Philippines Market Dive (Macros, Fintech, & Founders Outside Manila), Positives (Demand, Culture, Language) vs. Improvements (Talent Gap, Education, Food Security) Thanks To Foxmont Capital Partners & BCG - E265

· Philippines,Southeast Asia,Purpose,Podcast Episodes English



"I fear brain drain. If you aren't optimistic about your country in the long term and want to move somewhere else, it creates a net outflow of talent that makes it hard for the ecosystem to build. There are very few countries in the world that actually have a net outflow. To have it continuously for so many years, especially when there's no war or push factor, is quite an interesting dynamic. This drives the FinTech sector. There's a self-perpetuating cycle here, where nobody wants to upset this flow. But from a tech ecosystem standpoint, there's so much more to build in the Philippines." - Jeremy Au


"I see a lot of my founders asking for support specifically for product manager and growth lead talents. We lack that a little bit because tech giants are all regional. So a lot of the positions are actually Singapore-based compared to being Manila-based, which is a bit of a lacking cohort of product managers and senior growth lead talents that some of our startups need, especially at Series B stages. I think that's the biggest gap." - Mark Sng


1. The Philippines is a remarkably open country in Southeast Asia for doing business. The strong diaspora, good faith ecosystem builders, English fluency and trade mindset help seed the ecosystem with more ideas and startups. The rest of 2023 may see muted consumption growth due to external headwinds, but 2024 is expected to see growth equity investments pick up again.

2. The education system in the Philippines is strong in vocational skills, such as nursing and seafaring. However, poor educational outcomes in reading, mathematics, and science lowers the country's ability to produce STEM talent. Brain drain is a major concern as it results in a net outflow of talent that hinders the growth of the startup ecosystem. More government investment, intentional on-the-job training and organic mentorship will help develop well-rounded local founders.

Watch, listen or read the full insight including local tax issues related to stock options, fintech regulatory framework, founders outside Manila and food security issues due to imports, spoilage & middlemen at

Please forward this message or invite friends at


Supported by Esevel

Do you manage your own IT for distributed teams in Asia? You know how painful it is. Esevel helps your in-house team by taking tough tasks off their hands and giving them the tools to manage IT effectively. Get help across eight countries in Asia Pacific, which includes onboarding, procurement, device management, real-time IT support, offboarding, and more. Gain full control of all your IT infrastructure in one place with our state-of-the-art platform. Check out and get a demo today. Use our referral code, "BRAVE" for three months, free. Terms and conditions apply.


Jeremy Au: (01:43)

Good morning. This is gonna be such an exciting conversation. Really excited to discuss the Philippines and the market and the future. Both the positives and the things that need to improve. Today, Shiyan and I will be introducing Mark. Mark, please introduce yourself.


Mark Sng: (01:57)

Yeah. Hi everyone. So I'm Mark I'm the partner running Gentree Fund. We are Philippines focus VC fund. We are back by Anchor LP, the C family. Personal background wise, I was previously with the Go Ventures team that Go Jack back to VC fund and then prior to that as well, also the Go Jack corporate development team that saw me take part in the GOC Series C and series fundraising, and also was part of the Coin pH acquisition, the team that, that led acquisition. So gave me also initial exposure to the Philippines in terms of the biggest startup exit there today. And yeah previous, prior to that, I was in the PE final three years and my first year in London in a finance boutique. So I've been in oil finance for a bit but also more generally been around Southeast Asia.


Jeremy Au: (02:33)

So the reason why we're all here is that we have the tremendous report from Foxmont Capital Partners, as well as BCG, discussing the Philippines ecosystem, right? And so I thought this would be a tremendous time to discuss and say, what's our favourite slide? Or, insight from the report. Why don't you start first, Shiyan?


Shiyan Koh: (02:53)

Oh, man. My favourite slide is slide 11 where we have the amazing stat of the 415 digital banks that launched only 5% are profitable. Which I think is a great reminder for anyone who's like, I'm gonna start a digital bank. But I think it's great. Because, FinTech is so hot, just to remind yourself of how hard it is. But they, hopefully, this is probably BCG, some poor analysts somewhere had to make this slide pull out kind of the key factors for, what has made them profitable and successful.

