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Southeast Asia’s digital economies are set to reach $218 billion in total value of transactions this year, jumping 11% from a year ago despite global macroeconomic headwinds, a new report by Google, Temasek and Bain & Company revealed.

“Southeast Asia has weathered global macroeconomic headwinds with more resilience, compared to other regions around the world … Consumer confidence is starting to rebound in second half 2023 after falling to lower levels in first half 2023,” said the report titled e-Conomy SEA 2023.

The yearly report analyzed the five main sectors of Southeast Asia’s digital economy – e-commerce, travel, food and transport, online media and digital financial services.

The report also revealed revenue in Southeast Asia’s digital economy is expected to hit $100 billion this year, growing 1.7 times as fast as the region’s total transaction value.

This is because firms are shifting focus from “growth at all costs” to profitability, in a bid to build “healthy” businesses.

“Southeast Asia’s digital economy is really in the midst of an unprecedented pivot towards profitability. There’s now a laser-like focus on high quality revenue and monetization, which, quite frankly, is incredibly healthy,” Fock Wai Hoong, head of Southeast Asia at Temasek, said on CNBC’s “Street Signs Asia” on Wednesday.

Good news is that companies are realizing that growth at all costs isn't the best way: Temasek

The report covered six major economies: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. It did not address the populations of Brunei, Cambodia, Laos, Myanmar, East Timor and Papua New Guinea.

“Keeping the focus on the digital participation gap and resolutely removing barriers to enable more Southeast Asians to become active users of digital products and services will help the region unlock further growth in the digital decade,” Sapna Chadha, vice president at Google Southeast Asia, said in the report.

Sectors driving growth

Online businesses are moving from acquiring users at high costs, to deepening engagement with existing customers in a bid to steer focus to profitability, the report noted.

“Companies and entrepreneurs now realize that the best way to grow is not grow at all costs, and stretch this early stage mentality across a scale, but quite frankly, to transition as quickly as possible through early stage, growth stage and towards more financial sustainability,” Fock told CNBC’s JP Ong.

The report noted e-commerce platforms are focusing more on engaging high-value users, growing transaction sizes as well as looking to revenue streams such as advertising and delivery services to drive long-term growth. The sector’s gross transaction value is estimated to hit $186 billion in 2025, up from $139 billion in 2023.

Southeast Asia has borne economic headwinds 'in a very good way,' Google regional VP says

As underbanked consumers and small businesses participate in the digital economy, consumer demand has driven digital lending – which the report said comprised the majority of the $30 billion worth of revenue in digital financial services. Singapore is expected to be the biggest digital lending market in the region through 2030.

Thanks to a post-Covid recovery, online travel and transport sectors are on track to hit pre-pandemic levels by 2024, according to the report. Despite a return to in-person dining and cutting of promotions, food delivery revenue – which falls under the transport sector – hit $800 million in 2023, jumping 60% from a year ago.

Thailand is seeing “significant momentum” where online travel is the main growth driver in 2023, growing 85% year-on-year.

Dry powder still on the rise

Macro headwinds such as inflation and high cost of capital have caused the deployment of private funding to plunge to its lowest level in six years, the report noted.

Despite investors being pickier, “dry powder” increased to $15.7 billion at the end of 2022, up from $12.4 billion in 2021. The report noted the term refers to “the amount of capital that has been committed minus the amount that has been called for investment.”

“This shows that there is fuel available to propel Southeast Asia’s digital economy to the next stage of growth,” the report said.

To attract funding in this current economic climate, digital companies need to show investors that they have clear and viable paths to profitability.

Digital financial services remains the top sector where investors are deploying capital in, due to its high monetization potential.

The report also noted that nascent sectors in the region such as health tech, education tech and automotive are seeing “a growing portion of deal activity,” in a signal that “investors are diversifying portfolios.”

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De minimis trade loophole that boosted Chinese online retailers to end May 2

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De minimis trade loophole that boosted Chinese online retailers to end May 2

A driver for an independent contractor to FedEx delivers packages on Cyber Monday in New York, US, on Monday, Nov. 27, 2023.

Stephanie Keith | Bloomberg | Getty Images

President Donald Trump on Wednesday signed an executive order shutting the de minimis trade loophole, effective May 2.

Trump in February abruptly ended the de minimis trade exemption, which allows shipments worth less than $800 to enter the U.S. duty-free. The order overwhelmed U.S. Customs and Border Protection employees and caused the U.S. Postal Service to temporarily halt packages from China and Hong Kong. Within days of its announcement, Trump reversed course and delayed the cancellation of the provision.

Wednesday’s announcement, which came alongside a set of sweeping new tariffs, gives customs officials, retailers and logistics companies more time to prepare. Goods that qualify under the de minimis exemption will be subject to a duty of either 30% of their value, or $25 per item. That rate will increase to $50 per item on June 1, the White House said.

Use of the de minimis provision has exploded in recent years as shoppers flock to Chinese e-commerce companies Temu and Shein, which offer ultra-low cost apparel, electronics and other items. The U.S. Customs and Border Protection has said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.

