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E-COMMERCE IN SOUTHEAST ASIA
Webinar starting soon...
E-COMMERCE IN SOUTHEAST ASIA
Webinar 05.05.2020
Agenda
3
Introduction Internet Economy & E-Commerce Market SEA
● Christopher Benz (CEO & Founder of Kemana.com)
● Hans-Peter Ressel (CEO & Founder of Momentum Commerce)
○ Market Overview
○ Internet Economy
○ E-Commerce Market
● Overview E-Commerce Market by Country
o Indonesia (Christopher Benz)
o Malaysia (Hans-Peter Ressel)
○ Thailand (Georg Krenn - AC Bangkok)
o Vietnam (Dietmar Schwank - AC Ho-Chi-Minh-City)
● Conclusions & Recommendations
o Christopher Benz
o Hans-Peter Ressel
o Sigmund Nemeti (AC Jakarta)
● 26% of population is younger than 15 years
● 150m SEA people will turn 15 over the next 15 years
● 10m people join the “mobile age” every year and
grow up as a digital citizen
● 570m people across 6 biggest markets in SEA (excl.
Cambodia, Laos, Myanmar)
● SEA houses some of the fastest growing markets in
the world with an average of 5% GDP growth in the
last 5 years (2% higher than rest of global economy)
● By 2030, SEA is expected to become the world’s
fourth largest economic bloc
● Very diverse region with 10 official languages and
hundreds of local dialects
4
Big, diverse and fast growing market in SEA Young demographics in SEA
Introduction Internet Economy & E-Commerce Market South Asia
Source: Google/Temasek Report E-
Commerce SEA 2019 Source: Google/Temasek Report E-
Commerce SEA 2019
● Since 2015, SEA Internet users increased from 260m
to 360m (10m in ‘19), esp. in the age group of 15-19
● Of those 360m, only 180m have started to use
services of the Internet economy
5
Fast growing Internet economy Most engaged mobile Internet region worldwide
● 10 years ago, 80% of SEA population didn’t have
internet access
● Today, TH (5:13h), ID, PH and MY are in the top 10
countries by mobile internet usage (global avg.
3:13h)
○ Social & Comms are the most engaged apps
(52% vs. 65% in ‘16)
○ Video apps / live streaming has doubled in last 3
years (20% vs. 10% in ‘16)
Introduction Internet Economy & E-Commerce Market South Asia
Source: Google/Temasek Report E-
Commerce SEA 2019
Source: Google/Temasek Report E-
Commerce SEA 2019
● e-Commerce already accounts for 38% of the SEA
Internet economy and has overtaken Online Travel;
further increase to 51% by 2025
● Active e-Commerce users have increased from 49m
to 150m in 2019
6
SEA Internet economy breakdown SEA e-Commerce market
● ID is the largest e-Commerce market in SEA, growing
12x in the last 4 years, driven by competition
between local and regional players
● Growth of e-Commerce is powered by fundamental
changes in consumer behavior and massive
investments of platforms in online shopping festivals,
in-app entertainment, seller development and
logistics infrastructure
Introduction Internet Economy & E-Commerce Market South Asia
Source: Google/Temasek Report E-
Commerce SEA 2019
Source: Google/Temasek Report E-
Commerce SEA 2019
Agenda
7
● Introduction Internet Economy & E-Commerce Market SEA
● Christopher Benz (CEO & Founder of Kemana.com)
● Hans-Peter Ressel (CEO & Founder of Momentum Commerce)
○ Market Overview
○ Internet Economy
○ E-Commerce Market
Overview E-Commerce Market by Country
o Indonesia (Christopher Benz)
o Malaysia (Hans-Peter Ressel)
○ Thailand (Georg Krenn - AC Bangkok)
o Vietnam (Dietmar Schwank - AC Ho-Chi-Minh-City)
● Conclusions & Recommendations
o Christopher Benz
o Hans-Peter Ressel
o Sigmund Nemeti (AC Jakarta)
E-COMMERCE
IN
INDONESIA
Christopher Benz
CEO & Founder of Kemana.com
9
● Indonesia has population of 272m people and half the
population is under 30 years old.