And so I thought that was like a really good slide around and it kind of gives you kind of a picture of like what are the pieces that exist in the ecosystem already versus what are the ones that still have to be built and what might the challenges be if someone were to approach this problem and then I think further up they do talk about the six folks who are issued licenses, digital banking licenses in the Philippines, and kinda like walk through those factors. So, that was my favourite slide.


Jeremy Au: (03:46)

How about you, Mark?


Mark Sng: (03:48)

Sure. I think that's mainly the general state of the economy and how more startups are getting funded. So, that's a very healthy liquidity environment. Naturally, there are hates as well, but they did rightly point out that, the demographic still winds out where the Philippines really benefits. The young population's rising internet penetration GDP growth was one of the highest in. 7.6%, if I'm not mistaken. So, so pretty strong growth. However, there are statements that I think were missed out on. And that is rising inflation. The Philippines has about 8.6% inflation rate. There is a gap with the rear wage inflation as well. So the rear wage inflation is only about 5%. So that's a differential of about 3% where Filipinos are losing their current being disposable incomes.

You have a twin deficit as well. Current account and fiscal deficit which means our with pressure and deflationary pressure on the Paso. This means that there is Paso buying demand and, and US dollar selling every day. And that happens to about 40 billion USD worth of remittance this year. So that also underpins the prevention of the Paso depreciation of more than 15%. Then so when you think about the macro factors here very strong to our tailwinds for which domestic for the first time ever, you have the presidency that's continuing from the, the, the presidency, the Marcos presidency is really leading off not uprooting the law, which is the first time, because usually, you have gaps in the six-year presidency when, when you have a changeover.

The Common Tower Act is another one that is leading to more internet penetration, where, smart and Globe are using the same common power infrastructure, so they all have to invest in separate towers anymore. However, the hates, I think, are not specific to the Philippines, if we think about it, is a very emerging market. Any country, in the emerging markets, would suffer when the US hikes rates, and you do not hike rates right from an interest rate parity standpoint. I think that's where we get quite excited for the Philippines because when you have such strong, fundamental tailwinds it leads to potentially good outcomes, at least when we think about the growth stage.


Jeremy Au: (05:38)

Well, thanks for I think the very quick summary of I think the bull case, but also I think the bear factors are on the macro side. Right. And I think that's more the full picture about what's going on in the market. For me, I think the two favourite slides were actually I think, a market snapshot of, similar to Shiyan, the finance side, but actually, the e-commerce players and that's on slide 13 here. But apart I actually personally, I think learned the most from slides 27 to 28. I was talking about the rise of founders beyond the Philippines capital Manila. I mean, to be frank, I've always travelled to Manila, but I haven't travelled to the surrounding areas, right, and obviously where people live. And so I thought it was just interesting to see them kind of point out pets kind of like, Wella, and describing, cities that I've never visited, right?

So I thought it was just interesting to see that I think you see that dynamic actually across much of southeast Asia, right? So you see like Ho Chi Minh City and Hanoi, and then you see adding other cities start to kind of like pick up the entrepreneurial bug. We see Indonesia as well between Jakarta and the different islands where other folks are starting to build because they can build from anywhere as long as they have internet. But I think it was also realistic because they were quite fair, I would say, in this conversation to say that, hey, if you're out in provinces, you don't have maybe the same talent pool, the same mentorship pool the same technical training that you're available to get. And I thought it was a pretty fair assessment of the situation. So, I really appreciated them pointing that out.

So obviously those are our favourite slides. Let's kind of like open the floor. Right. So, I think one thing I noticed to kind of like broaden our conversation is there's a lot of positive factors for the Philippines. But I was comparing this to the report from May last year. That was a partnership between IP partners as well as Tech in Asia. Right, and I think they felt like there was a lot of stuff that they wanted to be positive about, but I also felt like there was a lot more work that could be done in terms of improvements, in terms of branding, regulatory infrastructure and talent. So I thought that was an interesting dynamic to be thinking through. Yeah. Mark, what do you think, what do you think the Philippines ecosystem needs more of here?


