The time is “ripe” for the Philippines to take its place on the global stage as an important player in the technology space, according to a new report.
The Philippines’ local technology market is still developing:
While a digital economic gap currently exists, there’s strong potential for the Southeast Asian country’s market to experience steady growth, a new report reveals. Moreover, even though local startups see significantly less funding than their other Southeast Asian counterparts, the funding gap is “not insurmountable.”
A key challenge would be “hesitancy on the part of technopreneurs to enter the market, a situation which is already slowly changing for the better,” according to the Philippine Startup Ecosystem Report 2021.
Consistent support and initiatives are present to support the ecosystem:
Since 2010, the Philippine government has started implementing “sound initiatives to support the startup and tech ecosystem, including the creation of laws, funds, and incubation and development programs.”
And the corporate sector – both local and foreign – have “significantly increased funding and angel investing which is being channeled towards Philippine startups, leading to the emergence of the likes of Sinigang Valley, which aims to be the first true startup tech hub in the country at the heart of Makati City,” the update noted.
In addition to these developments, efforts aimed at the fortification of the ecosystem Iron Triangle (covering the logistics, e-commerce, and Fintech sectors) are “expected to lead to strong growth within the near future.”
There are reliable indicators of the potential direction of the Philippine market:
Technopreneur focus will be increasingly “influenced by environmental (E) and social (S) impacts, such as sustainability and equality/equity issues,” the report added.
It also mentioned that there will be “a preference for Camels – startups that have survived harsh business climates, and are resilient, cautious, committed, and customer-focused – over the more common Unicorns.”
Additionally, two sectors – entertainment, and crypto-gaming – have “the strongest potential to draw in funding in a post-pandemic world economy,” the report noted.
According to the report, now is a “golden opportunity to invest in the Philippine tech ecosystem.”
But the Philippines is still lagging behind in other key categories: it has “the second lowest GDP per capita and the lowest GMV per capita of the major ASEAN nations, the report revealed.
In 2019, only 2.1% of $29 billion invested in the ASEAN6 “went to the Philippines,” the report added. This means the country was “beaten by neighbors that had smaller populations and economies (measured by GDP).”
But certain factors in the Philippines “contribute to a hospitable environment for startups,” the report added. It pointed out that consumption is 90% of GDP when “the regional average is 67%, and pre-pandemic income showed average annual growth of 4.5%.”
The report also mentioned that these imply “an emerging middle class with growing purchasing power, which sets the Philippines as one of the most dynamic countries in the region.”
You can check out the complete report with charts here.