The Philippines, with its expanding startup ecosystem and enabling environment which I explored a few months ago, is positioning itself as an ideal destination for startups. Despite being in the nascent stages of development, the country is emerging as a key player in the region, fueled by a young and tech-savvy population. With its strong potential as a startup hub, let’s highlight a few of The Philippines’ attractive features and the steps taken to foster a vibrant entrepreneurial ecosystem.
Enabling Environment and Skilled Talent
The Department of Trade and Industry (DTI) recognizes the Philippines as an actively emerging startup ecosystem in the region. Trade Secretary Alfredo Pascual emphasizes the country’s growing startup scene and a 20 percent growth in deal count, demonstrating investors’ confidence and interest. Moreover, the Global Startup Genome Report 2022 acknowledges the Philippine startup ecosystem and Manila’s entrepreneurial environment among the top 20 Global Ecosystems and Top 10 Asian Ecosystems regarding affordable talent.
“Being in the nascent stages of its startup ecosystem development, the Philippines is one of the actively emerging ecosystems across the region. We wish to highlight the country’s strong potential as a startup destination. It is home to a very young, tech-savvy population, putting the startup scene at the center of an innovation-based program.”– Alfredo Pascual
Tax Incentives and Support
To attract startups and foster a healthy business environment, the Philippines offers several tax incentives and support mechanisms. Under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, startups benefit from a reduced 20 percent corporate income tax (CIT) rate. This lower CIT rate positions the country as an attractive destination for entrepreneurs. Additionally, the Strategic Investment Priority Plan (SIPP), implemented through CREATE, provides a tailored tax incentive package based on tier, location, and market orientation.
Challenges and Reforms
While the Philippines has been recognized as a promising startup destination, it has also faced challenges. A study by the Business Name Generator identified high procedure costs and a high business tax rate as deterrents for starting a business in the country. However, the government has taken proactive measures to address these concerns. The implementation of the CREATE Law, with its reduced CIT rate for startups, aims to alleviate the burden on entrepreneurs and enhance the ease of doing business in the country.
With a young and tech-savvy population, an expanding startup ecosystem, and supportive government policies, the Philippines is paving the way to become a dream startup destination.
Despite initial challenges, the country’s commitment to fostering an innovative and entrepreneurial culture has gained recognition globally.
By offering tax incentives, affordable talent, and an enabling environment, the Philippines beckons entrepreneurs to explore its vast potential and make their startup dreams a reality.