● $40bn USD internet economy in 2019. It is expected
to reach $130bn USD by 2025.
● Ecommerce market size specifically was $21bn USD
in 2019 and is expected to hit $82bn USD by the year
2025.
● Highest Ecommerce percentage growth Globally in
2019, at a 78% increase.
Indonesia - Overview Doing Business in Indonesia
E-Commerce in Indonesia
● GoJek has raised $4.5 Billion USD
● Tokopedia has raised $2.4 Billion USD
● BliBli owned and funded by Djarum
● Payment is the underlying strategy
● Ewallets play a critical role in Ecommerce
● Restrictive entry barriers for foreign companies
specifically in retail, oil and gas, medical pharma.
● 2 types of companies - Local & Foreign Owned.
Different rules for each.
● 25% corporate tax rate
● 0.1% capital gains tax
● EUR 1015 avg. monthly salary, EUR 200-300 for fresh
graduates; limited talent pool with little exposure to
international education and standards.
Massive Investment Climate
10
● Local E-Commerce is very fragmented, yet with only
a handful of dominant players
● Fashion, Home & Living & FMCG biggest categories in
terms of volumes; Electronics in terms of revenues
● Internet penetration of 64%, with 90% having some E-
commerce shopping experience
● Only 48% of population have bank accounts; 2.4%
Credit Card penetration rate
Market Environment
E-Commerce in Indonesia
● While there are strict regulations on foreign
ownership within certain industries many Niche
market opportunities still remain largely open.
● While investment has focused heavily in
marketplaces and fintech, few players have been
able to crack more specialized offerings.
● B2B for the most part is still completely open for
niche offerings and far from saturated compared to
B2C.
Niche Market Segments
● Most retail is closed through to June 1st.
● Mudik cancelled by decree across the country.
● Limited restrictions so far, with limited enforcement
by army and policy.
● Limited testing currently, resulting in very low
infection numbers.
● E-Commerce volumes are expected to increase %120+
for both April + May 2020 compared to January 2020
with strong demand surge for food delivery, sports,
personal care / FMCG, electronics.
Current Developments during Covid-19
E-COMMERCE
IN
MALAYSIA
Hans-Peter Ressel
CEO & Founder of Momentum Commerce
12
● Malaysia has a very diverse population of 32m people
and a 11bn USD internet economy (>2x vs. 2015)
which is expected to hit 26bn USD by 2025
● B2C E-Commerce market size was 3bn USD in 2019
(3x vs. 2015) and is expected to hit 11bn USD by the
year 2025
● Metropolitan areas in Klang Valley, Penang and Johor
Bahru account for >65% of the E-commerce volumes,
East Malaysia still under-indexed
Malaysia - Overview Doing Business in Malaysia
E-Commerce in Malaysia
● In 2017, Alibaba Group set up their first DFTZ (Digital
Free Trade Zone) outside of China in Malaysia at KLIA
Aeropolis (eCom park, logistics park, etc.)
● Port Klang amongst the top 15 global container ports
● Almost 1m annual cargo tonnes and 50% increase
expected in the next 10 years
● 20 out of top 25 freight forwarders with a base in MY
● Big cross-border market with ca. 50% of the E-
Commerce volumes being sourced from China
● Low market entry barriers for foreign companies and
investors in most industry sectors
● Min. paid up capital RM 1; much higher for certain
industries and if work permits have to be given out
● 24% corporate tax rate
● 0% capital gains tax
● EUR 900 avg. monthly salary, EUR 550 for fresh
graduates; strong talent pool with high share of
international education
Regional Hub: KLIA Aeropolis, total of 8,548 acres
13
● Local E-Commerce is very fragmented, yet with only
a handful of dominant players
● Fashion, Home & Living & FMCG biggest categories in
terms of volumes; Electronics in terms of revenues
● Internet penetration of 81%, thereof 80% with E-
commerce shopping experience
● Only 3m unbanked people; still 9m underbanked
Market Environment
E-Commerce in Malaysia
● In general different duties & taxes based on HS code
● De minimis rate (price threshold below which no
taxes are charged) is RM 500 / EUR 106 for B2C air
freight
● Above RM 500: SST 5-10%, Import duties 0-25%
● For products on prohibited / restricted list, addtl.
