MANILA, Philippines — The government needs to increase funding support and implement a special tax program for local startups to propel the growth of the country’s startup ecosystem, according to venture capital fund Gobi-Core Philippine Fund.
These were among the recommendations of the venture capital fund’s report titled “Philippine Horizons: Filipino Innovation in the ASEAN (Association of Southeast Asian Nations) Landscape,” presented by Gobi-Core Philippine Fund founding partner Carlo Chen-Delantar during the Philippine Startup Week 2024.
He said the Philippines is well-positioned for growth, with the country’s young and fast-growing population offering a unique opportunity to harness the talent pool for economic transformation.
While there have been laws enacted to support startups, the report cited the need for the government to strengthen the implementation of such initiatives to grow the startup ecosystem.
“The government can increase support for local startups by issuing grants that provide early-stage funding, allowing entrepreneurs to focus on research and development,” the report said.
It also said having the government as an investor is strategic for startups in terms of partnerships, credibility accreditation and other business registration needs.
“With that, establishing a Fund of Funds can attract private investors by investing in venture capital funds, which, in turn, invest in promising startups. These venture capital firms also serve as a source of dealflow for future direct investments,” it said.
The report also recommended implementing a special startup tax program to help local startups thrive.
“Tax exemptions and benefits can be implemented for various types of investors and companies to increase investments entering the local market. These tax incentives can be implemented in different ways such as on a per-case basis depending on the financial situation of the companies, as well as a per-year basis based on the startup’s tenure,” the report said.
Chen-Delantar said the Philippines can learn from its neighbors’ best practices.
“Singapore’s progressive tax policies attract startups to partial and full tax exemptions for early-stage businesses. Imagine if the Philippines adopted similar incentives, how many new ventures could flourish?” he said.
He said Malaysia and Vietnam also offer excellent examples of startup ecosystem support, particularly in creating a favorable regulatory environment and talent development.
Other recommendations cited in the report include streamlining the business registration process; coming up with strategies to support innovation outside Manila; having a centralized platform for information on the country’s startup ecosystem; supporting entrepreneurship on a university level; improving tech infrastructure, and increasing coordination and collaboration.