Tech spending in Thailand and four other Southeast Asian economies is projected to grow 7% this year to approach US$47 billion, despite a number of challenges such as fragile post-pandemic supply chains, according to UK-based research and advisory firm Forrester.
In a recent report entitled Asia Pacific Tech Market Forecast 2022-27, Forrester said Southeast Asia is a major growth engine for a digital economy that is projected to reach $330 billion by 2025.
The region's digital consumption is propped up by a large millennial and Gen Z population, favourable policy environments, and investment pouring in from tech giants which is fuelling a wave of digital transformation in emerging Asean markets, said Leslie Joseph, principal analyst at Forrester.
Tech spending in Singapore is expected to expand 4.6% this year to hit S$22.2 billion. Dubbed the Silicon Valley of Asia, the city-state continues to be a stable regional hub for technology talent and innovation, with the government allocating high-level budgets toward innovation initiatives, he added.
The five major Southeast Asian economies -- Indonesia, the Philippines, Thailand, Vietnam and Malaysia -- will see tech spending approach $47 billion, with Indonesia, Vietnam and the Philippines having the highest growth rates of 9.3%, 9.3%, and 8.1%, respectively.
This year, challenges to tech spending growth include fragile post-pandemic supply chains, a shortage of science, technology and engineering workers, and questions over how quickly China can restart its economy, noted the report.
In Asia-Pacific, tech spending will remain robust this year with growth set to rise by 5.8% to $732 billion despite a softening macroeconomic environment and higher inflation. The market is projected to grow by 6.8-7.3% per year between 2024 and 2027.
"Asia-Pacific accounts for 75% of global GDP growth," said Mr Joseph. "While we anticipate Asia-Pacific tech spending growth will increase even further, it's crucial that countries and businesses invest in the right technologies to continue to benefit from growing digital and cloud infrastructure."
Forrester expects tech spending in China to grow by 7.4% to hit 1.7 trillion yuan this year. Technology innovation will play a key role in industrial modernisation, and generative AI will catalyse tech investments in all major industries.
India will post the highest growth in the region at 10.1% this year. Strong government support for ongoing digitalisation efforts will continue to impact investments in building a national digital infrastructure, driving tech spending to 3.9 trillion rupees in 2023.
Tech spending in Australia will rise to nearly A$70 billion, up 6.3% from a year earlier as renewed sustainability efforts and the local services economy will strongly influence digital growth expenditure, the report explained.
According to Forrester, 74% of growth in Asia-Pacific this year will come from software and services as regional cloud adoption increases. Software spending will continue to rise at a compound annual growth rate of 10.3% through to 2027.