permits, documents and licenses may be required
● Very strict regulation on food & fashion products to
be “halal” due to predominantly muslim population
Cross-border Logistics
● Very strict MCO in four different waves so far, with
limited mobility (<10km away from home) and strong
enforcement by army and policy
● MCO starting to be lifted from May 4th onwards
almost across all industries with strict SOP’s in place
● E-Commerce volumes doubled in April 2020
compared to January 2020 with strong demand surge
for personal care / FMCG products & food deliveries
● Little government support for startups / companies
Current Developments during Covid-19
E-COMMERCE
IN
THAILAND
Georg Krenn
AC Bangkok
Thailand - Status Quo:• Thailand 4.0 scheme drives digital economy/e-commerce• Tech-Savvy young generation, majority of Thais is Gen Y• 85 % of population active internet users• 75 % of population active social media users• M-Commerce dominates in Thailand: 70 % browse with
their smart phones• Thais are still resistant towards digital payment,
Cash/Collection on Delivery (COD) still dominating (>50 %)
Constraints:• E-Commerce platforms are still not very B2B sales focused,
marketplaces are mostly B2B2C (Alibaba dominating)• Average order value comparatively low• IP infringements hard to prevent and pursue• Cross-border sales not feasible directly from Austria• Legal requirements for setup challenging• Import of specific goods restricted or prohibited; import
license required for most FMCG goods, medicine,
cosmetics, food supplements, cigarettes and alcohol
Thailand‘s E-Commerce in detail:• Total value of E-Commerce 2019: approx. 16 billion USD;
thereof 55 % B2B, 27 % B2C, 18 % B2G• Thailand’s B2C sales leading in value in SE-Asia (2019)• Foreign investors (mainly Alibaba) investing heavily in
infrastructure (distribution centers)
• Leading product categories sold online (2018):
Mobile & Electronics (25 %), Fashion (15 %), Beauty (12 %);
Lifestyle & Hobby (11 %), Health & Wellness (8 %)
Current developments with regard to COVID-19:• COVID-19 pandemic makes e-commerce mainstream,
100 % rise in Lazada sales (mid-March to mid-April ‘20)• Decline in sales of high value products (IT gadgets,
smartphone), shift to every day products (clothing, food
supplements, FMCG)• Lazada added 26,000 new merchants in March 2020,
bringing the total number to 200,000 sellers• Online Payments finally rising in numbers• New focus on offline-to-online programs (O2O)
15
MARKET OVERVIEW THAILAND
E-Commerce in Thailand
16
• E-Marketplaces: Lazada (#1), Shopee (#2), JD.Central (#3)
• Brand Webstores: E.g. Samsung, Microsoft, Apple, Kiehl’s
NEW: E-Marketplaces offer special platforms for leading
brands: LazMall, ShopeeMall and JD Mall
• E-Retailer: E.g. Advice, Power Buy, Central Department
Store, Watsons, JIB, Makro Click, HomePro
• Social Commerce: Facebook, YouTube, Line, Instagram
Source: Bangkok Post, E-commerce
set to build on successes, 27.01.2020
DOMINATING E-SALES CHANNELS IN THAILAND
E-Commerce in Thailand
• Cross-border E-Commerce is possible
• Chinese sellers/products dominate cross-border sales
• Alibaba sets up its distribution center in the free-trade
zone of the Eastern Economic Corridor; products will be
kept without paying import tax
• Average order value:
- 738 baht for local products
- 350 baht for cross-border products
Cross border e-Commerce:
• Express consignment goods with a value below
1,500 Baht: import duty & tax exemption
• Goods exceeding 1,500 Baht: Customs declarations
necessary (income duty & tax to be paid)
• New e-commerce law currently under consideration; Law
will be aimed at taxing e-business operators which are
based outside of Thailand (sales tax)
• Generally possible for Brand Webstores & Social Media
channels, for E-Marketplaces: Negotiations are required
