Entrepreneurship in the Philippines

Entrepreneurship in the Philippines

• The objectives of the discussion included explaining entrepreneurial ventures and trends in the Philippines, recognizing the impact and value of entrepreneurship to the Philippine economy, and analyzing government programs related to entrepreneurship.

Qualities of Entrepreneur and Cultural Aspects of Entrepreneurship

• Filipino entrepreneurs have led the local business scene, often succeeding abroad.
• Their ventures are predominantly in food processing, property development, and trade, including shopping malls.

Entrepreneurship as a Product of Resources, Opportunities, and Constraints

• The availability of entrepreneurs is uneven across time and locations.
• Entrepreneurship hinges on internal and external motivational factors within a business.

Historical Periods of Economic and Entrepreneurial Development

• Precolonial Era: Barter system existed, involving trade with the Arabs and Chinese. Crafts and trade flourished through local traders.
• Spanish Colonization (18th Century): Galleon trade connected Manila and Acapulco. Tobacco monopoly was prominent, and economic activity centered around crops and commerce.
• Spanish Colonization (19th Century): Land holdings became concentrated in the hands of a few, alongside agriculture thriving in various provinces.
• American Colonization (Mid-19th Century): Free trade with tax-free export fostered entrepreneurial ventures, with prominent players like the Roxases and Barretto families.
• American Colonization (20th Century): Metal and mineral production became specialized and exported to the American market. This period involved a liberalization of the economy. The Philippines Autonomy Act (Jones Law) and creation of PNB are key events. The Tydings-McDuffie Act contributed to transportation and communication advances.
• Post-Colonial Period: The Bell Trade Act and the Filipino First Policy significantly impacted the landscape. The rise of Filipino manufacturing elites in the 1950s fostered banking and finance. Universities produced a substantial supply of managerial skills within the industry.
• Post-Marcos Period: Economic liberalization fostered foreign investment and domestic market growth, stimulating employment and entrepreneurship. Large conglomerates benefited from this period.
• Martial Law Period (Authoritarian Period): Filipino-foreign joint ventures increased, and infrastructure projects spurred expansion. Increased out-migration of Filipino workers was also a feature of the period.

Strength of the Philippine Entrepreneurial Ecosystem

• Over half the world has a better entrepreneurship ecosystem than the Philippines. Ranking in 2018 was 84th out of 137 countries globally.

Effectiveness of the Philippine Entrepreneurship Ecosystem

• The Philippine ecosystem experiences a low firm birth rate.
  • For every 1 million working-age people in 2016, 2,300 new firms were born in Malaysia, 1,000 in Indonesia, and 300 in the Philippines.

Inclusiveness of the Philippine Entrepreneurial Ecosystem

• Sub-national ecosystems are associated with higher levels of productivity. Variations exist across regions in terms of service value-added per worker.

Assessing the Ecosystem

• The World Bank's entrepreneurship diagnostic toolkit evaluates policies, markets, culture, supports, finance, and human capital to assess the effectiveness of the ecosystem.

Policy Related to SME's

• Philippine regulations present a less bureaucratic environment compared to some neighboring countries (2017 data).

Support Mechanisms

• Support mechanisms for startups, like initiatives and programs, have expanded. Various governmental initiatives and programs to foster entrepreneurship and support have increased over time, and the need exists to coordinate these.

Financial Aspects of the Philippine Entrepreneurship Ecosystem

• Access to finance is not a significant constraint, but few businesses use bank loans.
• In 2017, Philippine tech startups attracted a small share of regional investment, with 100 deals totaling $18M, compared to 310 deals totaling $3B.

Human Capital

• Filipino firms provide significant employee training, however, less time and money are spent on software training, comparative to countries in the region.

Cultural Aspects

• Filipino entrepreneurial traits exhibit above-world averages when considering perceived opportunities, capabilities, and entrepreneurial spirit. The values, like a preference for imported goods and often optimistic outlook, influence Filipino business culture. Internet usage is high, but online purchases are lower than neighbors.

Filipino Values & Culture

• Love for imported goods, bahala na values, mañana attitude, perceived value of time, and a sense of hiya influence business culture.

Small and Medium Enterprises (SMEs) in the Philippines

• SMEs are categorized based on size (micro, cottage, small, medium, large) using a size classification reflecting revenue.
• Policymakers consider SMEs critical to achieving both economic and social goals.
• International organizations offer support and access to funding for SME development.
• Various perspectives exist on the challenges facing SMEs in the Philippines, including economic conditions, resource constraints and broader macro-economic factors.

SMEs and Entrepreneurs

• Entrepreneurs' personal attitudes/values significantly influence SME success.
• Entrepreneurs face various difficulties, and micro-economic level analysis alone may not fully analyze the difficulties.