the philippine entrepreneurship...

ASSESSING THE PHILIPPINE ENTREPRENEURSHIP ECOSYSTEM Andres. F. Garcia

Sr. Economist

andres@worldbank.org

Inclusive Innovation Conference

October 2nd, 2018

This Photo by Unknown Author is licensed under CC BY

MEET CIELOMONTEVERDE

2021

2

HOW STRONG IS THE PHILIPPINE ENTREPRENEURSHIP ECOSYSTEM?

United States 1

Switzerland 2

Canada 3

United Kingdom 4

Australia 5

Denmark 6

Iceland 7

Singapore 27

China 43

Malaysia 58

Thailand 71

Philippines 84

Vietnam 87

Indonesia 94

MOST ENTREPRENEURIAL

COUNTRIES

PHILIPPINES AND

ITS NEIGHBORS

Rank Rank

Source: The Global Entrepreneurship Index, 2018.

Ranking includes 137 countries

Over half of the world has a stronger entrepreneurship ecosystem

3

…HOW EFFECTIVE IS THE PHILIPPINE ENTREPRENEURSHIP ECOSYSTEM?

For every 1 million

working age population…

New firms born in 2016

300

2,300

Source: World Bank. 2018. World Development Indicators Business Density

1,000

The Philippine ecosystem suffers from a low firm birth rate

4

…HOW INCLUSIVE IS THE PHILIPPINE ENTREPRENEURSHIP ECOSYSTEM?

Source: World Bank. 2018. Productivity and Growth Report

0100200300400500600

Tho

usa

nd

s

Services: VA per Worker by Region, 2015(in Php, Constant 2000 Prices)

Some subnational ecosystems lead to higher productivity levels

5

ASSESSING THE ECOSYSTEM USING THE WORLD BANK’S ENTREPRENEURSHIP DIAGNOSTIC TOOLKIT

Policy

FinanceCulture

Supports

Human Capital

Markets

Source: Babson Entrepreneurship Ecosystem Project.6

POLICY

-30

-20

-10

0

10

20

30

40

50

Burden of governmentregulations Hiring and firing practices Competition Impact of biz rules in FDI

Diffe

rence w

ith w

orld a

vera

ge s

core

s (

%)

Indonesia Malaysia Philippines Thailand Viet Nam

Source: WEF, 2017. World Competitiveness Report

It’s less bureaucratically fun in the Philippines

7

SUPPORTS

Sources: Author’s elaboration based on information provided in the QBO/PWC “Off to a great start: 2017 Philippine Startup Survey”, VMWare Cloud Index, and data collection.

2005 2011 2012 2015 2016 2017

April:Philippine Emerging Startups Open

October:Startup Weekend

March:Kickstart Ventures begins investing

March:Ideaspacelaunches

January: Google Manila opens

September: Geeks on a Beach launches

January: Endeavor enters the PH market

June: SlingshotMNLdebuts

August: Philippine Startup Roadmap was unveiled

February: Palawan ITBI and Startup Hub launches

August: QBO Innovation Hub launches

2013

January: PLDT Voyager Innovations and Google Launchpad Accelerator Program launch

March: PwC Philippines launches Venture Hub

2018

May: Senate approves Innovative Startup Act

Support mechanisms have increased over time. Time to take stock and coordinate.

8

FINANCE

Source: World Bank, 2015. Enterprise surveys.

Access to finance might not be a major constraint

but few firms use banks to finance investments

17

1211

2

11

3735

1215

29

Indonesia Malaysia Philippines Thailand Vietnam

Sha

re o

f fi

rms

(%

)

Firms identifying access to finance as a major constraint

Firms using banks to finance investments

In 2017, Philippine tech startups attracted

a small share of regional investment

Source: CB Insights, 2017 (Jan-Sept).

100 deals

$18 million

310 deals

$3 billion

9

- Lots of firms offer training to their full time

employees

60% 19%

- Neighboring countries spend more than the

Philippines on software

50% 33%

HUMAN CAPITAL

Skills of today are above average but

they are not fully ready for the future

-30

-20

-10

0

10

20

30

Skills of current workforce Skills of future workforce

Diffe

rence to w

orld a

vera

ge s

core

s (

%)

Indonesia Malaysia Philippines Thailand Vietnam

Source: WEF, 2016. World Competitiveness Report

Filipino firms train a greater portion of their

employees, but don’t spend much on software

Source: Cornell, INSEAD, WIPI, 2018. Global Innovation Index10

Source: Global Entrepreneurship Monitor, 2015

-80

-60

-40

-20

0

20

40

60

80

Perceivedopportunities

Perceivedcapabilities Entrepreneurial spirit Innovation High Status

Diffe

rence w

ith w

orld a

vera

ge s

core

s (

%)

Indonesia Malaysia Philippines Thailand Vietnam

The perceived Filipino entrepreneurial traits are above world averages

CULTURE

11

CULTURE

Connected Filipinos are world leaders on

internet usage and social media…

On average, every day

Filipinos spend:

- over 9h on the internet,

the 2nd most worldwide

- over 4h on mobile internet

- nearly 4h on social media,

the world’s leader, including

67m Facebook users

Thailand 62

Malaysia 59

Vietnam 47

Indonesia 40

Philippines 39

%

SHARE OF PEOPLE

BUYING ONLINE

Source: We are Social, 2018. Digital Report.

…but they make less online purchases

than their neighbors

12

MARKETS

Source: Google Temasek, 2017

…the Philippine e-commerce retail market

will grow to nearly $10b in 2025

0

2

4

6

8

10

2015 2025

USD

billions

40%(CAGR)

Singapore 1,861

China 634

Thailand 199

Vietnam 160

Malaysia 74

Philippines 38

Indonesia 32

USD

DIGITAL PURCHASES

PER BUYER

Source: Accenture. 2017. Insights to Digital CommercePer capita digital purchase

Despite the low level of online purchases

made by Filipinos nowadays…

13

Malaysia 26

Singapore 24

Indonesia 28

China 32

Thailand 39

Vietnam 47

Philippines 51

BUSINESS CONNECTING

TO CONSUMERS THROUGH

THE INTERNET

Rank

Source: WEF. 2016. Global Information Technology ReportInternet use for business-to consumer transactions ranking (Out of 139)

Few businesses are ready for the digital

economy

MARKETS

Online participation is currently

constrained by high prices

53% of people using cellphones

do not access the internet.

Mobile internet is nearly 3x more

expensive than in Malaysia.

24% of households have broadband.

Broadband internet is over 6x more

expensive than in Malaysia.

Source: ITU, 2017. Measuring the Information Society Report.

14

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LET’S MAKE CIELO’S DREAM

A REALITY

2021

15

Thank

you

Andres F. Garcia

andres@worldbank.org