Outside of the United States, the Middle East is the biggest source of remittances by overseas Filipinos. In 2018, Filipinos in the region sent home US$6.6 billion in remittances, with Saudi Arabia and the UAE accounting for a whopping $4.2 billion alone.
Beyond the fees generated from the transfer of funds however, it’s worth considering whether there are other more effective ways for Gulf investors to tap into the potential of the Philippines market, by leveraging its unique proposition as a country.
Southeast Asia has emerged as a digital battleground for tech startups in recent years. For example, Singapore-based ride hailing app, Grab, which is backed by Softbank Vision Fund, Saudi Arabia’s Public Investment Fund, and Abu Dhabi’s Mubadala, has been competing head-to-head with Go-Jek, another popular ride-hailing app from Indonesia, backed by Google, Tencent, and KKR & Co.
These ride-hailing startups, with valuations hovering around or above $10 billion, have morphed into “super apps” offering financial services, food and grocery delivery, housekeeping, and even wellness services like massages. Their success and continuous growth are largely underpinned by their strong presence across Southeast Asia, marketing their products and services aggressively through mobiles to 600 million plus consumers, with a strong focus on the localization of their propositions.
Yet, despite their growing influence with consumers, there is one market where more can be done by tech giants like these– that is the Philippines. Although Grab and Go-Jek have established a presence in the Philippines market, there remains huge untapped potential to be claimed. This is particularly true in the fintech, e-commerce, services, and entertainment sectors, where no dominant startup exists thus far.
While both Grab and Go-Jek have had teething problems, and haven’t had the best ride with regulators, it’s worth approaching the Philippines market differently. For starters, Gulf investors can find solutions to similar problems that the Southeast Asian unicorns are trying to address, by tapping into the large Filipino community which exists right here in the Middle East region.
By developing a deep understanding of the Filipino market’s needs, culture, and behavior, Gulf investors can fund businesses who can put together compelling digital propositions that can first be implemented in the Gulf, followed immediately by entry into the Philippines market. This not only provides Gulf investors valuable insights into the buying patterns within the community in the Gulf, but will also help them achieve a strong advantage over digital competitors when they do enter the Filipino market.
A few Filipino companies have recognized the opportunity to tap the Philippine market in the Gulf, and have established a presence in the region such as F&B giant Jollibee, the Philippines’ largest bank BDO, and media and entertainment leader ABS-CBN. They and others like them can be key partners in addressing the Filipino market digitally from the Gulf.
By attracting more Filipino companies as partners to invest in the Gulf, and address regional opportunities relevant to the Philippines market, Gulf investors will have a strong incentive to invest in, or with them, to pursue growth, and implement digital propositions.
This exchange of capital and opportunities must form the basis for a cross-border partnership that can not only address the digital consumer, but can also be extended into large-scale capital investments in energy, infrastructure, and logistics later.
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