DTI to study gov’t support for startups

THE Department of Trade and Industry will be looking into how to boost the startup industry in the Philippines to attract more investors and increase the appetite for emerging innovative businesses.

Trade Secretary Ramon M. Lopez told reporters on Friday at the Association of Southeast Asian Nations (ASEAN) Slingshot press conference at the Philippine International Convention Center that the government support could come in the form of income tax incentives, or through the Investments Priorities Plan.

“We were talking earlier about the possibility of helping angel investors in the country, for example, you encourage them to invest in startups and their investments can become some sort of donation or tax deductible, especially for failures, so if you think about it that way, it could encourage probably a higher capital but this time it’s not a donation – a donation that has no payback, in this case you create an investment that can have a big payback not only for the individual but also for the society.

“We will probably study this – the guidelines of [the] startup business so we can give them the right support because from here we can have a lot of Filipino startup business, technology (based) businesses, so right now it’s private sector initiated funding or funders.”

Mr. Lopez added that while incentives may become prone to abuse due to the nature of startups, the government will have to research on the proper kind of support certain businesses need.

Trade undersecretary for trade and investments promotion Nora K. Terrado said that incentives aside, the funds that will be used to support the startups will come from both the government and the private sector.

“Right now, the way we provide access to our startups in the country is to link them to angels and venture capital and traditional local investors who have more capital in investing in startups, and that is where we are. And the DTI has some bridge financing facilities like P3 (Pondo sa Pagbabago at Pag-asenso) and other banks like DBP (Development Bank of the Philippines) would provide the line of credit and very traditional financing model. In the future we would like to make more akin to the needs of the startup community,” She added.

“There’s lot of capital available in the country that we think can be tapped, but I don’t know the amount. That’s precisely why we have the startup ecosystem development program. It includes advocacies where the investors can understand the available opportunities for them to invest here, so advocacy will be needed so risk-averse investors may open up.”

Ms. Terrado added that they have yet to see a unicorn startup – these are startups have a value of about $100 million.

It was reiterated, however, that providing even a ballpark figure for startup investments is difficult due to investors – especially angel investors – declining to disclose the amount of financial support they give.

Slingshot is a government-assisted program to provide a networking venue for local startups and foreign and local investors to meet. There were over 80 startups who took part in the exhibit.

“Frankly, these innovators, they don’t need government support if… you develop something that’s… supposed to be a great, big idea. Normally they would already have a market in their minds already,” Mr. Lopez said.

“Government, of course, will be supporting… create an environment, building the network and helping them in those ways and possibly give some forms of incentive. The market, especially [the] internet-based market, they’re already out there and they’re more creative in searching and creating a market, so I don’t think there will be a need for a clear government system in that one.” – Anna Gabriela A. Mogato