeast Asia's digital economy's impressive performance, we already talked about the GMV revenue and profits.

What are the key factors that actually driving this robust growth amidst the sort of global economic challenges on there? Maybe Florian, do you have a point of view on that?

Well, I mean, first of all, I think it's important to put kind of economic challenges into context. Now, globally, I think the economy is doing quite well. If you look at particularly the U.S. economy, which has just been exceptional, and the Asian markets also have been doing really well, the markets around us, India and China, but especially Southeast Asia as well. Most markets have a growth rate about 5% in GDP growth. So,

It's actually, again, despite the high interest rate environment we're in, it's been actually a fairly healthy, broader economic environment. And I think the digital economy in Southeast Asia just reflects on that. We're seeing a continued shift into digital transaction channels. Talk about digital financial services a bit more later.

payments, lending, all going up quite sizably and people are gearing to the convenience of digital engagement, which has further lifted up the digital economy in the region. I think one thing is the 2024 Economy C report highlights several notable trends. We already talked about the e-commerce growth, the AI

infrastructure. Considering these developments, what key insights from the 2024 report have caused you to shift your perspectives into thinking about the Southeast Asia digital economy compared to your outlook in 2023 report? Maybe I'll start with Wai Hong.

Yeah, so, you know, I think that there probably sounds like there are two questions in there. The first one, if you think about from a funding perspective, we mentioned last year that there were four items that were really critical for us to exit the funding winter. You know, obviously, number one, there was a need for reasonable and rational valuation expectations. There is a need for proven monetization model. There is a need to drive towards a path to profitability. And lastly, there needed to be dependable exits.

Now, the really good news I think you start to see in the report this year is that we've made great progress on three of those four. I think from a valuation expectation perspective, we've started seeing both entrepreneurs and investors all recognize the economic reality we are in today with regards to where the interest rate environment is and the macro dynamics. And then certainly as you think about business fundamentals, businesses now at that early stage are really being built with monetization as a key principle.

And through all stages, you are seeing that path to profitability, that drive towards profitability, really being focused on in a way that is appropriate for their stage of development. All of which I think is quite promising. - Sima, anything? - I have to talk about AI. And so last year, we were in early discussions around this, right? And you would have said, why didn't we cover it as much last year? And I think that we've seen a big shift in people talking about AI as a concept

to now actually how they're putting it into place. And so that's why chunks of the report now focus on that shift and that change. So we're seeing businesses leverage AI in terms of leading to positive impact on their business. And not just monetarily, they're doing things that are expanding their reach. For example, gaming developers or online transport players, they're able to do things with language

that they couldn't have done previously. So now they can reach new audiences inbound as well as export audiences. And they're able to look at things like batch routing and efficiency in the online transport space that again, like we've just seen a big shift. And that is, it's not a coincidence. And that's what this report really talks about fundamentals of Southeast Asia that are different.

A lot of people may underestimate, I think, Southeast Asia's opportunity here. There is openness. You mentioned the curiosity. So people are searching more, not just consumers, but businesses as well. 11x increase in search interest in this space of AI. But outside of that, I would say beyond interest, you see the opportunity from tech positivity. The government's having a productive conversation around this, and they're making investments

and giving incentives such that more players are investing locally here. I think Southeast Asia is in a sweet spot. I'm sure we'll talk about it more in your coming questions. But that's really, I would say, the big difference and shift in how much things have changed in just one year. Sorry, any...

Well, those were my two main talking points. Probability, AI. I do have one more, which I do think what's great to see is the continued business dynamic we see for companies in this part of the world. One, the fact that despite all kind of the kind of evolution we've been through, there continues to be this high growth momentum that I mentioned. And two, I think how these companies are also growing on their own as they go international outside Southeast Asia. So, a lot of activity with

the big platform companies that reaches beyond Southeast Asia, game developers from the region which are playing a role way beyond Southeast Asia. So it's quite exciting to see actually that Southeast Asia is starting to play a bit more beyond its own shores. And maybe I can just add to a little bit to build on what Sabna mentioned earlier as well. I think at some level there is a shift, but it's actually a very natural shift.