Mark Sng: (07:33)

Yeah, sure. No, I think talent is definitely one area. I see a lot of my founders sort of, ask colleagues' requests for support and specifically, here I'm talking about product manager and growth lead talents. So I often get a founder this asking me if I've, any recruitment leads that can provide for them for those sorts of positions. I think the main reason is that you don't have the local tech giants that you do in Indonesia. For instance, you have Wikipedias, the travel locals, the projects which are based, and their headquarters in Jakarta itself. So you have PM talent pools and cohorts being trained in Jakarta itself. That then leads to more diversity within the ecosystem when they then move on to do their own startups, if not support startups in the ecosystem. I think we lack that a little bit because tech giants are all regional. So from that context, a lot of them, the positions are actually based more Singapore based comparatively to actually being Manila-based. So that is a bit of a lacking cohort of product managers senior growth, lead talents that, that some of our startups getting to do Series B stages kind of demand and kind of need. So I think that's the biggest gap.

From a regulatory standpoint, I would say that okay, so, there are certain sectors that are very well regulated. FinTech is one, and that's why FinTech is proliferated in the Philippines. So they're very clear license categories, right? There's an OPS license or payment. You have, the AFEX license for remittances, the EML license for mobile wallet, the VSAP license for crypto, and then you have additional banks, right? There's actually five categories of banking licenses you can get. And each category is different minimum capitalization requirements, right?

So it's all very fully mapped. Right. If you do something out of the map you get shut down straight away. So things like, for example, stock trading of US stocks, the reason why there's not been agile or a big yet is because specifically on the s sec code section eight, it says that Filipino national is not allowed to trade foreign insecurities, right? So there's very specific things that they really specify in the policies and regulations that makes it very clear for you to know how to operate, right? Which makes it easier from an investment standpoint and also from an FDI standpoint. The insurance commission's another one that has been very forward thinking.

They create an insurance sandbox that allows you basically to act as a managing agent. Working with an insurance company and naturally the entire impetus behind that is that the Philippines is currently 1.2% in insurance penetration, right? The global average is 4%. Countries like Japan and Hong Kong are 10%. So there's a long, long way to catch up, right? And you're not even talking about motor insurance cause Philippines, you actually have mandatory third party motor insurance, right? Talking about things like health insurance, and general insurance, right? Consumer education behind that, Is there bank insurance for you to distribute through the banking relationship as well?

So, so those are the sort of areas where I think, the regulatory side has been quite valid because you have, they have created a framework for you to operate within. And then this, certainly you can actually operate with it. I think by comparison, if you think about the Vietnamese market, sometimes when I was used to covering the market every lawyer you talk to has a definite interpretation which makes it a bit more complex.


Jeremy Au: (10:12)

Yeah. That's always a problem in a lot of emerging markets, right? Is that having that conversation? I think one interesting adjacent on the finance side is that, I thought it was quite interesting to learn from the Tech In Asia IP Partners report that in the Philippines, the ESOP, stock options taxes are actually taxable at an exercise point, right? And so they're not deferrable like they would be in the US or in Singapore, but also the gains and the future value of the shares, also tax, and then there's capital gains tax, et cetera, which I think makes it very difficult. I think from a, we talk about PM shortage, et cetera, it's hard, because a lot of the value actually is in the future, the potential value of the growth and value of the company, right?

So I thought it was an interesting problem. I know, but I mean, that's good for Singapore as the, I guess Delaware or Southeast Asia. But I guess it's interesting actually to see that. Also another interesting pattern actually. I think I see many startups across the region are doing the same thing of domiciling in Singapore to get around that.


Mark Sng: (11:09)

Yeah, I think it's a very common trend. And also when you think about, I think, I think more specific to the Philippines is it's mostly Vietnam. That's the issue when you think about, listing entities and things like that, right? So this can list Singapore Hoku. I think the good thing about the Philippines between Singapore and the Philippines is that we have a double tax agreement. So we have a DTA. This means that if you remit money for capital gains from the Philippines, there will not be a capital gains tax on you. At least in the Philippines, there will be no affording tax to be specific.


Shiyan Koh: (11:36)

Hey Mark, I just wanna go back to the talent point. Are you seeing sort of returnee fill some of those rules? Like, like we're seeing sort of in, in Vietnam and Singapore and Indo, there's a lot of sort of like, especially the pandemic, bringing people home. So I'm kind of curious about what you're seeing in the Philippines.


