Despite having solid education base to support local entrepreneurship and the domestic market, the country still does not have a substantial number of established businesses, according to the “Entrepreneurship in the Philippines: 2013 Report.”
The study said the roots of the problem are the low level of entrepreneurial skills and lack of access to capital for expansion.
Although many sectors acknowledge entrepreneurship as a solution to the problem of high unemployment, the report stressed entrepreneurs should not only be given support during the start-up stage but in the later stages as well to ensure their sustainability and growth.
“In the Philippines the early-stage entrepreneurial activity is high compared to other Asian countries in the Asia-Pacific and South Asia. The majority of start-up entrepreneurs are young, belonging to the 18- to 34-year-old age group. However, start-up businesses suffer high failure rates due to the lack of access to capital and poor business profitability,” the study said authored by Aida Licaros-Velasco, Mitzie Irene P. Conchada, Brian C. Gozun, Gerardo L. Largoza, Junette A. Perez and Emilina Sarreal.
The study gave following recommendations to support entrepreneurship from the start-up stage to the matured level of established enterprises:
Education and Training. Schools and universities should champion entrepreneurship as a career choice of graduates by integrating it in the curriculum in both basic and higher education. Further, the authors stressed formal training of entrepreneurial capability through the offering of courses in starting, managing and growing a business.
Government Policies. The government should simplify processes for registration, licensing, regulation and incentives that are provided to start-ups and growing small and medium enterprises (SMEs). They should also further simplify the process of taxation. It is a fact that one of the major obstacles to entrepreneurship is the difficulty of doing business in the country. The main cause is the length of time required to register a business, which discourages Filipino entrepreneurs from legalizing the status of their businesses.
Innovation. To support innovation among start-up and growing firms, more common service facilities like business incubators can be provided so small and start-up enterprises can use modern technology and be more globally competitive. Creativity should also be taught in basic and higher education for the youth to be more innovative. Research and development activity should be supported by the government through procurement from SMEs.
There should be more active collaboration between academe and the industry on research and product development.
Financial Support. There should be more creative funding support for SMEs, apart from the traditional micro financing and formal bank credit facilities for their expansion needs. Examples of these are the establishment of cooperatives and other formal equity-fund generation. The country can benchmark the experience of other countries in generating equity funds.
“Only then can job creation be sustained in the long run,” the study added.
The report was published and distributed by De La Salle University Publishing House. The International Development Research Centre of Canada provided the financial support for the conduct of the study. Moreover, the Angelo King Institute for Economic and Business Studies of De La Salle University helped in providing the administrative and funding support for the project.