Why Chinese fintech lenders are flocking to the Philippines

We wrote toward the end of last year that Chinese consumer loan apps were flocking to Indonesia.

In July, Indonesia’s financial services regulator, OJK, did its second round of crackdowns on unlicensed players. It worked with Google, the Ministry of Information and Communications, and the police to shut down unregistered players.

But only 60+ companies still have their registration numbers. What happened to the other 200?

Many fled, a few of them shut down, and a few others moved to the Philippines. In fact, even some of the Chinese players with registration numbers also started expanding to the Philippines.

Some of the famous names in Indonesia, such as Pinjam Yuk and Dana Rupiah, have set up operations in Manila (particularly in Makati and Taguig cities).

Office buildings in Taguig City, Philippines

Big guys in town

Big players from China are not missing the fintech opportunity in the Philippines either.

Tencent Holdings has recently set foot in the Philippines through the funding of Voyager Innovations, a fintech company by telecom firm PLDT. Along with KKR, Tencent is putting in a total of US$175 million for a minority stake in Voyager. This transaction “marks the largest investment to date in a Philippine technology company,” says PLDT.

PLDT was the pre-IPO investor of Rocket Internet, putting in ~US$380 million in 2014 ahead of the latter’s floating in Frankfurt. Earlier this year, PLDT did a partial disposal.

Just last year, the Alibaba-affiliated Ant Financial Services Group joined forces with Ayala Corporation to invest in Globe Telecom-backed Mynt, a rival of Voyager.

True Money, a fintech firm owned by Thailand’s Ascend Money (and where Ant Financial also has a partial investment), is also aggressively developing its business in the Philippines.

Armed with Chinese money and technology, the war between the big fintech players is definitely brewing in the Philippines.

Why the Philippines?

In many ways, Filipinos love to consume as much as, if not more than, their Indonesian counterparts. However, the credit infrastructure is also underdeveloped.

According to data from the World Bank, only 32 percent of the Philippines’ population has a financial institute account as of 2017, with the majority still unbanked. The lack of access to basic financial services creates a problem for Filipinos to take loans from banks. Many of them turn to informal methods, such as borrowing from family and friends.

Don’t forget remittances