Mark Sng: (11:53)

So one trend you're obviously had the double click on when you think about the Philippines is obviously Filipino workers, right? They're 10 million around the world. More specifically, they're 5 million just in California alone. A lot of them are working obviously blue collar jobs, but also white collar jobs, right? You're thinking about nurses, you're talking about doctors and hospitals as well. There is. Quite a big cohort of Filipino Americans who work in Malta View, work in Palolo Alto as well. I'm sure Shiyan know a lot of them. So, so we have encountered quite a few of them.

Few of them are building things for the home. We are not seeing the same sort of cohorts that you're seeing with Indonesians coming back to Indonesia. I think the Indonesian government made a very purposeful effort to bring a lot of Indonesian talent to Silicon Valley, they look for the talent, right? They bring them back from but we don't have that in the Philippines yet. So actually was talking to Patrick and Eddie about that, why don't we have that for the Philippines? Yeah, so that's where I think more effort is put in. And I think that the way it happens is more by showing evidence-based that you can actually create large companies or, sizable outcomes for yourself from the Philippines by doing startups. I think traditionally there's been a bit less of an entrepreneurial mindset in the Philippines compared to the Indonesian market. People tend to like to work for corporate SM groups which are considered a good job to work for after you graduate from university cause it's stable, right? And you have very good initiatives at QBO and Ideal Space, Katrina Child who's, create creating a very wide diversity and more accessible base for the founder to start with things.

So I think that's very needed. But you also have actually after this call, I'm speaking to one of the few AM guys who enjoy investors who are investing in the Philippines. So you have the initial group of them coming back. But I wouldn't say it's a large cohort that we're seeing.


Jeremy Au: (13:25)

Yeah, I think that's an interesting theme that I think we're seeing, which is I think the concept of sea turtles, right? I think, which I think Asia Partners report earlier this year kind of like did a big highlight off. And I think it's an in of itself is actually a copying of the, the Chinese phrase actually for returning talent. Of course. I think it's hard to discuss this without also talking not just about a stock of returnees, but also the flow of outflow. Right? And I think as you mentioned, the 10 million diasporas of Filipinos outside is a function of a lot of folks leaving the country. Right? Either a, from their perspective, a temporary basis or for, or trying to be a permanent basis. Right.

And I think it's an interesting dynamic where it feels like Vietnam, I think is the other way around. It feels like, feels like a lot more returning actually than leaving to some extent. And then I think Indonesia, I think never had a tremendous outflow. In fact, I think that's been one of the conversations is that the number of total Indonesian students on exchange or studying in the US actually shrank as a number, our state flat. Even though the economy's much richer and larger. So I think that's kind of like a bit of an elephant in the room, right? I think it's really hard to build a very strong entrepreneurial technology knowledge first ecosystem when there's a sensation of a brain drain on a net basis.


Mark Sng: (14:37)

Yeah. The Philippines definitely suffers from a bit of that because obviously, you could pay, you pay a lot more of you to go overseas, right? So, so yeah, being able to sort of show them that you can actually create outcomes that matter in the Philippines that make a fundamental life difference. I think it's quite important to actually stimulate the return home, because at the end of the day, if you think about why they moved overseas, it was economically driven, right?


Jeremy Au: (14:59)

Yeah, and I think what's interesting is that I think it's kind of circular, right? A little bit, which is that it's hard I think from a policymaker basis is that if you believe a lot of folks are gonna immigrate, then are you gonna invest in education because you know the gains of the education go elsewhere.


Mark Sng: (15:16)

No, this is where this is where the Philippines does actually. So, this is where the Philippines has a very good vocation. Okay. I wouldn't say good in the sense that I think there's been some complaints about some of the accreditation bodies that I've seen on the news. However, they have very strong accreditation bodies, right? So, the nursing schools, for instance, the seafaring schools, for instance, if you go to a cruise ship a lot, the cruise men, cruise, cruise ship workers are all Filipino. The nurses are Filipino in any hospital you go to in Singapore, you know the major cohort, they're Filipino.


