e-ConomySEA 2024 report: Malaysia’s digital economy to hit US$31 billion in 2024

Online travel led sector growth with a 19 % increase, reaching US$ 8B GMV
E-commerce, M’sia’s leading online source grew 17 % to US$ 16B GMV in 2024

Malaysia’s digital economy is set to reach US$ 31 billion ( RM138 billion ) in Gross Merchandise Value ( GMV) in 2024, marking a 16 % increase from 2023, according to the latest e-Conomy SEA 2024 report by Google, Temasek, and Bain &amp, Company.

Good growth patterns in all modern sector are present.

Malaysia’s online business continues its development towards success while sustaining double-digit GMV development. The report shows deeper online membership, successful crowdfunding strategies, and healing in pandemic-impacted sectors as key drivers of this growth.

Online travel: Posting the fastest GMV growth among sectors, online travel expanded by 19 % year-on-year to US$ 8 billion ( RM36 billion ) GMV. In 2024, Malaysia’s strong growth in global tourism is anticipated to exceed pre-pandemic levels. Spending on international travel has increased 330 % since 2020, with the Asia-Pacific place accounting for 38 % of outgoing expenses. Visitors from Southeast Asia ( SEA ) represent nearly half ( 49 % ) of Malaysia’s inbound travel spend, driven by enhanced air connectivity, strategic airline partnerships, and favourable exchange rates.

]RM1 = US$ 0.22]

The growth of Malaysia’s online media industry has been consistent, with its GMV projected to increase 10 % from$ 3 billion in 2023 to$ 4 billion in 2024, as a result of the growing demand for digital content, video games, and streaming services.
As a number of Malaysia’s online banks provide powerful features and are simple to accessibility, contributing to the rapid expansion of the DFS landscape, online financial services is on a roll. Digital wealth is expected to grow significantly, reaching an assets under management ( AUM) of about$ 80 billion by 2030, while digital payments are anticipated to increase by 5 % from 2023 to$ 172 billion by 2024.

Malaysia to capture the AI option

Artificial Intelligence ( AI ) is reshaping Malaysia’s digital economy. The government’s commitment to responsible AI development through the Malaysia AI Roadmap 2021-2025 and the upcoming launch of the National AI Office ( NAIO ) underpins this transformation. The report identifies Malaysia as one of the top ten states globally for AI research interest, especially in training, advertising, and entertainment, with Kuala Lumpur, Putrajaya, and Selangor leading the way.

The demand for AI infrastructure may increase as more businesses use it to develop, increase efficiencies, and enhance customer experiences as well as to create new concepts. Malaysia invested$ 15 billion in AI network in H1 ’24 to meet this demand. According to the report, Malaysia’s existing data center ability is 120MW, and it anticipates an increase of 5X over the next few years.

Malaysia has seized the AI possiblity thanks to strategic activities like KL20, which will support Malaysia’s startup habitat by promoting high-tech industries, obtaining tax exemptions for foreign investments, and providing$ 1 billion in federal funding for startups in Malaysia and the location.

We want to get a local hero for modern policies that are forward-thinking and transformative, encourage a regulatory environment that encourages scientific advancement, and foster cross-border collaboration as Malaysia assumes the Asean Chairmanship next year. The e-Conomy report serves as a powerful affirmation of our efforts and is not just a report, it is a testament to Malaysia’s enormous potential, according to Gobind Singh Deo, minister of digital, who was represented by Fabian Bigar, minister of digital, at the event.

” It is a call to action for all of us – the government, the private sector, and the people of Malaysia to collaborate and realise our nation’s full digital potential. Let us seize this opportunity and together, build a digitally empowered Malaysia that is prosperous, inclusive, and sustainable”, he added.

Meanwhile, Farhan Qureshi ( pic ), country director for Google Malaysia said:” We have been seeing a consistent strong growth of Malaysia’s digital economy and this year is another strong testament of the potential of Malaysia’s digital economy. With the region’s focus on AI, it’s encouraging to see the country’s leaders are putting AI and semiconductors in the country’s priority list”.

By empowering the local workforce with AI-ready skills and tools, we at Google are committed to further supporting Malaysia’s digital economy’s growth. We are committed to keeping Malaysia at the forefront of the digital age, he added, from funding scholarships for young people to develop AI-ready skills through Google Career Certificate scholarships to deploying Google Workspace for public officers.

Amanda Chin, partner, Bain &amp, Company, noted:” Southeast Asia’s digital economy thrives on double-digit GMV and revenue growth and a surge in profitability across sectors led by key players. Likewise in Malaysia, we see a healthy digital economy driven by e-commerce, online travel and digital financial services”.

” As the country’s DFS sector embraces digital disruption, new technologies such as AI are poised to accelerate growth. Businesses must move beyond experimentation and invest in fundamental elements in order to align AI initiatives with core business objectives to address real-world issues and create tangible value, strengthen AI talent, and create scalable, adaptable infrastructure for sustained growth, she added.

Geia Lopez, head of data, insights, and international growth at Google Southeast Asia, added:” Investments in AI and the growing interest in its applications signal a bright future for Malaysia’s digital economy. To maintain this momentum and foster trust in the changing digital landscape, it is important to prioritize digital security, though.

Click here to download the report.