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Sunday, May 27, 2018 Vol. 13 No. 225
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‘BOTTOM FEEDER’
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Can overhaul of fiscal perks under TRAIN 2 boost PHL business, cut revenue loss?
T
By Cai U. Ordinario
HE Philippines has been deemed a “bottom feeder” when it comes to attracting foreign direct investments (FDIs) in the Association of Southeast Asian Nations (Asean).
The level of the country’s FDIs as of 2015, according to the Department of Finance (DOF), reached only 2 percent of the country’s GDP. This means FDIs could be P266.44 billion in 2015 using current prices. Full-year GDP in 2015 was at P13.32 trillion. This may look impressive since DOF cited Bangko Sentral ng Pili-
pinas (BSP) data which showed net FDI has been steadily increasing and reached $8 billion in 2018 from only $1.7 billion in 2005. And yet, compared to the rest of the 10-member Asean, the country is a laggard in terms of FDI. Its closest neighbors are Thailand and Indonesia with FDIs reaching 2.3 percent of their GDP.
The smaller Asean countries such as Cambodia, Lao PDR and Vietnam were the leaders in terms of attracting FDIs with 9.4 percent, 8.7 percent and 6.1 percent of GDP being accounted for by FDIs, respectively. This situation has led the Philippines to extend so many concessions over the years in the hope
that foreign businesses would be more attracted to invest in the country and to stay and give Filipinos decent employment. The DOF said these “deal sweeteners” are enshrined in 123 laws and even 192 noninvestment tax incentives. These incentives have been in existence for Continued on A2
Entry of 5 TNCs can’t nudge Grab from granite throne
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By Lorenz S. Marasigan
OMPETITION is always seen as good for the market, as this drives prices down and service levels up, but without capitalizing on existing market forces, new entrants will only see themselves on the fringe and not on the battlefield. mission Commissioner Stella Luz A. Quimbo said new transport network companies (TNCs) should grab the opportunity of the network effects to ensure the viability of their businesses. “How the market would look like with new providers depends on how quickly the new players can take advantage of network effects, particularly how well they are able to get drivers on board so that riders are willing to try them out,” she told the BusinessMirror. A market study conducted by research firm Statista showed about 2.96 million users of ridehailing apps in the Philippines. This is expected to increase this year to 3.5 million and balloon to 5.4 million by 2022. Current supply shows there are more or less 35,000 private cars in
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This is particularly true for the ride-hailing market in the Philippines, where virtually, the sector is dominated by one single player who, by chance and by choice, achieved its status by buying out its only competitor. Grab, a ride-booking application that originated from Malaysia and is now headquartered in Singapore, continues to enjoy the lion’s share of the market, even after new players began servicing local commuters. It may take some time before new entrants—five of them—gain traction, as their services were just recently launched after the Land Transportation Franchising and Regulatory Board (LTFRB) awarded them their franchises last month. Philippine Competition Com-
QUIMBO: “How the market would look like with new providers depends on how quickly the new players can take advantage of network effects, particularly how well they are able to get drivers on board so that riders are willing to try them out.”
the system—at least for Grab. The regulator has allowed the supply of transport network-vehicle services (TNVS) providers—or drivers enrolled in a TNC—to be capped at 66,750 units from 45,700 units
previously. Broken down, the new allocations are as follows: 65,000 for Metro Manila (from 45,000); 2,500 for Cebu (from 500); and 250 for Pampanga (from 200).
LTFRB Director Aileen B. Lizada said these figures are subject for review every three months. This was first implemented in February. Grab Philippines Country Head Brian Cu has repeatedly
claimed there is a gap between supply and demand in the ride-hailing market, as the company receives about 600,000 passenger booking requests each day with only 35,000 vehicles to serve them. These days, booking for a ride—according to consumers— has been harder than ever. One user even claimed she had to wait for an hour and a half before a driver accepted her request for a 4-kilometer ride. “With more riders, even more drivers are attracted to the platform, and so on,” Quimbo said. Network effect, she explained, is an event when “as more consumers, in this case, drivers, join one side of the market, the platform becomes more attractive for consumers/passengers on the other side.” There are five new TNCs in the market today, namely, Hype, Hirna, Owto, Golag and Micab. Hype, which will offer five products, is set to launch on June 10. It allows users to book for a taxi, a pooled ride, a sedan, an Asian utility vehicle that is suitable for six persons, and a sportutility vehicle for a more premium ride. It promises riders to as much as 30-percent savings in rides versus Grab, while providing a “fair” Continued on A2
n JAPAN 0.4809 n UK 70.3049 n HK 6.6941 n CHINA 8.2379 n SINGAPORE 39.2330 n AUSTRALIA 39.7885 n EU 61.5687 n SAUDI ARABIA 14.0077
Source: BSP (May 25, 2018 )