That is a very strong show that the education system is actually at the world-class level for you to develop. And these are actually vocational skills, right? I mean, that's someone working on a captain of a cruise ship, so I would say the education system actually does train strong enough people. And even if you look at the white collar side of things, right? You have the big three universities and they produce investment bankers. Some of the top people in the country are all from those schools. Even top people working in JP Morgan, Hong Kong and it's across the board, right? So I say this Philippines education system will not be very catered to the mass market can also be a very strong student regards because of it.


Jeremy Au: (16:22)

Yeah. Well, I'm gonna debate you on this one, right? I agree with you, actually. A very strong vocational, I mean, dynamic. For example, some of the biggest maritime training in Sailor academies are in the Philippines, right? But I think OECD says that 15 year old students in the Philippines scored lowered in reading mathematics and science right on PSA rankings, right then as than Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. So I think it's a really, like, I think it's true to our vocational side.

If you want to be vocational, I think that's there. But then your baseline on, your, reading, mathematics and science. Right? And you need that to become coders, to be engineers for the stem, right? For science. Right. And I think if you don't do the science, that's very hard to do deep tech let alone more than that. So you are looking at software as a service and so, so far FinTech. So it feels like that's the kind of like dichotomy a little bit, right? Which is, I think the diaspora is getting a good education. There's a strong vocational side but the local education system at least has not yet shown the investment levels yet, right? Or, and outcomes, I think. Yeah.


Mark Sng: (17:24)

In the coding more developer IT tech talent. Yeah. And I think that's also a functional economy, right? Because there's no SaaS economy in the Philippines. 90% of GDP is consumption at the end. Naturally, you're gonna gravitate towards more commerce-driven type outcomes in most things. And actually, when you think about commerce-driven, Tech is, may not be the key factor and becomes an enabler, but it's not the key USP anymore.

Some of that may also gravitate toward the way some education systems are thought, right? With better people actually take off developer courses and things like that. However, having said that you do have actually quite a strong developer based in the Philippines. Especially when it comes to web developers. There's one area where I think that's actually quite a deep talent compared to other markets. I've seen a lot of Web3 developers who are based like point out, there's some activity outside in the middle, right?


Jeremy Au: (18:14)

I think Shiyan and I previously discussed that one thing we see in the Philippines is that it's not language locked. Right? And so I was like, so we used that phrase, we, we coined that phrase here in the previous episode the where it was just saying like, some countries are landlocked, they don't have a port, so they can't access trade and they don't have benefit from the net flow. I think a lot of countries in Southeast Asia are language locked, right? In the sense speak English and so they are locked to their local market in terms of knowledge and content and they kind of use ChatGPT for example, right? Whereas, yeah, I think I noticed for example, like this whole ChatGPT, I noticed a lot of my obviously Singaporean, but Filipino friends have been one of the earliest adopters of ChatGPT, because it's in English, and it outputs English. There's lots you play with. Versus I think, if you're not English fluent, it's harder for you to play with that technology.


Shiyan Koh: (18:55)

There are some amazing things though. Have you seen Kissan GPT, Jeremy? It's a, it's an Indian developer who's hooked up GPT also with Whisper and you can basically talk to it in like, I don't know, five or six different Indian languages. It's aimed at farmers basically, and it gives you farming. So it's really aimed at an illiterate population, so it's totally audio-driven with a database of best practices in terms of farming.

And it's actually, I don't know, I was really impressed with the demo. I was like, this is kind of awesome. And there's all these sorts of people tagging onto the thread being like, oh, I tested it in Bengali. I tested it in this, and so it's, I think GPT actually opens up a whole new set of use cases and users who might not actually be like, formally trained in coding or some of these other things. And so I don't know. I mean, maybe that is to counter you, Jeremy is like can you take the Filipinos who are not necessarily coder trained, but who maybe have expertise in business process outsourcing and things like that, and supercharge them, with some of these new GPT applications to become efficient and effective.


Mark Sng: (20:05)

There's actually really a push away from call centre BEPO into more data labelling AI labelling type EPO services already. If you notice because are.

[00:20:21] Jeremy Au: One of the ways to build like a hundred billion business obvious Asia is labour cost arbitrage, right? So whether there's call centres or data labelling or, executive assistance. So definitely see that peace, especially between the Philippines and the US. Right. Even though there's so much language fluency and so, so forth. So, looking ahead, what do you think Marcus, your, I guess, what's your hope and fear, I guess, for the Philippines market and we'll go around.


