South East Asia’s Internet economy, spanning online shopping to games and advertising, will surge sixfold to about $200 billion in the next decade, according to joint research by Google Inc. and Temasek Holdings Pte.

As more consumers get online and shop from smartphones, e-commerce in the region could jump to $88 billion by 2025, a 16-fold increase, according to a report the two companies released in conjunction with a conference in Singapore.

That growth will be driven by an increase in the number of Internet users from 260 million to 480 million by 2020, according to the report.

Indonesia, the biggest economy in South East Asia, is projected to add Net users faster than any other country in the world, according to the report.

Despite such prospects, the region that also includes Malaysia, Singapore, the Philippines, Thailand and Vietnam attracted less than a fifth of the venture capital funding India received in 2014. In 2014, VC investment in Southeast Asia accounted for 0.04% of its gross domestic product. That compares with 0.15% in China, 0.25% in India and 0.3% in the U.S., according to the report.

“There’s a $200 billion opportunity in South East Asia,” Rajan Anandan, managing director of South East Asia and India at Google, told the conference. “Affordable smartphones and affordable data are really driving this revolution.”

Google and Temasek, Singapore’s state-owned investment company which invests in VC firms and startups through its unit Vertex Venture Holdings Ltd., worked together on the report, using Google’s proprietary data, Temasek’s research, as well as interviews with 59 experts.

Source: Magnitude of ASEAN’s e-commerce potential | Alex Bursak | LinkedIn