Southeast Asia’s digital economy is on track to surpass US$300 billion in gross merchandise value ( GMV ) by 2025, 1.5 times the inaugural forecast 10 years ago, with revenues forecast to hit US$135 billion, a new report finds.

As the world’s fifth-largest economy with a population of over 680 million, Southeast Asia has undergone a remarkable digital transformation over the past decade. Today, three in five people in the region shop online, and over 60% of all payments are digital, according to the 10th edition of the annual e-Conomy SEA report, From Digital Decade to AI Reality: Accelerating the Future in Asean, released by Google, Temasek, and Bain & Company.

E-commerce is picking up, with GMV and revenue projected to reach US$185 billion and US$41 billion, respectively, in 2025. This acceleration is driven by two key factors: the significant economies of scale of leading platforms, which create distinct competitive advantages, and the rapid expansion of video commerce, the report says.

Video commerce now accounts for approximately 25% of total GMV. This trend is fuelled by a high volume of lower-value transactions, the influence of trusted local creators, and seamless social-to-e-commerce integrations that convert user attention into sales with minimal friction.

Sustainable business models

Meanwhile, most food delivery platforms are now profitable or are approaching profitability by building more sustainable business models, according to the report. They have made significant progress in reducing their cost to serve through optimized logistics and streamlined operations in key metro areas. Food delivery GMV is projected to reach US$23 billion, with revenue nearing US$2.4 billion in 2025. The segment is diversifying its earnings with advertising revenue that is surging 60-90% year-on-year, as well as commissions from dine-in vouchers, loyalty subscriptions, and cloud kitchens.

In transport, growth comes from firms offering tiered services and subscription bundles, while in-app ads provide an additional revenue stream. Projections show GMV reaching US$11.5 billion and revenue climbing to US$1.9 billion in 2025

Online travel also continues to grow, with GMV projected to hit US$51 billion and revenue set to reach US$24 billion in 2025, fuelled by high airfares and accommodation rates. Indonesia, Malaysia, and Vietnam have boosted arrivals from China and India by expanding visa-free or e-visa schemes, recording double-digit growth in total arrivals in the first half of 2025. Meanwhile, Japan is solidifying its status as a top destination for Southeast Asian travellers, while China is rapidly gaining ground.

Online media, meanwhile, is on track to hit $34 billion in GMV in 2025, the report says. Advertising growth ( 16% YoY ) is fuelled by the rise of retail media networks, increasing maturity of video commerce, and AI-powered ad formats. Gaming ( 6% ) continues to expand its user base, particularly in Indonesia. Growth of video ( 15% ) and music ( 14% ) segments continues, albeit at a slower pace than their 2024 peaks. 

According to the report, digital financial services ( DFS ) is swiftly maturing beyond payments. Financial inclusion is expanding through embedded lending solutions, targeting underserved segments and greater regional connectivity and adoption. Ten Southeast Asian countries are now using national unified QR systems, and eight nations have enabled cross-border QR interoperability. DFS growth is fuelled by digital lending, where ecosystem players leverage in-app data for underwriting, and a surging digital wealth segment, where several platforms now exceed US$1 billion in assets under management for six Southeast Asian markets.

Cautious uptick

Private funding is up 15% YoY to around US$8 billion, driven by investors focusing on late-stage deals, with the DFS sector accounting for about half of the total deal value. The increase in late-stage investments, the largest since the second half of 2023, has been driven by both private equity activity and corporate investments. While early-stage funding continues to contract, growth-stage deployment stabilized YoY compared to H1’24.  

The number of growth stage investments fell YoY, but the average deal size of growth-stage investments has increased, showing discipline and greater concentration of capital into higher-quality businesses. Funding continues to diversify into nascent sectors, particularly software and services. A majority of investors expect funding to increase in Singapore, Vietnam, and Malaysia, with a particular emphasis on software and services, as well as AI and deep tech.

This cautious uptick is underpinned by three key enablers: realistic entry valuations, which have largely settled at sustainable levels; proven monetization models, where revenue growth keeps pace with GMV; and a clearer path to profitability for established digital players. The focus now is shifting to the fourth enabler – dependable exit pathways – which is showing positive signs and healthy IPO pipeline in the region. 

AI transformation

Southeast Asia is rapidly positioning itself at the forefront of the global AI transformation, driven by a thriving ecosystem of adopters, innovative start-ups, and major investors, the report says.

This transformation is already part of everyday life in the region, with consumer interest in AI topics three times higher than the global average. Five countries from the region – Singapore, Brunei, the Philippines, Indonesia, and Malaysia – already rank among the world’s top 20 for interest in multimodal AI. Three out of four users say AI-powered tools have helped them discover content and make tasks easier, while nearly half ( 45% ) expect to save time on research and make decisions faster. 

The region's workforce is seizing the AI opportunity and actively developing their skills. Seventy-nine percent of workers reported learning to use AI, and 43% indicated that they use it both personally and professionally. 

With over 4,600 megawatts of new capacity planned, the region’s data centre capacity is set to grow by 180% – faster than the 120% growth projected for the rest of Asia-Pacific.

AI is a bright spot for investors in the region. Over the past 12 months, more than US$2.3 billion has been invested in the region's over 680 AI start-ups, accounting for over 30% of private funding value in the first half of 2025. This momentum is further fuelled by major global players choosing the region as a new hotspot for cloud and data centre investments. 

Looking ahead, Southeast Asia’s growth in the next decade will be bolstered by AI acceleration, revival of capital markets, and deeper cross-regional collaboration, according to the report.