Despite programmes to support startups, many businesses don’t make it
The Philippines leads the region in the number of businesses closed. For every 10 businesses founded, 7 are shut down. Lack of access to capital (which prompted a third of closures in 2015) and poor profitability are the leading reasons for closures.
The country is yet to reach a critical mass of engineers and scientists to support innovation efforts
There were only 89 scientists and engineers per million people in the Philippines in 2002. This is not enough to create a legacy impact on the innovation system of today, and not enough workers are training in key fields.
Inability to retain talented professionals
Annually, around 16,000 science and technology professionals leave the country to work abroad: most are female and the majority are bound for Saudi Arabia; they make up six per cent of the total population of Overseas Filipino Workers (OFWs), comprised mostly of midwives, nurses, and engineers.
Procurement red tape
Prohibitive procurement processes hinder the effective use of the increased government R&D budget. Current government auditing practices also limit funding agencies’ capacity to provide the right kind and amount of funds necessary to support R&D and innovation.
Changing economic mindsets
Innovation is a current priority of most, if not all, players in the ecosystem. The Filipino Government is embracing an ‘i3 strategy’ (‘Inclusive, Innovation-led, Industrial) and since 2019 through the Philippine Innovation Act. With a focus of the Department of Science and Technology (DOST) on using innovation to impact lives.
However, the attitude towards innovation in the Philippines has been hampered by a prolonged period during which local innovation has taken a backseat. In the past three decades, development has been understood as building infrastructure, an empowered business sector, and more jobs in the market. This creates a disconnect with honing locally-developed technologies by mostly importing materials for infrastructure, as well as prioritising businesses which take advantage of cheap labour in the country over those that might develop human capital.
Poor alignment of priorities regarding innovation policy
There are two Acts of the Filipino government which are focused on the innovation ecosystem - but they have created a history of disparate provisions involving the composition of a central body governing innovation, the focus of innovation and funding innovation:
- Innovative Start-up Act
- Philippine Innovation Act
There are multiple agency plans, but no unifying plan:
- Philippine Export Development Plan (DTI)
- Philippine Rural Development Plan (DA)
- Philippine Roadmap on Digital Start-ups (DTI)
- Philippine IT Development Roadmap (DICT)
- Ambisyon Natin 2020 (NEDA).
There are nonetheless emerging efforts and examples from multiple government agencies and private institutions to have joined-up projects and exercises:
- The Department of Information and Communications Technology (DICT) is working with the Department of Trade and Industry (DTI), the Department of Budget and Management (DBM) and the Department of Finance (DOF) to establish a national government portal.
- DICT works with DTI and DOST on the startup ecosystem.
- The UK’s ‘Newton Fund’ has organised collaborations between the Department of Agriculture (DA) and the Commission on Higher Education (CHED) to encourage innovation in agriculture and between DA and DOST in commercialising agritech.
