SEA fintech sector shows promising outlook

A recent study by UnaFinancial revealed that Singapore is set to lead the region in fintech investment, contributing a substantial 3.56% of the Southeast Asian gross domestic product (GDP) by 2027. 

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This impressive projection is the highest contribution among the eight Southeast Asian nations analysed in the study.

The UnaFinancial study focused its attention on eight Southeast Asian countries, including Singapore, Indonesia, the Philippines, Vietnam, Malaysia, Thailand, Myanmar, and Brunei. 

Initially, the research assessed the share of direct fintech investment as a percentage of GDP in these nations. It used a vector error correction model for forecasting. 

The study suggested that by 2027, fintech investments could surge fivefold, constituting a significant 1.65% share of the entire GDP across Southeast Asia.

Singapore took the lead in this fintech revolution, with its fintech investment projected to reach 3.56% of GDP by 2027, showcasing a remarkable growth rate of 2.45%. Following Singapore are Vietnam (2.42%, +2.27%), Thailand (2.40%, +2.19%), Indonesia (1.15%, +0.86%), the Philippines (0.31%, +0.18%), Malaysia (0.26%, +0.16%), Myanmar (0.20%, +0.20%), and Brunei (0.03%, +0.03%).

On a global scale, the fintech investment indicator is expected to reach 1.07% by 2027, showing an increase of 0.82%.

Experts in the field expect that over the next five years, the return on investment in Southeast Asia’s fintech sector will continue to rise, solidifying its status as a key driver of economic growth in the region.

Singapore stands out with its impressive investment attractiveness, reaching 41.05% in 2022, ahead of Brunei (22.36%), Myanmar (11.31%), Malaysia (6.47%), and other countries. The overall figure for Southeast Asia’s fintech investment attractiveness averages at 8.44%. 

Analysts noted a strong link between this distribution and economic performance indicators such as GDP per capita, labour productivity, and research and development (R&D) intensity.

Examining the share of fintech in direct investments across Southeast Asia, it accounts for 3.82%, with Indonesia leading the way at 13.52%, closely followed by Singapore at 2.71%.

UnaFinancial’s experts attribute Singapore’s robust fintech development to favourable conditions, while Indonesia’s sizable population presents abundant growth opportunities. 

Singapore also stands out for the significant impact of fintech on its GDP growth, with fintech investments contributing 1.11% to its GDP in 2022, outpacing the 0.32% seen in Southeast Asia and the 0.25% figure observed worldwide.

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