The Philippines, a lead example in a sharing economy

FIRST

it was Uber, then Grab Car, and now Grab Share where two passengers share a ride. The latter is 30% cheaper than the Grab car and allows only one additional detour per ride. Grab Share was first launched in Singapore and was a success. Using a matching algorithm to help passengers, it provides a better option as well as more earnings for its drivers.

Another ride-sharing innovation, one that can only be afforded by a few, is the helicopter startup launched by Ascent Urban Air Mobility last April 3.

It is a response to Manila’s traffic and limited parking spaces, as well as to a need expressed by a growing population of businessmen, visiting investors, and other professionals who require a faster and more efficient mode of transport. It operates on a sharing scheme so it is much cheaper than hiring a helicopter for one passenger. This helicopter-sharing innovation provides flights to these places:

From NAIA to Makati – 16,900 (5 minutes)

NAIA to Bonifacio Global City – P8900 (10 min.)

NAIA to Quezon City –

(15 min.)

NAIA to Tagaytay – min.)

Other destinations include Clark in Pampanga. It hopes to expand to the Visayas and Mindanao, and eventually to other Southeast Asian countries. 110,900 121,900 (20

What are the prospects for success of the sharing economy?

Cameron Gilchrist noted in the 2016 ASEAN Briefing paper that ASEAN is becoming more interconnected, and that the most promising markets are those involved in the sharing economy. Indonesia and the Philippines, perhaps because of their being island countries besides being highly populated, have been ranked by Nielsen as two of five populations worldwide primed to participate in the sharing economy. In fact, in 2015, our Department of Transportation and Communication (DOTC) together with service providers worked to pass legislation on ride-sharing.

To date, only Singapore and the Philippines have passed legislation in this area. Recently, World Bank with DOTC and Grab launched the Open Traffic Initiative that uses the GPS Information from Grab’s drivers to help officials address traffic safety and congestion.

While these opportunities exist, there are barriers to entry. To date, these startup industries still have to build public trust and confidence since they are perceived as operating in a legal gray area. In other words, there is need for legislation that would ensure its sustainability. Too, these enterprises are still seen as threats to the job security of traditional service providers like taxicabs. As they are “disruptive” in nature, there is need for a proactive and collaborative approach that would build public trust. The lack or inadequacy of regulation has been shown during the early years of operation of Uber and Grab. The sharing economy, specifically the ride-sharing entities, require digital networks as sharing platforms. These digital networks rely on credit card and Internet booking. Thus, platform developers need to adapt to regional markets where cash is still the leading transaction medium.

As in most innovations, entrepreneurs who plan to enter the sharing economy must be willing to take risk and make sacrifices if need be. This is what Grab had done – subsidize its operations and charge lower fares. It has branched out to non-transport services such as food delivery, collection of payments for micro loans and insurance. This had enabled it to gain goodwill and the opportunity to build social networks as well as participate in promoting ethical and environmental values.

There appears to be a growing support as was shown by the joint effort of entrepreneurs and government authorities who continue to work hard in making the Philippines a lead example of a sharing economy. Among its advantages are that it has become an important business hub in ASEAN. It has a growing middle class and the political will to make the business climate in the country favorable for investments. A recent ranking by the US News and World Reportlists the Philippines as the best country in the world for Foreign Direct Investments (FDI).

The sharing economy, which is one of the fastest business trends across the globe, is likewise expected to grow from $14 billion in 2014 to $335 billion in 2025. Millennials, more than the older entrepreneurs, are more likely to participate.

A critical factor – in fact, the foundation of the sharing economy – is TRUST. Trust between the entrepreneur and its clientele; trust between the sharers in the economy; and trust between the citizens and the government.