Shortcomings of Philippine tech start-up environment cited

Posted on June 04, 2014

CEBU CITY -- The Philippines’ technology start-up ecosystem lags behind those of China and Singapore, speakers at the Cebu ICT/BPM Conference here said.

Beryl Chavez Li, representing funding platform Seed Asia, cited poverty and difficulties in setting up a business among the constraints in start-ups’ development.

“While the Philippines has a large population, there are more people at the bottom of the pyramid,” Ms. Li said. The poor cannot afford a smartphone, the most commonly used platform for mobile applications.

“Developing apps for [Apple, Inc.’s mobile operating system] iOS in the Philippines might not be in their best interest because not everyone can afford their phones,” she added.

Ms. Li also noted that it takes 35 days to set up a business in the Philippines compared with the 2.5 days it takes in Singapore. The efficiency of legal online payment systems is also said to be much higher in Singapore.

Ms. Li said the Philippines’ strengths lie in its cheap yet highly trainable labor sector.

“While there is plenty of talent in software design or development in the US or Singapore, they cost significantly more than the same employee position in the Philippines,” she said.

Ms. Li said upgrading Internet infrastructure and online payment and delivery systems are the key to upgrading the start-up environment in the country.

She noted a lack of start-up companies focused on the creation of more robust online payment solutions and applications that can simplify everyday tasks at minimal cost.

“Once you make it easy for developers and entrepreneurs to do business, the money and the talent follows. By pushing innovation to solve public needs, we can create something valuable,” she said.

Ms. Li noted that e-commerce revenues in the Philippines reached a measly $1.2 billion in 2013 compared with $33 billion in China.

“There’s a clear window of opportunity in providing everyday solutions,” she said.

“Interestingly, 90% of this comes from the purchase of airline tickets. We found that people are more likely to take this service because they can save time rather than line up and disrupt their activities,” she added.

Paul Santos, managing partner of Singaporean-based start-up incubator Wavemaker Labs, also challenged the start-up community in the country to develop social enterprise solutions over social networking applications and tools.

“Instead of creating another photo or restaurant app, start-ups should be looking at providing real value by solving social problems,” said Mr. Santos.

He stressed that the Philippines’ demographic -- with its large, cheap, but technically proficient workforce and high poverty incidence rate -- is a great resource to develop applications and solutions that solve the everyday needs of people.

“Everyone wants to replicate the success of Silicon Valley, but they should really pursue the opportunities in front of them,” he said, in response to questions on whether the country can become the Silicon Valley of Southeast Asia.

“What we should replicate is the spirit of providing valuable services to consumers and businesses,” he added.

He urged business process outsourcing (BPO) companies in the country to fund ideas that answer the industry’s problems concerning workforce retention as a way of incentivizing the start-up environment. -- John Paolo G. Bago