Opening a local online shop (Brand Webstores):• Set up of a corporate/local subsidiary• Register with the Department of Business Development• Obtain an e-license• Register with the OCPB (Consumer Protection)• Obtain a Foreign Business License• Legal compliance with Electronic Transactions Act• New Personal Data Protection Act from 28 May 2020• Handling of customs clearance
Working with an E-commerce enabler:• E-Commerce enablers can act as a one-stop solution • Enablers may take over only specific services, e.g. import
clearance, warehousing, order fulfillment, etc.• Leading enablers in Thailand: e.g. Ascend Group,
aCommerce, Silken Asia, Seven Digital, DEALCHA• Possible for E-Marketplaces, Brand Webstores, Social Media
channels and E-Retailers
Getting listed with an E-Retailer:• E-Retailers sell a variety of brand products from their own
store (focusing on specific sectors)• Requirement to get listed with the E-Retailer first• Local partner/subsidiary for import clearance is required• Leading industry companies have their own e-retail shops• Warehousing, order fulfillment, advertising, etc. will
normally be handled directly by the e-Retailer• Growth Potential: Mobile & Gadget, Fashion, Health
17
LEGAL POSSIBILITIES TO SELL PRODUCTS ONLINE
E-Commerce in Thailand
E-COMMERCE
IN
VIETNAM
Dietmar Schwank
AC Ho-Chi-Minh-City
19
● 96 mio. inhabitants, GDP growth 3-4 %
● Large, young and technology-oriented pop.
● e-commerce volume to rise from 5 bn USD in
2019 to 23 bn USD in 2025
● CAGR 35 %, low penetrance (1% of FCMG)
● Booming convenience solutions, esp. for food,
fashion, electronics, furniture, toys, etc.
● Popularity of foreign e-commerce websites
● Rising B2B e-commerce (Alibaba dominant)
Vietnam - Overview Doing Business in Vietnam
E-Commerce in Vietnam
● Poor legal guidelines for B2C cross border e-
commerce, new decree being drafted
● Challenges in tax administration, esp. with
Foreign Contractor’s Withholding Tax
● Difficulty of capital transfer abroad
● New cybersecurity law leads to weak data
protection
● Favourable FTA framework and legislation
● Investor-friendly environment
● Uncertainty in NTBs and economic policy
● Set-up of WFOE and sales companies possible
● 20% corporate tax rate
● Double-taxation agreement in force
● Relatively low wages (minimum salary around
USD 200)
● Limited talent pool outside the major cities
Legal framework
● Low trust of consumers in local platforms due to
poor product quality, discrepancy between what
is advertised vs. delivered
● Popularity of COD and avid saving mentality
● Risk of infringement of IP rights
● Inadequate technology infrastructure
● High shipping costs and traffic congestion
● Customers in rural areas are difficult to reach
Constraints
20
● E-Marketplaces
Shopee #1, followed by 3 local platforms
● Social Commerce
Facebook, Zalo, Instagram, Tiktok
● Fast delivery services
GrabFood, GoViet, Now.vn
● e-wallets
Momo, ZaloPay,…
Market Environment
E-Commerce in Vietnam
● Heated competition (local vs. foreign
players)
● Massive foreign investment in the sector
● Infrastructure investment and fierce
competition in logistics and delivery services
● Focus on platform profitability, not growth
● Digital payments on the rise
Trends
● Vietnam performed well in the crisis and will not
hit recession in 2020
● Shopping centres and retail reopened again, but
traffic there remains little so far
● Demand surge for food delivery, sports, personal
care / FMCG, electronics during the next months
● Digital transformation accelerates in the medium
run
Current Developments during Covid-19
Agenda
21
● Introduction Internet Economy & E-Commerce Market SEA
● Christopher Benz (CEO & Founder of Kemana.com)
● Hans-Peter Ressel (CEO & Founder of Momentum Commerce)
○ Market Overview
○ Internet Economy
○ E-Commerce Market
● Overview E-Commerce Market by Country
o Indonesia (Christopher Benz)
o Malaysia (Hans-Peter Ressel)
○ Thailand (Georg Krenn - AC Bangkok)
o Vietnam (Dietmar Schwank - AC Ho-Chi-Minh-City)
