Philippines unveils startup roadmap, pushes for senate bill

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DOST-ICTO office and startup community turn over the Philippine startup roadmap to the office of Senator Paolo “Bam” Aquino.

Looks like the Philippines has started to get serious about building its startup ecosystem.

At the 3rd Geeks on a Beach international conference in Boracay this week, the government and stakeholders in the startup community unveiled a roadmap, a framework for developing the startup ecosystem in the hopes it would become the next “sunshine” industry following in the footsteps of outsourcing.

But that wasn’t the only good news: the roadmap will be the basis of a startup bill filed in the Senate, raising optimism that much-needed policies will finally be laid down.

Authored by entrepreneur and Senator Paolo “Bam” Aquino, this bill is one important piece in achieving what the roadmap envisions: 500 startups with total funding of US$200 million and valuation of US$2 billion by 2020.

“This journey started a little over two years ago when we started asking ourselves what should be the right role for the government in the development of the startup ecosystem. We gathered members of the community and started a conversation. The community came up with a long list of things we need to do. We will work on very important strategies especially in the areas of policy and infrastructure,” explained Mon Ibrahim, deputy director of the Philippines’ Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO), which led the initiative.

The government is “playing a catch-up game,” he said, but better late than never.

Venture capital firm Kickstart Ventures’ Christian Besler agrees. “[The roadmap] is a good starting point. We tend to bash the government, but it’s actually good to see that the government on this side of the table is heavily involved now. It’s marching along, not just following. It’s saying ‘we want to be equals’ and that means they have to adapt to [our] pace.”

The roadmap was drafted by the DOST-ICTO, with the help of Kickstart Ventures, incubator-accelerator Ideaspace, entrepreneurs, startup founders, and the academe.

Building a thriving ecosystem and crafting the roadmap are similar in that they both require close collaboration between the public and private sectors. Startup stakeholders couldn’t have emphasized this more during the conference.

“This roadmap aims to develop a coherent and consistent strategic plan for the country’s innovative ecosystem, engaging members of both public and private sectors. This is a project for the startup community and by the community itself,” Ibrahim said.

Beryl Li, senior consultant for the crafting of the roadmap, told the audience: “We all came together in one room, a first in history, to talk about what the Philippines should do to push the ecosystem forward.”

Jojo Flores, co-founder of Plug and Play, said the roadmap puts everyone in one page. “All the developments are happening in individual silos. It was important to have a common goal. This is the first step we’ve taken.”

“We’re moving towards one vision, one direction,” Ideaspace co-founder and president Earl Valencia said, echoing Flores’ point.

Action plans

Ibrahim explained that the roadmap is “80 percent what we need from the government and 20 percent what the community needs to do.”

But he noted this will evolve and the community would eventually do most of the work once the government has laid the foundation that will poise it for growth.

Interest in the Philippine startup scene is emerging. It’s only expected as the country is one of the fastest growing in Asia; it has a young and tech-savvy population; and it has competitive advantages such as low labor cost and English language proficiency.

From practically little startup investment activity and a few players five years ago, the Philippines now has 20 accelerators, incubators and venture capitalists, and at least a hundred operating startups.

Despite this relative dynamism, the scene is still in its infancy. Movers and shakers in this industry realize the country has a long way to go before becoming a startup hub.

Ibrahim said the roadmap has identified areas that need improvement and the programs that will address each area.

Two of the commonly cited challenges for the ecosystem are poor internet infrastructure and lack of enabling policies (streamlined business procedures, tax incentives, and easy immigration).

For internet infrastructure, the roadmap cites the need to review the anti-trust bill, which should allow other internet providers to enter the market, drive prices down, and improve the quality of services.

Representatives from the government and academe, investors, entrepreneurs, and startup founders gather at the 3rd Geeks on a Beach conference in Boracay, Philippines.

Representatives from the government and academe, investors, entrepreneurs, and startup founders gather at the 3rd Geeks on a Beach conference in Boracay, Philippines.

A longer wish list

The roadmap also states the need to cut down time for incorporating, closing, or dissolving a company, and for tax incentives targeting startups operating at a loss in the first years.

This is where the startup bill comes in (full details). Filed by Senator Aquino and titled “An Act Exempting Startup Enterprises From Taxes Arising From the First Two Years of Operation,” the bill will help institutionalize the roadmap. However it has only three pages at the moment and focuses on tax incentives.

On the sidelines of Geeks on a Beach, Karl Santinitigan, programs director at the office of Aquino, said the bill was filed to get the conversation moving, but it’s still going to evolve. “That’s why the roadmap is timely because that’ll feed into the bill.”

Of course, the startup community has a longer “wish list.”

Arup Maity, co-founder of BlastAsia, has proposed a stage where startups could be considered startups before they become companies. Valencia wants incentives to encourage investors to risk their money in startups, while Jay Fajardo of Launch Garage raised the need for policies that will bring innovation from the academe to the commercial side.

“The wheels are in motion,” said Fajardo. “A lot of governments around the world are looking at the startup ecosystem as a major contributor to economic progress. The startup roadmap is the tool to get not just the DOST-ICTO, but the rest of the government involved.”

Aquino’s bill tasks the Bureau of Internal Revenue, the Department of Trade and Industry, and the Securities and Exchange Commission to promulgate the necessary rules and regulations once the bill is passed into law.

“The next BPO”

What’s the big picture? For Ibrahim, “ultimately, our goal is to generate startups that drive economic growth and provide solutions to our society’s most pervasive issues.”

If done right, Flores said the country’s startup plan can prominently put it on the global map, like what the business process outsourcing (BPO) industry did.

The Philippines is a world leader in outsourcing, and has overtaken India as the world’s call center capital this year. By 2016, experts estimate the country’s BPO industry to generate US$25 billion in revenue, accounting for about 10 percent of the Philippine economy and as much as the total amount of remittances from Filipinos overseas.

“We have an opportunity to leapfrog that and become a bigger industry, one that’s not service-based but product-based, IT-based,” said Flores.

“This could be the next BPO industry of the Philippines,” Valencia concluded.

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