THE PHILIPPINE government must grant more incentives and strengthen its digital infrastructure to support the growth of startups, analysts said.
“The (startup) ecosystem needs to offer compelling benefits to would-be startup founders for them to domicile in the Philippines,” Jay Fajardo, executive director at Ideaspace Ventures and QBO, told BusinessWorld in an e-mail.
These benefits should come in the form of financial incentives, regulatory freedom, access to inexpensive but quality talent, mature digital infrastructure, a vibrant consumer market, and strong intellectual property protection, he said.
Startups are seen as an effective means of fostering innovation and providing job opportunities. In 2018, Republic Act (RA) No. 11337 or the Innovative Startup Act was signed into law to encourage the establishment and growth of startups.
The law provides for the grant of fiscal incentives such as income tax holidays and duty import exemptions for startups. It also provides for simplified visa processing for foreign startups and investors and mandates educational institutions to “foster an environment conducive to innovation.”
The issuance of startup visas, which would allow foreigners to put expand their startups in the Philippines, would spur growth in the country’s innovation economy, Mr. Fajardo said.
To generate funding for startups, the government can issue a separate visa similar to a retiree’s visa, he said, which allows foreigners to settle in the country provided that they maintain a deposit of $20,000.
“Rather than having them use this on random investments such as real estate or a small business, a special retirement visa can be created directing these funds into Philippine tech startup ventures or venture capital funds,” Mr. Fajardo said.
RA 11337 also created the Startup Fund meant to provide these firms more grants-in-aid.
Rachel Carrasco, co-founder of food startup BakenPH, said the country should allocate diverse grants to bolster Philippine startups.
“I registered this business (BakenPH) in Singapore and there are so many grants available to citizens and permanent residents,” she told BusinessWorld on the sidelines of an event this month. “There are grants when you hire local employees, there are grants to push your business in the digital space — there’s many of that.”
Alewijn Aidan K. Ong, assistant general manager for business development at the National Development Corp. (NDC), said the agency added three new co-investment partners to its portfolio this year, namely venture capital firm Kaya Founders, ARQCapital Partners, Inc., and Fuel Dreams.
“Initially, we started out with five co-investment partners. So, we were able to successfully do that,” he told reporters on the sidelines of an event this month. “For 2024, we were looking at adding about 50-60% in our portfolio, so we were able to get three more on board.”
Existing co-investment partners of the NDC are Ideaspace Ventures, Investment & Capital Corp. of the Philippines, Gobi-Core Philippine Fund, Foxmont Capital Partners, and Real Tech Holdings Co., Ltd.
“Of the eight that we have right now, around four or five are pretty active,” Mr. Ong said. — Beatriz Marie D. Cruz