If you think about ultimately what we've been talking about all these years behind why Southeast Asia is one of the fastest growing digital economies in the world, you think about that digitally savvy population, you think about the fast growing middle class demographic, and you think then a little bit around, as Sapna mentioned and alluded to, now the government engagement around AI. Just interesting fact. All 10 ASEAN nations have announced their own sort of national strategic AI initiatives

or plans. And ASEAN itself has actually released, I guess, a report and a guide on AI governance and ethics. So I think you put all that together, I think it's very natural that Southeast Asia is quite frankly well positioned to capitalize on the AI trend. Okay, I'm going to switch gears and we're going to talk first about e-commerce. So e-commerce has now re-accelerated in Southeast Asia, mainly fueled by video e-commerce. Can you elaborate on, say, the impact

of video e-commerce on the Southeast Asia e-commerce landscape and what are the potential for future growth? I can start. What's, I think, tremendous to see is that 20% of e-commerce is now video-based, right? And that's really unique to this. The trends start in this world and I feel like catch up elsewhere. This is why as Google, we've just launched YouTube Shopping in several markets in Southeast Asia because you see the

the aptitude of the creators in this space, but also the general lean in from the consumer base. They're loving video. They're finding the information that they need from influencers who are not just doing it from, I think, just to make money. I think they're doing it in terms of being helpful to the audiences. And you're seeing everyone lean in from the big commerce players that we work with.

the creator ecosystems, the agency ecosystem. And so you're seeing a big shift in this. But I think that truly is stand out that 20%

Right. Any thoughts? Well, I think the other support effect, as we mentioned earlier, that e-commerce is probably one of the oldest and most mature sectors in this space and just become ingrained in people's behavior patterns. So we see two, three times transactions per month is now common for a lot of e-commerce users in Southeast Asia, of which there are hundreds of millions, which is just providing a great base to build on. And we're seeing now the last boundaries unlocked. I think some existing categories like electronics and fashion are highly penetrated, but we're

You now see the move unlocking the last piece of logistics around cold chain for grocery, around bulky logistics for white goods and furniture, which will, we think, provide some further growth momentum for e-commerce for the coming years. Moving from e-commerce, I want to talk about continued growth of digital financial services. I think digital payments is now getting a lot more widespread. I think last year was cash is no longer king. I remember that comment from Slepner.

And digital lending is now gaining traction. Can you talk about what are the factors driving this growth and what are the key challenges and opportunities for say digital financial service providers in Southeast Asia? Yeah, good question. I mean, again, you mentioned payments already. Payments at the end of the day unlocks this whole ecosystem. Cash on a mattress is never going to be in any type of other digital financial services product.

We continue to see that trend playing out really nicely. So going from 52% last year to 56% of total GTV this year. So actually growing quite fast and really being widespread across markets as well. If you look at the penetration of QR codes and just use of kind of adoption of account to account payment in different countries around the region, which also

also drives down the cost of payment, which has been a great overall story. On the back of this, you see lending, wealth, insurance doing really well. And the key here, we think, is just solid regulatory frameworks that further drive consumer adoption and driving consumer use cases. Consumers are clearly keen to use these services. They often provide better value proposition, easier access and usability, or lower cost than established channels. But given one of the other themes we highlight this year is trust,

given the trust part of the equation, I think having strong regulatory foundation and having kind of good constructs around that for digital financial services is critical to unlock the next wave of growth here.

I think the only thing you have to ask your audience is, how often do they go to the ATM? Have they gone to the ATM in the last 12 months compared to five years ago? I think the reality is digital payments and digital cash, quite frankly, are almost defunct. Show of hands who's got cash in their wallet? Zero, actually. I've actually gone out a couple of times without my wallet and actually taking just the phone with me to do the payments and stuff. But one interesting thing that came out from this report this year was the concept of

Embedded insurance, I think this happens a lot in e-commerce and transport services. What is the potential impact of embedded insurance for digital financial service providers in Southeast Asia? And how would traditional insurance have to adapt to this new trend? Is it they still, or these providers actually also work with traditional insurance providers? Oh, they participate. So I think what makes embedded insurance interesting is it's typically embedded in the purchase flow.

So it's insuring your car ride, it's insuring a package proof gets delivered, it's travel insurance if you buy a trip somewhere else. So it's a very natural part of the purchase journey. It often plays to consumers need to protect what they just bought in one form or another.

