Press Release

Local businesses tap potential of OFW market

Villy Cabuag
OFW Journalism Consortium

Despite the drop in remittances of overseas Filipino workers during the past few years, more and more businesses are offering products and services ranging from insurance policies to housing units to telecommunications.

In separate interviews, local firms echoed the government's confidence that the drop in remittances of OFWs, would not affect their profits and is irrelevant to their inroads on the market.

The economy, as measured by the Gross National Product or the sum of domestic output and the net factor income from abroad, has relied on the almost US$7 billion annual remittance of Filipinos overseas to maintain its growth rate. But while the country has been exporting local talents for three decades, it was only two or three years ago when local companies began to flock abroad to tap the OFW market.

In 1999, the country's top insurer, Philippine American Life and General Insurance Company decided on a strategy designed specially for OFWs. It asked its sister firm in Hong Kong to pilot-test the marketing of insurance policies for Filipino workers.

"We saw that this particular market has a very unique need, which is why we devised a way to service the OFWs," said Philam Life assistant vice president for OFW marketing Monette Ventura.

Before, the multinational firm, a subsidiary of U.S.-based American International Group, was content to market insurance policies for the OFW market in the country through mailing campaigns to the families of the workers. But recently, Ventura said, the firm began to focus on a specific market niche and created the OFW and Filipino-Chinese departments.

After three years of operation abroad, Philam Life acknowledged that the Filipino workers need a program that will look after the security of the worker and the welfare of their family members which could be paid at the shortest possible time.

Many local companies had set up satellite offices in Hong Kong prior to Philam Life's entry. But most of these were local pre-need firms offering education and pension plans. The Insurance Commission said that only two local life insurers currently have international operations for OFWs.

A life plan was a hard sell item, especially for a local insurer, because of varying laws in different countries, among other things. Hong Kong insurance law, for instance, does not allow the sale of a Philippine policy there.

But some companies have learned to tailor-fit their products according to the needs of the Filipino community, such as short-term, flexible payment schemes and offering products useful to their family. They have packaged a life insurance in the pre-need products like what the
Yuchengco group's Malayan Insurance offered when it introduced the scheme late last year for Hong Kong and the Middle East.

Ventura admits OFWs and their families still need to be educated on the benefits of having an insurance policy while working in another country. She cites government data that only 12 percent of the estimated 75 million Filipinos are insured, one way or another. Perks are currently being given to private insurance firms to be aggressive and reach the target of 20 percent insured within the next two years.

Unlike AIG, which has an extensive network of subsidiaries present in 130 countries, a local company like Malayan would have to choose a partner to guide them through the intricacies of the market, according to Joel Almagrom the company's vice president. Malayan is one of the top 20 insurance companies in the country.

But finding a partner is not easy.

Erick Veneracion, general manager of the telecom firm Swiftel, said the company's biggest challenge is getting a foreign partner especially at a time when most companies are imposing belt-tightening measures in the light of the nose-diving U.S. and the Japanese economies.

"It's not easy to get a partner once you are outside the Philippines. You have to show them that the business model is OK and (in some countries) you cannot own 100 percent of the business," Veneracion said.

Swiftel, one of a group of information and communication technology firms wholly-owned by Millenium Holdings Inc, serves mainly the concerns of OFWs in Hong Kong and Macau in partnership with local telecom firms in the said countries.

This relationship enables Swiftel to provide services such as allowing customers to send and receive messages from a GSM (Global Service for Mobile communications) cellular phone or from a paging firm by using one of their devices. But Veneracion said while these services cannot fully take-off because of some problems with suppliers, the company is doing well.

"We have very minimal advertising (costs on the products). We just distribute leaflets at Central Park (in Hong Kong)," he said. In its three months of operation, Swiftel already has 5,000 subscribers; it is processing 16,000 messages a month including those who subscribe to their
"info-tainment" service.

He explained that workers there have no choice but to use the service to get in touch with their country and their loved ones, as some cable TV operators do not carry Philippine programming. There are two other telecom firms offering the same service but some analysts say these need more local content.

But such services alone do not support all the needs of the migrant workers and their families in the Philippines. According to Balikabayani Foundation Inc, the OFW needs more than just the services that local firms are offering them.

"In fact they (migrant workers) are asking more of direct services on things as how to manage their investments. The problem is, first, they don't know where to invest and second, if there are current savings (and investment) offerings available, these do not fit their needs," said Mai Anonuevo, Balikbayani's executive director.

She said many firms servicing OFWs, such as banks and investment houses, do not have an understanding of their clients' needs.

Which is why Balikabayani was established. It objective is not purely for profit but to teach migrants how to manage their hard-earned savings.

Having an organized community of migrant workers in another country can be the most powerful tool. They can have more "bargaining power" in negotiating with a firm. "Even if they can't understand (the benefit of) insurance, but with the critical mass and membership, they can demand cheaper rates and higher earnings.

"Rural banks, for instance, why are they interested in helping Balikabayani? Because they know that we have many members and because they see the market potential," Anonuevo said.

In fact, the group has signed with an agreement with International Netherlands Group, the world's top insurer, to package an insurance program designed for the members of the multi-service center that the organization set-up for OFWs in Hong Kong.

But at the moment the group is still studying what type of investment policies or strategies would suit the migrant workers and support their reintegration with their family members in the country. But finding the appropriate business for a particular area is a tough task. Anonuevo is still studying the rudiments of Social Enterprise Development at the Asian Institute of Management to arm the group in giving such advise.

"But we won't give the service (investment consultancy) for free. Because we saw that if we give it for free they cannot see the value of their hardships and there's no use in helping them," she said. - OFW Journalism Consortium

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Press release contributed by:

OFW Journalism Consortium
Contact address: INSTITUTE ON CHURCH AND SOCIAL ISSUES
2/F ISO Building, Social Development Complex, Ateneo de Manila University,
Loyola Heights, Quezon City, Philippines
63-02-4265953, 4266070 (fax), jopiniano@lycos.com