Mark Sng: (20:51)

So, yeah. I think the first thing first after the Philippines, Is this team that my final is really focused on this year is really food security. So the Philippines is actually remarkably food insecure. Everything on your plate in Manila is mostly imported. The spoilage rate between the red market, in the population area to the red market in the Manila area, the spoiling rate us really high around, 40 to 60%. This also explains why margins are so thick for a lot of the middlemen. Cause they have to account for the spoilage rates. There's very, there's a lot of price obstructions between, the different nodes as well. So you don't know the pricing at the trading post and the red market, it changes every day, which allows middlemen to create thicker margins and basically squeeze the farmers as well when you don't plant the right crops. So, so there's a very big agritech problem at the moment in the Philippines because logistics is a problem that's least the waste you're bringing down the vegetables.

There's a lack of there's a very fragmented trading ecosystem. So most of what's demanded by Manila on a daily basis is actually fulfilled through the traditional ecosystem. So you have a bunch of new tech founders trying to do farm to table ideas naturally taking a lot of the learnings from Indonesia to heart as well. I think in Indonesia, when we look at some of the players there the margins are a lot thinner, at least when it comes to the distribution layer. If you distribute down to red markets, I think the margins are only 4.5% if you are on a gross margin basis. If you distribute to Eden Farms to B2B then I think you're closer to 12% percent if you're lucky.

In the Philippines, it's highest high, 20-28%. It can go up to 40 plus percent if you optimize for it properly and if you actually know your pricing. So there, there is, a huge, huge market inefficiency there that creates out size margins, and that's why my father is actually very, very interested in agritech. When we look upstream, though, there's even deeper problems at the farmer level because one of the things that happened in the Philippines was the cut program, the agreement reform program. And that led to five Hector Farmer Plots which meant that for individual land owners, you can only own five factors. So the only industrial skill farming you have is Thousand Hector collectors which are not really very industrial skills because that means that you don't have the proper equipment to manage and optimize it. So there is a need to actually sort of consolidate and also sort of, better support the farmers.


There's not enough financing being given to the farmers as well. Whenever a super typhoon happens massive crop failure, which results in a lot of banks not wanting to lend to the agriculture sector. So even, even though banks are mandated by law to lend 25% of their balance sheet to the agriculture sector, none of them are doing so because they're all paying fines because it's more economical to pay the fines just because typhoons can cost mass massive crop failure. So all this confluence of four factors means there's so much you can do in this space, right? Because it's, it is crazy that a 20 million population city can be food insecure, right? And that's a problem for the future. For right now as well. Most of the meat in Manila is imported even pork is I import from Spain because it's cheaper to import pork from Spain. It's a bit crazy, right?

If you think about it. Yeah. So I think there's one team that I think we are quite excited by in something that we are double-clicking on. So, we are looking at a couple of startups in the space. We are, we are working with a couple of founders who are, have plans to digitalize the trading posts, for instance, who have plans to do contract farming for another instance. And then also taking the learnings on the Indonesian players and how financing's actually needed to actually do farm to table. If not, the working capital cycle will always kind of kill you because you have to pay your farmers and tea equals zero. And you only get paid from, your restaurants.


Jeremy Au: (24:13)

Well, thanks for answering both, I guess effectively your fear for the ecosystem and country, but also what the hope is. Right. How about you Shiyan?


Shiyan Koh: (24:27)

Oh gosh. I mean, I don't know if I have fears right other than the sort of EM types of fears, like longer term macro stuff that we cannot really control that much. I think my hope is that I think with the coins exit and Kumus' growth, it basically lights the way for more people to build and to build it. I think that's, that's what we need in the ecosystem overall, right? We need more success stories, more exits, more liquidity and recycling of the money and the talent through the ecosystem. And so that's, that's my big hope.