And we see that continuously upticking in different parts of the region. And for all the platforms, this is actually an important part of their profitability journey. So it's one of the adjacent services that they've gone into and that they're monetizing on. Now at the backend of almost every one of these is an insurer. So there's insurance partnerships, which are backing up and subscribing the books that get built on the back of this, and then kind of providing these insurances as well. So it's very synergistic with the established insurance industry.

will never rival the scale of kind of bigger life and P&C insurance markets as well, but it's an interesting pocket of the insurance market that is emerging there. So I think one question would come up for lending is regulatory changes and also interest rate adjustments. Okay. And we just had a rate cut in September can impact lending revenue. I think

How does the digital financial services providers now deal with these challenges to ensure, say, sustainable growth of digital lending within the region itself? Yeah, good question. I mean, so on the interest rate side, a lot of them actually have relatively short-term loans still, so it doesn't impact them as much because they can adjust life kind of with a market to kind of price and changes in the broader interest rate environment. Regulatory activity obviously has become much higher and in particular, I think consumer protection has played a much, much bigger role in all markets in the region, which

We're choosing this as a big net positive for this part of the world. It makes lending, I think, more secure for everybody who participates in the ecosystem, both the consumer and the companies who are providing the services.

So we think that's actually kind of a big net positive kind of doing this the right way. And you will see that most digital franchises players are very kind of actively engaged in these regulatory dialogues and actually very supportive of what's coming there. So I have this question that I will ask all three of you. What's the one thing you know about the economy, Southeast Asia, 2024 report that very few do? Maybe I'll start from Wai Hong first.

So I think to be fair, I don't think there's anything I know that no one else does. The report is quite transparent and it's been a very collaborative team effort from all of us. I will say the one thing that continues to surprise me about the report is you mentioned, or something I mentioned, we've continued to surprise ourselves with regards to the size of the digital economy. Not in all years, but in quite a number of the years that we put out the report.

And this year, in turn, I also continue to be pleasantly surprised. If you think about the pace at which companies have pivoted towards profitability, they've improved their business fundamentals, they've driven monetization, and actually very adeptly found ways to calibrate the delicate balance between growth and profitability, I think that's been wonderful to see.

People probably don't know how much time we spend on this report, right? Yeah, that's a good one. We all know that. When we start in the year, this isn't like a three-month journey. We kind of spend the whole year on it. And the number of teams across the board, we all have our unique roles to play, you know, in terms of the deep intelligence on the commerce side from Bain, all the industry side from Bain, the investor side from Tomasic. Google has the consumer insights. But I would say...

Even outside of that, it's how we all come together. It's not your typical report where just report is done by some analysts and get stamped with some logos. It's a very, there's a lot of genuine time and interest. But the one plug I'll say that nobody ever will probably take away and talk about from this year's report is around state of the developer ecosystem. We have a few pages on it because it's something I deeply care about. Southeast Asia is very unique.

and probably doesn't get the credit that it deserves for what's happening in terms of game downloads that are generated by Southeast Asia developers. 12% of all downloads come from Southeast Asia developers, which is 3x the share if you think about it GDP-wise. Sure.

should have and it's not a coincidence and it's because of the amazing developers that I get to work with in this region every day, particularly in Vietnam, but across the entire region. I have been following this report since the first day it started till now. So I'm very impressed that every year you could share this report. I just really wonder what is really in the background. What about you, Florian? Well, I can tell you that because it's nine years worth of Excel sheets is a lot.

And some poor soul every year has to piece it back together. I'm an analyst at heart, so I usually get quite involved in this, and it's always quite an interesting journey. If I had to call out one thing that I'm quite excited about, we did speak about AI earlier, all the AI investments that are happening, the opportunity on the business layer for companies. What really excites me, I think, around AI is also the ability for

Southeast Asia to operate with the talent we have. I think AI has shifted the game a bit in the data space from deep data science talent, which is still crucial, but kind of oftentimes now is more for the LLM layer to much more the prompt engineering and figuring out what to do with AI, which is actually much more of a business skill set.

I think that, personally believe that can really help unlock some of the talent shortages we face historically in Southeast Asia and hopefully feed that next level of growth we're looking for from startups in Southeast Asia in this space. That's a great segue to the next conversation we're going to have because AI dominates the conversation everywhere.

So I think one key point we really talk about is the significant infrastructure investment for AI-ready data centers in Southeast Asia, over $30 billion in the first half of 2024. What are the primary motivations behind these large-scale investments and who are the key players driving this infrastructure development? Yeah, I can start. So in terms of the key players, you have the hyperscalers like the Googles and the Microsofts and Apple.

