THE PHILIPPINES has been catching the eye of prospective foreign investors due to tax reforms pushed by the administration of President Rodrigo R. Duterte, but more needs to be done to make it easier to do business in the country according to speakers at a forum on Wednesday.
Speaking at the Ayala-FINEX (Financial Executives Institute of the Philippines) Summit 2019 at Fairmont Makati, Stephen Au Yeung, an EY Advisory Practice Partner, said that he observed clients growing more curious about the Philippine market.
“A lot of companies consider the effective tax rate they need to pay… Having an incentive from a tax perspective will be able to attract companies to invest in a new economy,” Mr. Au Yeung said.
Amid concerns about Metro Manila’s worsening congestion, he added that the Philippine government can study Indonesia’s effort to designate a new national capital on Borneo island. He noted that development of more than one megacity in a country has been a key trend not only in Asia but also elsewhere.
“Actually, we do see that if we only rely on one megacity, [it] will actually slow down growth. So definitely, I think it should be something to consider…” Mr. Au Yeung explained.
Last week, Indonesian President Jokowi Widodo bared his administration’s $33-billion plan to move the national capital to Kalimantan in Borneo, noting that Jakarta has become “too heavy”, with some of its areas sinking as much as 20 centimeters per year. Mr. Widodo said, however, that Jakarta will remain a key commercial and financial center.
Mr. Au Yeung urged businesses to be more innovative as they face evolving market conditions. He said the finance industry will be more digitally driven, embracing data analytics and blockchain increasingly for its businesses.
Minette B. Navarrete, president of Ayala-owned venture capital firm Kickstart Ventures, Inc., cited opportunities from Southeast Asian growth, which is still among the fastest in the world.
Seven years after it was spun out of Globe Telecom, Inc., Ms. Navarrete said venture capital firm has invested in 42 start-ups in seven countries.
While many are in the Philippines, the others are in the United States, Canada, Singapore and Malaysia.
She said Kickstart Ventures has already witnessed its first successful startup exit, with mobile wallet Coins.ph acquired by Indonesian ride-hailing app GoJek after a three-year incubation.
Like Mr. Yeung, Ms. Navarrete cited public policy as a key factor affecting the Philippine startup ecosystem which she said is still in its nascent stage.
“In Singapore, you get a company set up in 30 minutes,” she said, comparing it to the Philippines where businesses face a registration process that takes around three months to complete.
Ms. Navarrete said that she has met with some government officials to urge them to make business policies easier.
Compared to Indonesia, which clinched $407 million worth of startup deals in 2018 according to startup news Web site e27, Philippine startups booked $300 million worth of deals last year.
Ms. Navarrete observed that fintechs are taking a big chunk of startup funds in Southeast Asia. “Frequently in emerging markets, it’s because it’s a payments problem. Not enough people have credit cards so that shows up quite a lot,” she explained, noting that startups focused on other financial services like loans and insurance are also attracting investors and are beginning to show up.
She further mentioned that healthtech startups are gaining traction especially in the Philippines and in China.
The talks were followed by a panel discussion with some industry leaders such as Antonio G. De Rosas, president and chief executive officer (CEO) of Pru Life UK; Antono C. Moncupa Jr., vice-chairman and CEO at EastWest Bank; Francis Giles B. Puno, president at First Gen Corp. and Jaime E. Ysmael, president and CEO of OCLP Holdings.
On its fourth installment, the Ayala-Finex Summit went with the theme “Innovating Businesses for a Better Tomorrow”, with discussions on how businesses could keep up and leverage technology to improve their operations. — Luz Wendy T. Noble