A recent comprehensive study examining the economic landscape of Southeast Asia has shed light on the growing prominence of fintech investments in the region. The study, which encompassed Singapore, Indonesia, the Philippines, Vietnam, Malaysia, Thailand, Myanmar, and Brunei, underscores the remarkable potential of fintech to drive economic growth in this dynamic part of the world.
The research, conducted by a team of analysts, began by evaluating the share of direct investment in the GDP of SEA countries. Notably, Singapore emerged as the standout performer in this regard, with the proportion of direct investment in its GDP reaching an impressive 41.05% in 2022. Brunei followed closely behind at 22.36%, with Myanmar at 11.31% and Malaysia at 6.47%. The regional average for SEA stood at 8.44%. Analysts attributed these figures to varying economic performance indicators, including GDP per capita, R&D intensity, and labor productivity.
Intriguingly, the study also delved into the share of fintech in the volume of direct investments within SEA, revealing its growing significance. Indonesia led the pack with a substantial 13.52% share, while Singapore registered 2.71%. Experts from UnaFinancial explained that Singapore’s pioneering fintech development and digitalization initiatives have positioned it as the regional leader, although Indonesia’s enormous population size is propelling it to rapidly catch up.
Perhaps most strikingly, Singapore also exhibited the most pronounced impact of fintech on GDP growth. In 2022, fintech investments accounted for 1.11% of the country’s GDP, a figure significantly higher than the SEA region’s average of 0.32% and the global average of 0.25%.
Looking ahead, a forecast based on the vector error correction model indicates that by 2027, the share of fintech investments in SEA’s GDP could surge by a staggering fivefold to reach 1.65%. Singapore is expected to maintain its lead, with fintech investments accounting for 3.56% of its GDP, a remarkable increase from the current 1.11%. Vietnam is also anticipated to experience substantial growth, reaching 2.42% (+2.27%), followed closely by Thailand at 2.40% (+2.19%). Indonesia is projected to rise to 1.15% (+0.86%), the Philippines to 0.31% (+0.18%), Malaysia to 0.26% (+0.16%), Myanmar to 0.20% (+0.20%), and Brunei to 0.03% (+0.03%). Globally, the indicator is expected to reach 1.07% (+0.82%).
Experts are optimistic about the outlook for fintech investments in Southeast Asia, forecasting a substantial increase in returns on investment over the next five years. This upward trajectory is set to consolidate fintech’s position as a key driver of economic growth in the region.
In conclusion, Southeast Asia’s burgeoning fintech sector, led by Singapore and bolstered by impressive regional growth, is poised to reshape the economic landscape, potentially serving as a catalyst for robust economic expansion in the years to come. As the region embraces digital financial services, the world will be watching closely to witness this transformative journey unfold.