Amazon, and so they play a key role, obviously, in terms of data center investment. And that leads to data center operators being very critical. You have the telcos. I mean, I would actually argue who's not a part of the ecosystem. That will be the outcome of this. And it goes into multiple places. You have

the data centers, you have cloud regions, you have subsea cables, right? So there's a number of different types of investments. We as Google, we have three major projects that we've been working on the subsea cable space across Asia because you want to make sure that the data becomes more closer to home. It's localized, but having the data sovereignty that the region deserves. But that actually leads to faster connections. It leads to

That faster connection and speed leads to better customer and consumer experience. And so that's a big motivation, right? To build the infrastructure across the board. Ultimately, it's for the consumers, right? That I would say that's leading to the digital economy taking off. The digital economy taking off is helpful to the government. So therefore, the government's creating the incentives for us to invest more

We're really happy to say that as Google, we've just made investments in Malaysia, Thailand. Singapore's had that investment. Indonesia is not that far behind. And so, you know, this region is becoming a very critical one. And you mentioned, you know, the $30 billion in just the first half of this year. That's tremendous, right? And I think that puts us on the map in a way that we haven't been before.

already. You may just add to that. I mean, I think, you know, once again, those numbers are big. I mean, $30 billion that was committed in the first half of this year, and that is intended to increase data center capacity by about 50%. So it's a lot. I think underlying all of that, for me, is the one simple thing, which is AI, you know, the acronym gets thrown on with AI a lot is GPT.

Right? And GPD stands for general purpose technology. And AI really is a general purpose technology, which means that it has a very broad applicability. And so the industries that people have bandied about that can benefit greatly is all of them, but it ranges from manufacturing through retail, through healthcare. So I think, you know, it really is something that can have a very profound impact on the economy.

And then drilling down into that, you know, obviously it has an ability to help companies with revenue generation as well as cost optimization and management. So once again, very broad applicability and very broad impact on businesses themselves. So like software, I think you'll start to see a lot of AI applications that are both horizontal as well as vertical, which is to be fascinating to see. And underlying that needs to be, once again, you know, sort of the AI digital infrastructure.

So the two big opportunity sets for me as an investor when I look at AI are both the enablers as well as the adopters. The enablers really being digital infrastructure. You can say maybe there's a little bit around semiconductor supply chain, which we are actually seeing Southeast Asia start to play a much more meaningful role in. Singapore, as you know, has foundry capabilities, whether that's Thailand, Vietnam, Malaysia. Everyone is building some element of capacity and capabilities around the AI supply chain. But I think once again, all this is really designed to help support

data center and digital infrastructure build out, which then enables the adopters. Once again, the companies that are going to use AI to actually improve their businesses. So the report also emphasized Southeast Asia's unique position to compete in the end layer applications. I think it's the user applications and data centers. What specific advantage that you see for Southeast Asia to be competing in these areas compared to the other regions?

I might be biased because I spend also time with startups, but the startup ecosystem, you see the, I see some really interesting innovations in various spaces, whether it's, you know, most recently I met a startup that is taking camera, vision, ML, and they're applying a lot of the science to look at

some of the video footage of stores and businesses to help detect issues that could go, you know, things that go wrong. So whether employee safety or security breaches, right? They're able to use video footage and actually capture things in advance. In Indonesia, I've met some, those focused on agriculture, figuring out how to prevent pest issues and other. So you see the wide gamut from agriculture to

to the more clearer tech opportunities that exist. So I do feel that there's a lean in and there's a desire to change big problems here. And so I think whether it's healthcare, agriculture, et cetera, I think that's one of the unique elements of this region. And that's the benefit of being in a developing part of the world, right? This

leapfrogging that can take place. We leapfrog to mobile faster than anybody else did. And the leapfrogging in the space of AI will happen because there's a desire to beat some really fundamental problems and to adapt this technology as quickly as possible.

So, there are examples of how GenAI can actually create tangible value for Southeast Asia business. I think in the report, we talk about travel planning and merchant onboarding. I think let's go beyond that. What other promising use cases in GenAI that are actually emerging within the region that actually would have, say, potential societal and economic impacts at the end for those who are using those applications?