Critics of the provision say it provides an unfair advantage to Chinese e-commerce companies and creates an influx of packages that are “subject to minimal documentation and inspection,” raising concerns around counterfeit and unsafe goods.

The Trump administration has sought to close the loophole over concerns that it facilitates shipments of fentanyl and other illicit substances on the claims that the packages are less likely to be inspected by customs agents.

Temu and Shein have taken steps to grow their operations in the U.S. as the de minimis loophole has come under greater scrutiny. After onboarding sellers with inventory in U.S. warehouses, Temu recently began steering shoppers to those items on its website, allowing it to speed up deliveries. Shein opened distribution centers in states including Illinois and California in 2022, and a supply chain hub in Seattle last year.

WATCH: President Trump signs executive orders for reciprocal tariffs

Pres. Trump signs executive orders for reciprocal tariffs

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Apple leads a drop in tech stocks after Trump tariff announcement

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 Apple leads a drop in tech stocks after Trump tariff announcement

Apple CEO Tim Cook, center, watches during the inauguration ceremonies for President Donald Trump, right, and Vice President JD Vance, left, in the rotunda of the U.S. Capitol in Washington, Jan. 20, 2025.

Shawn Thew | Afp | Getty Images

Apple slid more than 6% in late trading Wednesday and led a broader decline in tech stocks after President Donald Trump announced new tariffs of between 10% and 49% on imported goods.

The majority of Apple’s revenue comes from devices manufactured primarily in China and a handful of other Asian countries. Nvidia, which manufactures new chips in Taiwan and assembles its artificial intelligence systems in Mexico and elsewhere, fell about 4%, while electric vehicle company Tesla dropped 4.5%.

Across the rest of the megacap universe, Alphabet, Amazon and Meta all dropped between 2.5% and 5%, and Microsoft was down by almost 2%.

If Apple’s postmarket loss is matched in regular trading Thursday, it would be the steepest decline for the stock since September 2020.

Trump on Wednesday afternoon said the new taxes on imported goods would be a “declaration of economic independence” for the country. He announced a 10% blanket tariff on all imports, and higher duties for specific countries, including 34% for China, 20% for European nations, and 24% for Japanese imports, based on what tariffs they charge on U.S. exports, Trump said.

“We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers,” Trump said during his speech. “Ultimately, more production at home will mean stronger competition and lower prices for consumers.”

Stocks broadly got hit by Trump’s announcements. An exchange-traded fund tracking the S&P 500 slid 2.8%, while an ETF following the Nasdaq 100 lost more than 3%.

During his speech, Trump praised Apple, Meta, and Nvidia for spending money and investing in the United States.

“Apple is going to spend $500 billion, they never spent money like that here,” Trump said. “They’re going to build their plants here.”

The Nasdaq just wrapped up its worst quarter since 2022, dropping 10% in the first three months of the year, though the tech-heavy index rose in each of the first two days of the second quarter.

WATCH: President Trump signs executive orders for reciprocal tariffs

Pres. Trump signs executive orders for reciprocal tariffs

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Amazon submits bid for TikTok as ban deadline nears

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Amazon submits bid for TikTok as ban deadline nears

Guests including Mark Zuckerberg, Lauren Sanchez, Jeff Bezos, Sundar Pichai and Elon Musk attend the Inauguration of Donald J. Trump in the U.S. Capitol Rotunda on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States. 

Julia Demaree Nikhinson | Getty Images

Amazon submitted a bid to the White House to purchase the social media app TikTok from its Chinese owners, CNBC has confirmed.

The company sent its proposal in a letter this week to Vice President JD Vance and Commerce Secretary Howard Lutnick, according to a source familiar with the matter who asked not to be named because the discussions are confidential. The parties aren’t treating the bid seriously, however, given that it was submitted just days before a deadline staving off a U.S. ban is set to expire, the person said.

Amazon declined to comment.

The e-commerce company’s offer, which was first reported by The New York Times, comes as TikTok’s fate in the U.S. is up in the air. The short-form video app faces another potential shutdown in the U.S. on April 5 if ByteDance, its parent company, can’t reach a deal to divest TikTok’s American operations. Lawmakers passed a bill last year setting a Jan. 19 deadline for the sale, but Trump signed an executive order granting a 75-day extension for a potential deal.

Trump could announce a decision on TikTok’s fate in the U.S. as soon as Wednesday, sources familiar with the situation told CNBC’s David Faber. Mobile technology company AppLovin has also made a bid for TikTok, Faber reported separately, citing sources familiar with the matter.

TikTok has emerged as a major hub for e-commerce as it has poured money into growing its online marketplace, called TikTok Shop. TikTok’s lucrative marketplace, coupled with the app’s more than 170 million users, could be an attractive asset for Amazon. Following TikTok’s success, Amazon launched and then shuttered a short-form video service of its own.

Last August, the two companies formed a partnership that allowed TikTok users to link their account with Amazon and make purchases from the site without leaving the app. The deal attracted scrutiny from lawmakers who were concerned about its potential national security risks.

WATCH: How TikTok Shop is beating Amazon and Temu in social shopping

How TikTok Shop Became The Fastest Growing Social Media Shopping Platform

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