The Republic of the Philippines is known for having an abundance of beautiful beaches, delicious fruits, and collections of thousands of islands. As a country, it is the 13th most populous country in the world and home to more than 108 million people. A few past winners of Ms. Universe beauty pageant competition came from the Philippines (e.g., Gloria Diaz, Pia Wurtzbach, and Catriona Gray). A well-known professional boxer in the U.S., Manny Pacquiao is Filipino, and he is currently serving as a Senator in the Philippines. What I'm trying to say is that the Philippines is so much more than that.
For instance, the startup ecosystem in the Philippines is increasing, just like its neighboring countries. More and more young professionals starting their own business, and in late 2019 the Philippines government introduced new legislation "Philippine Innovation Act (RA11293). I will explain briefly in a bit of what is RA11293 is all about.
That said, last week, I had the opportunity to attend the "Consultation on the Innovation Startup Act" event at the Kalayaan Hall, Philippine Center. Thank you to Jed Llona, Consul, Political & Economic Affairs, and Celynne P. Layug, Trade Commissioner, Philippine Trade & Investment Center for the invite. It was an honor and privilege to be able to support an event organized by the Philippines consulate. Southeast Asia is buzzing not only in that region but also here in the San Francisco Bay Area.
The event kick started by Consul General, Henry S. Bensurto, Jr. and followed by DTI Undersecretary, Rowena Guevara delivered her keynote address " The Philippine Startup Ecosystem." Mrs. Guevera shared with the audience on the Philippine startup ecosystem, which I thought was very interesting and insightful. The second keynote speakers were DTI, Undersecretary Rafaelita Aldaba, and she spoke about "Opportunities and Challenges of Philippine Startup." She discussed in detail the many challenges and leading issues faced by the startup in the Philippines.
Some of the problems (but not limited to) are as follows:
Disconnect: Too many programs, and it should be harmonized to maximize impact, no end-to-end support.
Access To Capital: Lack of awareness of available funds, mismatch in terms of financing, lack of funding for early stage.
Mindset: Corporate mindset, fear of failure, risk-taking.
Policy Gaps: Startup incentives, SEC, BIR,
Financing Skillset: Limited access to Tech-creative courses mismatch of talent.
Solutions: Inclusive Innovation Industrial Strategy
Embrace Industry 4.0: Prepare SMEs for Industry 4.0
Innovative SMEs & Startups: Build a robust startup ecosystem
Ease of Doing Business: Simplification of process, automation, and also introduced new legislation, Philippine Innovation Act (RA No: 11293).
Upskill/Reskill Workforce: Upgrade education curricula, and introduce robust skills training programs.
Integrate Production Systems: Link and integrated all industries, including agriculture & services, and promote research commercialization.
Innovation and Entrepreneurship Ecosystem: Use and adopt new technologies, and improve digital skills.
So what is the Philippine Innovation Act (RA No: 11293)?
In a nutshell, the new act created to attract and retain foreign founders to set up shops and to make it easier to do business in the Philippines. RA No: 11293 bill provides benefits, programs to strengthen, promote, and develop the Philippine startup ecosystem. The measure consists (but not limited to) of the following strategies:
National Innovation Council - Established as an inter-agency council chaired by the President, tasked to create the country's innovation goals, priorities, and long-term national strategy.
Innovation Fund - To strengthens entrepreneurship and enterprises engaged in developing innovative solutions. Mandates all banking institutions to set aside 4% of the loan portfolio for innovation development credit.
Innovation Centers - Encourage and supports the establishments of innovation and business incubators.
Intellectual Property - Mandates the enforcement of relevant Intellectual Property Laws to protect the exclusive rights of scientists, inventors, and innovators to their intellectual property and creations.
Diaspora for Innovation and Development - Establishes the Diaspora for Innovation Development Program to enable the country to mobilize and tap the high-level expertise of the Filipino diaspora in pursuits of innovation and development efforts.
Startup Investment Development Plan - The DTI and along with other government agencies, will spearhead initiatives to develop short, medium, and long-term strategies to promote and facilitate applicable benefits to current and prospective investors of startups/and startup enablers.
Startup Venture Fund - The SVF is created to help stimulate capital investment in the emerging startup ecosystem of the Philippines. The fund's primary purpose is to provide an avenue to match investments from select investors to startups based in the Philippines.
Startup Grant Fund - The SGF shall be used by the three lead agencies (DTI, DOST, DICT) to provide initial and supplemental Grants-in-Aid for startups and/or startup enablers.
Startup Visa - Startup Visa is a conditional permit provided to startup owners, employees, and investors to open up the Philippines for emerging and progressive ideas. The visa is valid for one (1) year to three (3) years, depending on the nature and stage of the startup.
Business One-Stop-Shop - The DTI will establish startup business one-stop-shops where end-to-end registrations of startups may be facilitated. It will be served as a platform containing all information on the legal and regulatory processes involved from opening, operating, to closing, or exiting a startup in consonance with the country's Ease of Doing Business Act.
It was great to see familiar faces at the event, and these individuals were among staunch supporters of the ASEAN region, such as Janssen Chong (Horizon Connect), Christina Laskowski (President, STACT-SV), and Thomas Jeng (500 Startups).
Thank you, Christina, Thomas, Erin Pangilinan (Founder, FASTER), and Jim Harvey (Nasdaq), for sharing your perspective as SV enablers. I appreciate the insights, and I'm sure that many among the audiences felt the same way too.
Other panel members who spoke at the event as founders were Kevin Gabayan (Founder, Plentina), Wayne Lue (Co-Founder, CTO, Joymode), and Jessica Tsoong (EIR at Relay Ventures). Their perspectives, as founders, were also impressive. A few of the Philippines promising startup that worth mentioning in the Philippines are Cropital, Paymongo, BeamandGo, Papa, and Rurok.
Just like the neighboring countries such as Malaysia, Indonesia, Singapore, and Vietnam - The Philippines has a lot of potential. I believe is that regardless of the overall challenges that the Philippines startup ecosystem faced today, there will be many opportunities awaits in the Philippines as well.
In the next three to five years, many Philippine startups will want to grow outside of their own country and to enter new territories, so don't be surprised when the next unicorns will come from the place of many of us least expected, which is the Philippines.
Last but not least, I leave this quote from DTI Undersecretary, Rafaelita Aldaba,
" We envision the Philippines as a globally competitive economy driven by a productive workforce, inclusive innovation and S&T, an enabling business environment, and a robust startup ecosystem."
Founder & Principal