Ride-hailing, delivery services to help boost PHL economy — analysts

KSENIIA ILINYKH-UNSPLASH

THE RIDE-HAILING and on-demand delivery services industry is expected to make a notable contribution to the Philippine economy, analysts from the University of Asia and the Pacific (UA&P) said on Tuesday, citing a study on one of the service providers.

Gregorio Mabbagu, a professor at the UA&P-School of Management, said that for every peso spent on the Grab Philippines platform, an additional P3.42 is injected into the national economy.

“If you go home using Grab and it’s let say P100, then you just multiply it to P3.42, so in effect, you are contributing to the economy of about P342,” he said during a briefing on Tuesday.

The result was among the key findings in the study conducted by the UA&P-Center for Research and Communications (CRC) titled “The Impact of Ride-Hailing and On-Demand Delivery Services on the Philippine Economy: A Focus on Grab Philippines.”

The study, commissioned by a third-party consultancy firm, found that consumer patronage of Grab services accounts for 0.07 to 0.3% of the national gross domestic product. 

From 2019 to 2021, Grab’s total economic contribution ranged from P37 billion to P165.6 billion, according to the study.

The scope of the study was limited to key regions: National Capital Region, Central Luzon, Cebu, and Davao City. It also considered only the transport services, including four-wheel transport services and two-wheeled services for food and items.

Grab Philippines’ business underwent assessment in terms of national multiplier output, national household income, and the national average of unemployed persons.

“The basis of a multiplier study rests on the assumption that an increase in spending translates into spillover increases in the performance of other sectors of the economy,” the study said.

The multiplier output for Grab Philippines’ services is higher compared to other heavy industries in the country, such as mining, according to the UA&P-CRC.

“We would say substantial as a tech company, especially when it comes to spurring a generation of income,” Mr. Mabbagu said.

Meanwhile, a peso increase in spending on Grab Philippines’ services generates an additional P0.44 in the household income of employees and partners, accounting for 0.10-0.17% of the total family income from 2019 to 2021.

During the period covered in the study, the platform’s services contributed to an equivalent of between P23.8 billion and P40.3 billion.

The Philippine economy grew by 5.6% in 2023, slower than the 7.6% expansion in 2022.

“The prospects of the industry would definitely be tied to, among others, the increase in the buying power of households,” Cid L. Terosa, an associate professor and senior economist at the UA&P said. 

”The increase in buying power of households will definitely push the industry forward and if you’re looking at the better economic performance this year, I would say that the performance of ride-hailing and on-demand delivery services will also improve,” he added.

Mr. Terosa said that the services depend a lot on road works and transport networks. “Income would really drive this industry further, aside from the technological developments,” he added.

Thomas G. Aquino, a senior fellow at the UA&P-CRC, said that the prospects in the ride-hailing and on-demand delivery services are “quite high” and are projected to expand.

“I’m not just looking at the Philippines, but the entire ASEAN as well, and other parts of the world,” Mr. Aquino said. “I think we have to always understand that this is a new economic activity… that is technology-based, and it is a platform on transportation.”

The Philippines’ transportation agencies need to collaborate with other digitally concerned agencies to enable the industry to grow further, he also said.

“Grab remains firm and focused in its commitment to being an active partner of the government in their growth and development agenda — and we are humbled to see this solidified in concrete economic outcomes,” Grab Philippines Country Head Grace Vera Cruz said in a statement.

“We understand that much work needs to be done in further driving the nation forward, and we are eager and prepared to help usher in a new phase of inclusive growth and prosperity — with the support of our partners in the government and public sector, and our regulators,” she added. — Sheldeen Joy Talavera