Entrepreneurship in the Philippines

2015-2016

Report Launch

Dr. Aida Licaros Velasco

GEM Philippines National Team Leader

De La Salle University

Manila, Philippines

June 22, 2017

Philippine Entrepreneurship Report

2015-2016

Aida Licaros Velasco

Brian Gozun

Paulynne Castillo

Mitzie Irene Conchada

Gerardo Largoza

Junette Perez

Emilina Sarreal

THE FRAMEWORK

Outcome (socio-

economic

development)

Social, Cultural,

Political, Economic

Context

Entrepreneurial Output

(new jobs, new value added)

Entrepreneurial Activity

�By phase

-Nascent, new, established,

discontinuation

�By impact

-High growth, innovative,

internationalization

�By type

-TEA, SEA, EEA

GEM Conceptual Framework

Societal Values

About

Entrepreneurship

+

-

+

-

+-

+

-

Individual

Attributes

(psychological,

demographic,

motivation)

+-

+-

Nati

on

al

Fra

mew

ork

C

on

dit

ion

s

En

trep

ren

eu

rial

Fra

mew

ork

Co

nd

itio

ns

Basic Requirements

Efficiency Enhancer

Innovation and Business

Sophistication

Model of Business Phases and Entrepreneurship

Characteristics

THE PHILIPPINES

THE FILIPINO DREAM...

3.9%-

Rich

Life

16.9

Affluent Life

79.2%

Simple and Comfortable

Life

Ambisyon 2040

Panatag

• Enough resources for day-to-day needs,

unexpected expenses and savings

• Peace and security

• Long and healthy life

• Comfortable retirement

• Matatag

– Family is together

– Time with friends

– Work-life balance

– Volunteering

• Maginhawa• Free from hunger and poverty

• Secure home ownership

• Good transport facilities

• Travel and vacation

Simple and Comfortable Life62%Own a car

61% - Enough money

for

day to day needs

28% -With savings for

unexpected expenses

61%Own a

medium –sized home

73%All children are

college educated

30%

Business owner

30% Relax with family

and friends

21% Able to take trips

around the country

PHILIPPINE ENTREPRENEURSHIP:

THE JOURNEY CONTINUES…

2015 GEM FINDINGS

Entrepreneurship in the Philippines

Self-Perception About Entrepreneurship

Value (%) Rank/65

Perceived Opportunities 53.8 12

Perceived Capabilities 69.0 8

Fear of Failure 36.5 31

Entrepreneurial Intentions 37.1 9

Activity

Total Early Stage Entrepreneurial

Activity (TEA)

TEA 2015 17.2 16

TEA 2014 18.4

TEA 2013 18.5

Established Business Ownership

Rate

7.3 26

Entrepreneurial Employee Activity -

EEA

2.3 29

Among all the countries in

South East Asia, Philippine

respondents registered on

average the strongest

entrepreneurial intentions

and perceived capabilities

and opportunities

Self Perception

0

10

20

30

40

50

60

70

80

Factor-driven Indonesia Malaysia Philippines Thailand Vietnam

Perceived opportunities

Perceived Capabilities

Fear of Failure

Entrepreneurial Intentions

Societal Perception on

Entrepreneurship

0

10

20

30

40

50

60

70

80

90

Factor-driven Indonesia Malaysia Philippines Thailand Vietnam

Entrepreneurship as a Good Career Choice

High Status to Successful Entrepreneurs

Media Attention for Entrepreneurship

Entepreneurial Motivations

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

TEA Necessity Driven Opportunity driven Improvemnet driven Motivational Index

Indonesia

Malaysia

Philippines

Thailand

Vietnam

Entrepreneurship in the Philippines

Motivational Index

Improvement-

driven

Opoortunity/Neces

sity Motive

1.6 38

Gender Equity

Female/Male TEA

Ratio

1.3 1

Female/Male

Opportunity Ratio

0.9 24

Entrepreneurship Impact

Job Expectations

(6+)

10.2 % 46

Innovation 5.5 % 7

Industry (% in

Business Service

Sector)

2.7 57

Entrepreneurship in the Philippines

Motivational Index

Improvement-

driven

Opportunity/Neces

sity Motive

1.6 38

Gender Equity

Female/Male TEA

Ratio

1.3 1

Female/Male

Opportunity Ratio

0.9 24

Entrepreneurship Impact

Job Expectations

(5+)

