David CagahastianSeptember 8, 2014

The Philippines has the highest rate of business start-ups in micro, small and medium enterprises in South East Asia in 2013, according to a recent survey conducted by the De La Salle University (DLSU) using the internationally recognized Global Entrepreneurship Monitor (GEM) standards.

In its report, the Philippines� GEM national team composed of DLSU professors said that in 2013, approximately 18.5 million Filipinos were starting or running a new business, while close to 6.6 million Filipinos were engaged in a business for at least three and a half years.

This high rate of start-up businesses is attributed to the fewer opportunities for employment in the Philippines, and partly to the optimism of Filipinos that they can start a business and succeed in it.

�The Philippines exhibits the highest rate of business start-up in the Asia-Pacific and South Asia region. On the other hand, the country has the highest business discontinuance rate. Majority of the entrepreneurs in the Philippines are driven by necessity given the high unemployment rate and few job opportunities in the country,� the report said.

According to Dr. Aida L. Velasco, GEM Philippines national team leader, 43.6 percent of Filipino start-ups were driven by necessity, while only 38 percent were driven by opportunities to do business.

She cited that by July 2013, the average age of Filipinos is at 23.4 years, with more than 70 percent of the population being below 30 years old. At the same time, the unemployment rate is 7.3 percent.

The conclusion that these business start-ups were driven by necessity is also bolstered by the fact that most of these businesses are not focused on generating more jobs for the economy.

Only 15.3 percent of the businesses considered as in the start-up process (up to three and a half years in operation) expect to have five employees after five years of business operations. Only 0.8 percent expect to have more than five employees in the next five years, while only 0.3 percent expect to have more than twenty employees in the next five years.

The report said that 89.9 percent of Filipino entrepreneurs surveyed are not registered with the Securities and Exchange Commission, and most of them are single proprietorships. �In such cases, registration is only with the local government and the Department of Trade and Industry. A significant portion of entrepreneurs have only one employee: the entrepreneur himself of the business owner.�

Canadian Embassy First Secretary Genevieve Asselin said that the challenge for the Philippines is to ensure that the strong economic fundamentals of the country will trickle down to the poor. She said that the Canadian government will support the Philippines� initiatives to promote entrepreneurship in the country, not the entrepreneurship driven by necessity, but the entrepreneurship that can contribute to economic growth through job creation.

GEM is the largest study of entrepreneurship participated in by 70 countries as of 2013. It aims to measure differences in the level of entrepreneurial activity across countries.

The study on entrepreneurship conducted using the GEM framework surveyed 2,500 entrepreneurs representing the 17 regions in the country. The study was supported by the International Development Research Centre of Canada, and the Angelo King Institute for Economic and Business Studies of DLSU. (David Cagahastian)