Unlocking the Next Stage for Philippines Startups: The Role of Government
Unlocking the Next Stage for Philippine Startups: The Role of Government and Governance
The Philippines has witnessed a surge in entrepreneurial activity, with startups emerging across sectors such as fintech, healthtech, and e-commerce. However, despite this momentum, the country has experienced a decline in its global startup ecosystem ranking, dropping to 64th place in 2025, marking its fourth consecutive year of decline. This trend underscores the need for strategic interventions to address persistent challenges and unlock the full potential of the Philippine startup ecosystem. (BusinessWorld Online)
Current Landscape and Challenges
The Philippine government has enacted policies like the Innovative Startup Act (Republic Act No. 11337) and the Philippine Innovation Act (Republic Act No. 11293) to bolster the startup ecosystem. These laws provide benefits such as grants, subsidies, and streamlined processes for startups. However, implementation gaps remain, with startups facing hurdles in accessing these benefits effectively. (Department of Trade and Industry, N90)
Infrastructure deficiencies, particularly outside Metro Manila, hinder the growth of startups in regional areas. Moreover, regulatory complexities and bureaucratic red tape continue to pose significant challenges. For instance, it can take over a month to register a business and even longer to wind down operations, deterring potential entrepreneurs. (Asian Business Review)
Strategic Recommendations for Government Intervention
Prioritise Policy Implementation and Coordination
While the legislative framework exists, effective implementation is crucial. Establishing a centralised coordinating body to oversee and harmonise startup-related programmes across various government agencies can ensure consistency and efficiency. This body should also facilitate continuous dialogue with stakeholders to adapt policies to the evolving needs of the startup ecosystem.
Streamline Regulatory Processes
Simplifying business registration and compliance procedures is essential. Implementing digital platforms for registration, reporting, and compliance can reduce administrative burdens and encourage more entrepreneurs to formalise their ventures. Additionally, introducing clear exit protocols for startups can provide a safety net for entrepreneurs, encouraging risk-taking and innovation.
Decentralize Support and Infrastructure Development
To promote inclusive growth, it’s vital to extend support beyond Metro Manila. Investing in infrastructure development, such as reliable internet connectivity and transportation networks in regional areas, can attract startups to these locations. Establishing regional innovation hubs and providing localised support services can further stimulate entrepreneurial activity across the country.
Foster Access to Capital
Addressing the funding gap is critical for startup growth. The government can incentivise investments by offering tax breaks to angel investors and venture capitalists who fund early-stage startups. Additionally, expanding grant programmes and facilitating access to low-interest loans can provide startups with the necessary capital to scale their operations.
Encourage Entrepreneurship Education and Culture
Embedding entrepreneurship education in academic curricula can cultivate an entrepreneurial mindset from an early age. Programs that offer mentorship, internships, and exposure to startup environments can inspire students to consider entrepreneurship as a viable career path. Public campaigns highlighting successful local entrepreneurs can also shift cultural perceptions and encourage more individuals to pursue entrepreneurial endeavours.
Teach and Promote the Importance of Corporate Governance
Beyond opportunities and incentives, cultivating a startup ecosystem that investors can trust is key to attracting more investment into the space. This includes teaching startup founders and leaders the importance of proper corporate governance that fosters institutional alignment among all stakeholders, ensuring effective rules-based collaboration between different stakeholders despite coming from different countries, cultures, and backgrounds.
Conclusion
The Philippine startup ecosystem holds immense potential to drive economic growth and innovation. The key to unlocking this potential is to develop a startup ecosystem that is both attractive because of the opportunities and incentives and trustworthy because of the quality of the companies and excellence of corporate governance. By addressing existing challenges through strategic government interventions, enhancing policy implementation, streamlining regulations, decentralising support, fostering access to capital, and promoting entrepreneurship culture, as well as promoting corporate governance, the country can create a conducive environment for startups to thrive. Collaborative efforts between the government, private sector, and academia are essential to realise this vision and position the Philippines as a leading hub for innovation in the region.
Authors
David Bonifacio, Partner, Head of Philippines