Lets face it, when thinking of IoT markets that are of interest, most companies go for the automatisms of naming the USA, Europe and maybe China. There are very few of who would mention the Philippines. But could those view be right? When looking at the percentage of spending by country in the ASEAN IoT market in 2014, Singapore was the undisputed leader, with 44.25% of the total spending, whereas the Philippines only totaled 12.65%, according to the 2015 Frost & Sullivan report.
This is no surprise. Singapore offers modern infrastructure, is internationally connected and one of the main logistical hot spots in the world. It therefore constitutes a market ready for IoT implementation. The Philippines on the other hand have in numerous parts insufficient infrastructure, problems with connectivity and insufficient educational facilities. So why should companies focus on this market? Two words “uncontested potential”.
According to the same report there is going to be a shift in total spending in the ASEAN IoT market, while Singapore’s share will drop by close to 50% the Philippines share will increase by 12%. This means that Philippine spending in IoT is forecasted to grow from US$ 55.1M in 2014 to US$ 766.8M in 2020. Potential alone though does not always justify investments into a certain market. It is also a question of how heavily this market is contested over by competitors. Will you have to outperform the competition in existing market or do you rather follow a Blue ocean strategy, entering a new market thereby making the competition irrelevant.
If we take Singapore as an example it is obvious that it has an particularly competitive environment, the same is the case for the US and European market, which makes market entry as well as earning profits much harder. The Philippines on the other hand are a country with a young population that is in the process of building its ICT/IoT market, which creates a government and companies that are actively looking for partners in the IoT/ICT space.
In 2014 manufacturing and logistics accounted for the lion’s share of the spending in IoT. But the sectors of banking, healthcare and smart city hold a lot of promise for future investments of IoT solution provider.
According to a study of the World Bank, 69% of Filipinos did not have bank accounts of their own or maintained one with someone else in 2014. Because of this void 10% of adults seek loans from private informal lenders, the world average stands at only 5%.
This presents an enormous opportunity for money-transfer operators in the IoT space, as they could claim roughly two thirds of the Philippines population of 98 million as their potential customers. At our Philippine event las year we had the mobile phone-based money transfer company ItsLikeCash participate and this year M-Pesa is on of our speakers. It is not only the business opportunity that promises value, but also its impact. The World Bank report further states, that “Studies show that when people participate in the financial system, they are better able to start and expand businesses, invest in education, manage risk, and absorb financial shocks”
Another industry that contains a lot of promise for the Philippines is healthcare. With a population close to 100 million inhabitants, rural areas with inadequate healthcare structures and spread-out island communities, it is difficult to provide a sufficient level of healthcare to all citizens.
Both the Chairman of Southeast Asia Continua Health Alliance as well as Product Manager at SMART Enterprise expressed their confidence at our last event, that IoT services could be the solution to these Problems. The Philippine government in an effort to support this channeled large funds to the healthcare sector, nearly doubling its budget within the last 2 years. It has been also actively looking for healthcare solution providers at our events.
Smart City and Infrastructure
Furthermore the Government has been pushing smart city programs in both Manila and Davao. In Manila a smart city venture is planed with Centios, a joint venture of Korea Telecom and Cisco. Hung Song, CEO and president of Centios, said the smart city involves the integrated operation and management of safety and security; energy, transport, education, health, environment, administration and energy management.
Another Interesting development in the Philippines that could be beneficial in regards to connectivity is TV White Space (TVWS) technologies. This low power technology is a new wireless data communications standard and is supported by the Information and Communications Technology Association which partners with our event. Executive Director Louis Casambre said “TVWS is an ideal wireless data delivery medium for the Philippines, with its long distance propagation characteristics and the ability of its signals to travel over water and through thick foliage, we are hopeful that this will be the technology to bring connectivity to rural areas and bridge the digital divide” though he admits that, “Right now TVWS is still very much in the experimental phase both in terms of technology as well as the policy regime, but we are confident that we can make this happen and are excited about what TV White Spaces can do for the Philippines.”
The Philippines thus represent a growing and less contested market with great opportunities in the IoT sector. It recently posted a GDP growth of 6.3% as well as a sustained IT spending growth of 10.1%. According to IDC the telecom services market will also show a positive performance in 2015, growing by 4.7% and an increase in IoT spending by Philippine companies is forecasted by an IDC survey.
If you like to participate in the Philippines ICT and IoT development or want to meet key stakeholders and learn from relevant case studies at the 7th edition of Asia IoT Business Platform in Manila, please feel free to contact us under Jazon@industry-Platfom.com or under +65 6733 1107
Jan 25, 2016