Conclusions & Recommendations
o Christopher Benz
o Hans-Peter Ressel
o Sigmund Nemeti (AC Jakarta)
● Consumer Trust
○ Significantly improved consumer trust for e-Commerce, Ride
Hailing, Media, Travel; still nascent for Education, Healthcare
○ Internet economy companies have become “household brands”
● Internet Access
○ Efforts by tech and telco companies have made fast Internet
access more reliable and affordable
○ Music, Video, Social apps bundled in zero-rated plans; optimized
apps for low data usage and patchy connectivity
● Logistics
○ Leading Logistics providers can deliver nationwide and partner up with e-Commerce / Ride Hailing players
○ e-Commerce players started to provide next-day and same-day deliveries
● Digital Payments
○ Growing user and merchant adoption both online and offline
○ Loyalty and rewards programs emerge as key drivers of usage
● Talent
○ Still a challenge despite efforts to “fill the gap” (digital upskilling, exp. managers from other industries)
22
Ecosystem challenges are being resolved
Conclusions
Source: Google/Temasek Report E-
Commerce SEA 2019
● Funding environment remains healthy (pre Covid-19) despite global headwinds
with a total of 37bn USD raised since 2015
○ e-Commerce and Ride Hailing have raised 2 out of 3 dollars
○ 24bn USD were invested in 11 Unicorns (valuation > 1bn USD)
○ 5bn USD were invested in 70 “Aspiring Unicorns” (valuation 100m - 1bn USD)
○ 7bn USD were invested in 3,000 Startups (valuation <100m)
○ Average deal size has doubled over the last 3 years (Seed: 0.5m->0.8m;
Series A: 2m->4m; Series B: 8m->16m)
● VCs are raising larger growth funds and shift their focus to SEA, PE funds are investing in earlier series
23
Funding in SEA Internet economy
Conclusions
Source: Google/Temasek Report E-
Commerce SEA 2019
Source: Google/Temasek Report E-
Commerce SEA 2019
24
SEA Internet Economy Metro vs. Rural
Conclusions
Source: Google/Temasek Report E-
Commerce SEA 2019
Source: Google/Temasek Report E-
Commerce SEA 2019
Source: Google/Temasek Report E-Commerce SEA 2019
Recommendations for the region
● booming internet economy in SEA (significant contribution of E-Commerce)
● high economic growth, big market ( > 650 million consumers)
● great potential for European products
● big and fast-growing middle-class (young, tech-savy, open-minded towards digitalization)
● small number of European investors; a lot of capital from private and institutional investors involved, international funds starting to join
● high necessity of E-Commerce development (further potential in rural areas)
● local partner needed (importer, E-Commerce enabler, local/regional warehousing, distribution partner); sustainable business relationship
● build presence, SEA very dynamic and promising
● patience with the legal framework required
● new: Digitalisierungsscheck
25
Q & A session
Any questions?
Please write your questions in the question box.
If we do not manage to answer your question, we will directly
contact you after the webinar!
E-Commerce in Southeast Asia
26
LET‘S STAY IN TOUCH
Vienna Headquarters:
Matthias Grabner | AUSSENWIRTSCHAFT Technology
T +43 5 90 900 3624
W www.wko.at/aussenwirtschaft/technology
Indonesia:
Sigmund Nemeti | AußenwirtschaftsCenter Jakarta
T +62 21 2550 0186 | E [email protected]
W www.wko.at/aussenwirtschaft/id
Thailand:
Günther Sucher | AußenwirtschaftsCenter Bangkok
T +66 2 0385 885 | E [email protected]
W www.wko.at/aussenwirtschaft/th
Malaysia:
Reinhart Zimmermann | AußenwirtschaftsCenter Kuala Lumpur
T +60 3 20 32 28 30 | E [email protected]
W www.wko.at/aussenwirtschaft/my
Vietnam:
Dietmar Schwank | AußenwirtschaftsCenter Ho Chi Minh City
T +84 28 7109 9781 | E [email protected]
W www.wko.at/aussenwirtschaft/vn
27
Christopher Benz | CEO & Founder Kemana.com
Hans-Peter Ressel | CEO & Founder Momentum Commerce
Webinar
E-COMMERCE IN SOUTHEAST ASIA
THANK YOU FOR YOUR ATTENTION!