Yeah, I can throw a few out. I mean, I think I would actually kind of think about it twofold. I think one is on the existing enterprise technology layer. There's a lot of opportunity here. Sapna was just using the word leapfrogging, which I think is very apt for what AI can do. Like historically, I think when you had implemented a new system, you always had to clean the data pipes, make sure the data is 100% clean, and then actually work on this. AI can help

kind of accelerate a lot of these journeys. For example, if you do like a procurement diagnostic, you can work with much less clean data to come to very, very good conclusions that historically had required a lot of data cleaning. So, if you're a business that hasn't really advanced much on this, this is actually a real tool that can get you a step change in performance, which we think is really interesting for a lot of companies in Southeast Asia. If you take it more to the startup new business world,

If you think around the opportunities in education, in remote healthcare, the ability to have an AI doctor on call now we're a bit further away from this to actually get this practically in place. But frankly, even a decently trained AI doctor is probably better than no doctor if you're living somewhere in Sulawesi. This could be really, really valuable for the region, kind of as you unlock new businesses and really also then place to, yeah, kind of Southeast Asia as a hub for new kind of emerging markets innovation. Wow.

Any thoughts? Have you seen any interesting generative AI applications? Yeah, so I mean, I think, you know, not much to add to what Sabna and Florian have said. I will say that, you know, once again, just going back to the point, you're seeing application use cases both on the revenue as well as on the cost side. And the revenue side in particular, you know, it's things like customer acquisition, customer engagement.

I think all those things, once again, it just broadens companies' ability to reach out, to touch, to engage, and to pull in, which I think is quite fascinating. And then certainly, once again, on the cost optimization side, whether that's sales and marketing, whether that's procurement, supply chain management, et cetera, all of which I think are quite fascinating spaces.

And we'll add one on the cost optimization in terms of coding. Right now, I mean, that's one that we're seeing that a lot of the code is being developed, but still signed off by engineers, right? And I think that it's allowing, again, faster speed, which then leads to this faster return on investment. So it's less about jobs going away. It's more around moving faster and the return coming faster, which I think is coming to that point of the top line and the bottom line actually growing and

and reducing in tandem. In fact, I think I saw a news headline. Sundar announced that probably 30% of the new code was... 25%. 25% of the new code was driven by AI. Yeah. Which is very cool. I would believe that because I did an enterprise use case, a project that was nine months, and it took me three weeks to replicate it. Oh, my goodness. Just with a prompt. Yeah. With a couple of prompts because I remember the entire product myself. So I was like, okay, I could...

And then I try to put it together, and it actually works on that. Now, I'm going to ask this question first. I will start off with Wai Hong. What is the one question that you wish more people would ask you about the report? WANG HUI: Well, with my investor hat on, I would say I love people to ask how they can collaboratively help drive the exit environment for Southeast Asia. MARK MANDEL: So I'm going to ask you that question now.

So once again, I think if you look at all the three things that I mentioned earlier with regards to valuation expectations in terms of monetization, path to profitability, I think those are check, check, check right now. The exit pathways, I think, are dependent upon those first three. And I think the fact that we've made progress, for me, bodes very well. I think that's point number one.

Secondly, I think there still needs to be good engagement around, look, investors are here to make money at the end of the day. I think that's the basic premise of why we invest. And we can't make money if you cannot sell. So the exits are critical. So private pathways, I suspect that you'll start to see a lot more private secondary sales, sort of fund-to-fund sales, if you will, between life cycles and life stages of companies.

But the public markets, I think, is one where there needs to be much more deeper engagement. I think there's been some good progress on that front. You've seen collaboration between the SGX and Thailand's SET, as an example, to have depository receipt linkages to help enhance liquidity across both these exchanges. You've seen regulators, for instance, in Malaysia that have actually done a lot of work to shorten the approval timelines for IPOs. I'd love to see some of these conversations and actions continue.

Yeah, I think the DPI conversation is actually on top of a lot of investors that I talk to even on the podcast. Sam, what about you? What's that one question that you wish people would ask? Well, there's always this assumption that we're adding fewer internet users or new internet consumers every year. Yeah, because we went through this incredibly fast phase of growth. So now we're not growing as fast as

But let's not diminish just how many new internet consumers are still coming online in this part of the world. And that's what is driving a big chunk of the digital economy right now. And it links to this like video commerce, right? What's happening with video commerce? We're reaching new geographies, new spaces, and we're actually, we are empowering SMBs and small businesses through video commerce, right? That's what I think is excellent around the platforms that are being developed

which is allowing us to get into, you know, outside of the metros. So we're seeing that growth, right, in sectors that, you know, Florian mentioned that, you know, it's not just beauty. It's not just beauty products that people are buying on video. It's across the board. And that interest and excitement is literally

leading to small businesses being able to take advantage of this. I think sometimes there's a belief that small businesses are getting disintermediated, but I would argue the way that various platforms have been set up is actually empowering and helping. And so I'm incredibly excited, but I get perturbed when people assume that because things aren't growing as fast as they did during COVID, that things aren't as exciting as they used to be. Mm-hmm.