Jeremy Au: (25:00)

Yeah, I think for me I think the fear is I think really about brain drain, right? I just think that if you are not optimistic about your country in the long term and you want to move somewhere else, I think it's a really, net outflow of talent is just, makes it hard for the ecosystem build and that, I don't think it's solid for any country. I think there are very few countries in the world that actually have a net outflow, right? And to have it for so many years, actually continuously is quite an interesting dynamic, especially when there's no war, right? Two, there's no giant push factor from my perspective. Yeah. drives the FinTech sector, so yeah I think that's why there's like, there's a bit of a self-perpetuating cycle here, right? Which is, nobody wants to upset this, this flow, but I just, I just think from a tech ecosystem, I think there's so much more to build, right? I think in the Philippines.


Mark Sng: (25:52)

Yeah. So I think what would be cool is if you go overseas, you learn the talent and then come back and actually implement that in the home country, right? I think that that's what a lot of governments wanna see, right? Because then you learn the skill sets in a developed country, you bring it home I do see Filipinos do very well in senior management and middle management in countries like Indonesia, in countries like Cambodia, countries, like in Vietnam where their English skills are actually picked up as being a key highlight of the skillset. Comparatively, I think when you think about more developed countries, they tend to be a more vocational skill. So if you take, a look at the trend distribution, that's something that actually I've noticed actually. So if you go to like Jakarta, some of the more senior members in some.


Jeremy Au: (26:30)

I think that's kind of the hope right? Is that, there are folks who return or folks who are kind of building domestically. But I think what I've noticed is that I think the founders are I think very clear about what they can learn from the internet. They can learn from, their peers is just that I think there's a lot of stuff that you can really learn on the job. You only learn if being part of a startup at an early stage that you only can learn if you had a great manager you through that process. And so I think that's my hope is that more of that on-the-job training, and mentorship happens. Yeah. And I think then you can get more well-rounded founders and operators who can do so. And I think I see that, I think there's quite a few founders now who have like, like, I've seen like a lot of Filipino Americans actually kind of like come back to the Philippines, start training, start really focus on talent development, kind of really interesting to see that happening.


Mark Sng: (27:18)

Yeah. By the way, Jeremy, the Philippines is one of the only markets you don't need to be Filipino to actually do very well. And a lot of expats have done very well in the market. It is one of the more remarkably open countries in Southeast Asia for you to do business, in that aspect. The local guys who actually accept you and little sort of.


Jeremy Au: (27:35)

And that brings us to another point that we talked about past was about, Asia partners highlighted the kind of like rocket internet talent mafia as one of the training grounds. I think Mark, get something to share about that.


Mark Sng: (27:46)

Yeah, no. So a lot of my good friends are, ex Rocket network people right in the Philippines. I wouldn't say it's, I'll say that it's a very strong sort of alumni, cause they're, they, they don't just keep moving. They, actually do network with the ecosystem and they do share their knowledge. So yeah, though I really like talking to them, really like hanging out with them. So yeah, it's cool to see the subtle alumni sort of come out and then seed the ecosystem with more ideas, seat the ecosystem with more, with more startups.


Shiyan Koh: (28:10)

Don't forget my buddy, Constantine.


Mark Sng: (28:12)

And this is all expats, by the way.


Jeremy Au: (28:13)

Shiyan. I wanna talk about Constantine a little bit about what building. Just a, 30-second thing about, I think it's something to be said about the broader space here. Yep.


Shiyan Koh: (28:23)

Yeah, I think, Khans is a, like, to your point Mark, a rocket alum and I think there's sort of the intersection of like Rocket and the Philippines as well because he was Zalora. And then he was Entrego, which was a logistics solution that was, basically all the logistics problems he had had at Zalora, he was like, oh, maybe I should try to solve them. And then was on the team and founder there at Entrego. And then he took that and was like, okay, how can we go bigger with this? With our learnings from both the e-commerce side and the logistics side and founded Locad. And so they enable brands to grow their e-commerce businesses with scalable and localized fulfilment. So if you think about like, I'm a brand and I need to be in like three countries what is the actual like work that has to get done in order to get my goods into consumer's hands?

You have to get, you have to move the goods, you need to have warehouses to store the goods, but you don't actually know how much you need. So you are either over-provisioned or under provisioned as you're trying to estimate what's going on. And so Locad basically allows you to think about your logistics and your warehouse needs in a sort of flexible, like on-demand way. So it's sort of a software-driven, flexible approach to fulfilment and logistic.


