Though e-commerce remains underdeveloped in Southeast Asia, it saw continuous growth especially in countries like Singapore, the Philippines, Malaysia and Indonesia. A study by Matthew Zito, Dezan Shira & Associates stated that: “Payment systems are by far the most common impediment to e-commerce growth across all four markets, primarily owing to underdeveloped credit and debit card use typical of Asia more widely. The next most prevalent obstacle is internet access, which may be broken down into basic access and internet speed. While the former is spreading to every corner of ASEAN via low-priced smartphones, the latter has some catching up to do before the e-commerce market can reach its full potential. The timely removal of these obstacles will strongly determine the future of the industry in ASEAN.”12
With the significant increase in the purchasing power and the growth in gross domestic product (GDP) per capita in ASEAN since the late 1970s, income growth has remained strong since 2000, with average annual real gains of more than 5%.13 The region had 199 million internet users (32% penetration) in 2014. This figure is expected to rise to 294 million (48% penetration) within three (3) years.14 The ASEAN is also leading the world in terms of social media use.15
Despite the millions of users and increasing internet penetration, most people in the region still prefer shopping in brick and mortar than online. Less than one of six consumers from the region purchase online16 which is due to the fact that shopping in malls has become part of the routine of consumers.
Improvements on internet infrastructure should also be considered in order to maximize the potential of e-commerce in Southeast Asia. The speed of internet in ASEAN is relatively low compared to other regions but is surprisingly more expensive. The Philippines lags behind other ASEAN countries in terms of internet speed with an average of 3.6 Mbps while Singapore has 61 Mbps outspeeding even the USA (22.3 Mbps) and Japan (41.7 Mbps).
In terms of laws and regulations, ASEAN countries have individual legislations governing e-commerce but there are no laws that oversee cross-border trading and other regional e-commerce activities. Harmonizing these individual laws will promote growth, competitiveness and safeguard the areas of e-transactions, consumer protection, data protection and privacy, cybercrime, content regulation, domain names and dispute resolution, as well as cloud computing policy.17
12– Asia Briefing/DezanShira& Associates (2014, May 9). E-commerceAcross Asia: Trends and Developments 2014. Retrieved October 26, 2015, from http://www.physeon.eu/wp-content/uploads/2013/01/E-commerce-across-asia-trends-developments-2014.pdf
13– Vinayak HV, Thompson, F., &Tonby, O. (2014, May). Understanding ASEAN: Seven things you need to know. Retrieved October 26, 2015, from http://www.mckinsey.com/insights/public_sector/understanding_asean_seven_things_you_need_to_know
14– UBS. (2014, June 13). ASEAN eCommerce - Is ASEAN at an inflection point for eCommerce? Retrieved October 26, 2015, from http://simontorring.com/wp-content/uploads/UBS-report-2014.pdf
15– Overview of E-commerce in Southeast Asia. (2015, May 5). Retrieved October 26, 2015, from http://aseanup.com/overview-of-E-commerce-in-southeast-asia/
16– Olsen, G., Chua, S., Gergele, O., & Bartolucci, F. (2015). Lifting the Barriers to E-commerce in ASEAN. Retrieved October 26, 2015, from https://www.atkearney.com/documents/10192/5540871/Lifting the Barriers to E-commerce in ASEAN.pdf/d977df60-3a86-42a6-8d19-1efd92010d52
17– Review of E-commerce Legislation Harmonization in the Association of Southeast Asian Nations. (2013, August). Retrieved October 26, 2015, from http://unctad.org/en/PublicationsLibrary/dtlstict2013d1_en.pdf