How about you, Florian? The one question. Yeah, I have a similar semantic point, which is I think I keep being a bit frustrated with people not realizing the potential of Southeast Asia or putting it down in a kind of a global hierarchy as being kind of not performing at the level it should be. I actually think it's been an amazing kind of space for the digital economy. I mean, just things like the e-commerce GMB in this part of the world still dwarfs the e-commerce GMB of India.

Now, it's going to be a long way to get to China levels, but we actually kind of have come a long way in kind of adoption and penetration. This is a fairly evolved part of the global economy, kind of this GDP per capita that is now kind of fitting for many countries, middle income levels, continues to be on a high growth trajectory, benefits from revival of manufacturing and a recent boom of data center investments. So I'm actually long-term extremely bullish on Southeast Asia. And again, as a group, I think we'd love to kind of

put it a bit more on the global map as a great kind of area for investment growth. Just to drive that point home, just to reiterate the numbers that Florian mentioned earlier, double-digit GMV growth, double-digit revenue growth, higher double-digit profit growth. Those are in a period of time where there's a lot of global uncertainty. There have been a lot of challenges, significantly higher interest rates across the market. I think those are very promising numbers. You know, it's really interesting. Before this report,

everyone's report is about resetting expectations. When I read this report, I was like, no, I don't think the expectations need to be reset. I think it's just to have the patience to see growth. So, and that comes to my traditional closing question. What is the outlook and what success would mean in your perspective for Southeast Asia as a region in the next decade? I think the fact that profitability and growth don't come at the expense of each other.

That's what we're seeing. And I think that digital businesses in this region have done a tremendous job and this will continue. I have no doubt that this will continue. So what does this mean? It means that we will see the fundamentals continue, but we'll see more digital inclusion as a result of it. I think that's been a theme over the years that we talked about the need for inclusion. And I think we're at a moment in time where you're seeing the practices and the regulation is supportive.

You're seeing businesses become more efficient, just allowing them to expand into new areas. You're also seeing the consumer savviness of this region is going to play out. And that is going to lead to new models that haven't existed elsewhere. And video commerce being that one, I think just, but it could lead to the digital inclusion that we've always wanted. Well, if I had one thing, the digital economy in this part of the world will kind of do well at various degrees of level that we've put some takes, but

The one success metric I wish that we could really see five to 10 years down the road is a deeper level of regional integration. And this is really ASEAN-level collaboration. This part of the world will never be the European Union, but at the end of the day, kind of this part of the world wins or loses together. And governments coming together, kind of this kind of cross-country payment rails,

that are coming up, integration, different sectors, that would be a huge win for Southeast Asia and also help us put the region more on the global radar, which then builds champions that are kind of going beyond those shores and punch above their weight globally as well.

You have the last word. I think I began this conversation by saying that the co-authors of the report have quite optimism about the future. But I would also say that if you distill what we've said today, we are firmly confident in the long-term potential of Southeast Asia's digital economy. And so that we're pretty excited about. I think the strides that we made in terms of achieving profitability or driving towards a path to profitability have been really encouraging to see.

I think there remains to be a little bit of work yet to be done around driving exits, as we mentioned. AI is going to be a massive tool to allow the region to leapfrog and supercharge that digital economy. And I think for me, success, in addition to greater regional cooperation, certainly is the availability of affordable and effective digital solutions to both consumers as well as companies.

And I think for us to get there, obviously, we also need to ensure that our workforce and our people, their literacy is up and they are educated, they're trained, retrained, upskilled to allow them to access that and to benefit from that growth so that every generation prospers.

With that, we actually ran a very good conversation for the ninth year of the Economy Southeast Asia Report for 2024. So we overestimate what we could achieve in a year, but we underestimate what we could achieve in a decade. Next year is the 10th year. I would definitely would like to come back here and have this conversation with you again to see what 2025 is going to look like. Many thanks for watching this. And definitely we will also put links to the report and you should go and dive deep and see what the new digital economy landscape for Southeast Asia is going to be.

Thank you very much. Thank you. Thank you.