Jeremy Au: (29:43)

Yeah, and that reminds me actually, of another company called Shipmates led by Josh Supan, which is a YC company. They're building a courier platform for e-commerce, so you can book with multiple couriers on one platform. So I think, but what was interesting, the key insight was that, just like the Philippines as a country is fragmented into way more islands and more evenly distributed than say, Indonesia. Right. Which has, kind of like more major islands that are more together. Right. But, and so he just shared like, hey, should as a land logistics network in each island, right? In the Philippines, but actually, the big cause is actually the ferry of trans inter-island travel. Right.


And I thought was an interesting piece that he said was like Obstacle Right to local, domestic, shipping charges by which obviously impacts the local e-commerce market, right? Which has historically been one of the fastest growing verticals right across Southeast Asia. So, yeah, just some interesting insights. Any other thoughts do you have about the Philippines?


Shiyan Koh: (30:39)

When are you inviting us over there, Mark, invite us for a dive trip where we can also discuss startups and invest all that good stuff?


Mark Sng: (30:51)

So we have a lot of there's a lot of beaches there. Right. But also there's also quite interesting mountains there as well you can go to. So, I was in Baguio the other week it was really lovely. It's a mountain town. So it's where actually strangely enough where the Japanese surrendered to the British after World War ii. It was done in Baguio. Interesting, right? But yeah, no, this is very unique. It's, it is very accessible. You're right Jeremy there are a lot of islands, but the main island is Luzon, right?


Jeremy Au: (31:19)

In terms of travel to the Philippines, I'll probably be going there at least once, if not twice this year. So it'll be interesting. Yeah, I mean, I'm well looking to confirm the Manila Festival. I don't know if you know this, but, okay. So Improv is an improvisational comedy an art form that was first built in the US about, a hundred years ago. And actually what's interesting is it's emerging in Southeast Asia. It is a hobby of mine. And interestingly the Philippines has the best improv comedy scene in Southeast Asia.

I think Singapore is actually a follower of the Philippines and then Vietnam's only just getting started right now. So it's kind of interesting to see that hobby, right? It'd be a good example of the cascade of language and culture right from America into Southeast Asia. Yeah. So go check out SPIT, that's probably the best team in Manilla. Looking forward to checking out some performances. Okay. I'm plugging improv teams. There we go. But I think as you look ahead, what do you think is one thing you think might potentially come true? Over the course of the next year?


Mark Sng: (32:25)

We are in a real economic situation globally, right? I think a lot of what happens next now depends on what the effect does. So I think some of the employment rate numbers are actually quite healthy. So I think that the room for them to cut the interest rate still is there. And inflation is pretty quite high. And I think that the implication is that all the kind of general consensus is that they actually are going to hack interest rates a little bit more by 50 basis points or whatnot. That's general consensus.

So as a result of which the Philippines has to hack an interest rate as well, right? Because if not your passports just gonna depreciate, there's gonna be outflows back to the US right? Just because of the interest rate, and parity rate. So because of that, the rest of the year, is going to be quite an interesting scenario for the Philippines where you have a lot of pent-up demand post covid, pent up demand, young population pent up demand, but at the same time as well, there's gonna be, they're gonna look at the prices, they're gonna see, oh yeah, the price of pockets increased, right? You have, weird things like in the Philippines the price of onions increases 400% in one week and then drops the next week because like, say, for the food, it's insecure, people are holding onions cause they import onions. Right? So people are gonna experience that.

I think that is what's gonna happen to the cause of the headwinds. But then once those headwinds start to dissipate, the US starts to take a bit more of an expansionary monetary policy. And then, once you start to grow back, which I think power has started to start to even talk about, right? I think that would be then the impetus in 2024 for the Philippines to really pick up again. In terms of, so there would be some degree of mute, muted sort of consumption growth. This rest of the year because of the headwinds externally, but I think 2024 is the year for the Philippines. We really spread the rings. And then some of the growth equity investments that we started seeing in 2021, and 2022, will start happening again at the BC stages, at the D stages when people start to.


Jeremy Au: (34:07)

Awesome. On that note thank you so much for coming to the show.