10.2 % 46

Innovation 5.5 % 7

Industry (% in

Business Service

Sector)

2.7 57

Phases of Entrepreneurship

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Nascent Entrep rate New Business

Ownership Rate

TEA EEA EB Discontinuance Rate

Indonesia

Malaysia

Philippines

Thailand

Vietnam

Reasons for Business Closure

Reasons 2013 2014 2015

Business not profitable 22.9 26.8 20.81

Personal Reasons 18.2 20.8 27.75

Problems getting financing 22.1 20.2 32.37

Incident 3.9 2.7 2.89

Another job or business

opportunity

1.9 3.8 3.47

Opportunity to sell 1.2 0.6 0

Others 28.3 21.3 12.72

2006 2013 2014 2015

Perceived Capabilities 72.48 68.40 66.15 68.99

Perceived Opportunities 58.05 47.94 45.89 53.77

Fear of Failure Rate 35.22 36.19 37.68 36.45

Entrepreneurial Intention 48.40 44.12 42.84 37.11

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Perceived Capabilities

Perceived Opportunities

Fear of Failure Rate

Entrepreneurial Intention

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

1 2 3 4 5 6 7 8 9

GDP

GDP

Does economic

growth dampen

entrepreneurial

intentions?

0.00

5.00

10.00

15.00

20.00

25.00

2006 2013 2014 2015

Nascent

Entrepreneurship Rate

New Business

Ownership Rate

Total early-stage

Entrepreneurial

Activity (TEA)

Established Business

Ownership Rate

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Unemployment rate percent

Unemployment

ratec percent

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

GDP

GDP

More jobs are

provided as

business gets

more established.

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

2006 2013 2014 2015

Know Startup

Entrepreneur Rate

Entrepreneurship as

Desirable Career

Choice

High Status Successful

Entrepreneurship

Media Attention for

Entrepreneurship

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Unemployment rate

Unemployment

ratec percent

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

GDP

GDP

Better economy

dampens interest on

entrepreneurship.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

1 2 3 4

Total early-stage

Entrepreneurial

Activity for Female

Working Age

Population

Total early-stage

Entrepreneurial

Activity for Male

Working Age

Population

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Labor-

Participatio

n Rate Male

Labor-

Participatio

n Rate

Female

Gender is not an

issue in

entrepreneurship.

PHILIPPINE ENTREPRENEURSHIP

ECOSYSTEM

Entrepreneurship Ecosystem

0

1

2

3

4

5

6

7

Physical Infrastructure 5.47

(52/62)

Internal Market Dynamics 6.12

(8/62)

Cultural and Social Norms 5.71

(10/62)

Commercial and Legal

Infrastructure 5.2 (20/60)

Post-school Entrepreneurship

Education 6.3 (1/62)

Government Policies: Support

and Relevance 3.85 (37/62)

Entrepreneurial Finance 5.09

(12/62)

Internal Market Burdens or Entry

Regulation 4.13 (32/62)

Government Policies: Taxes and

Bureaucracy 2.87 (52/62)

Government Entrepreneurship

Programs 3.58 (49/62)

R&D Transfer 4.06 (24/62)

School-level Entrepreneurship

Education 4.99 (2/62)

GEM

Philippines

Although there are

policies and laws

seemingly supporting

entrepreneurship in the

country, the population is

not well informed on the

existence of these

policies.

Philippine Entrepreneurial Landscape

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Financing for entrepreneurs

Governmental support and

policies

Taxes and bureaucracy

Governmental programs

Basic-school Entrepreneurial

Education and training

Post-school entrepreneurial

education and training

R&D Transfer

Commercial and professional

infrastructure

Internal market dynamics

Internal market openness

Physical and services

infrastructure

Cultural and social norms

2013

2014

2015

Entrepreneurship Ecosystem

0

1

2

3

4

5

6

7

Physical Infrastructure 5.47

(52/62)

Internal Market Dynamics 6.12

(8/62)

Cultural and Social Norms 5.71

(10/62)

Commercial and Legal

Infrastructure 5.2 (20/60)

Post-school Entrepreneurship

Education 6.3 (1/62)

Government Policies: Support

and Relevance 3.85 (37/62)

Entrepreneurial Finance 5.09

(12/62)

Internal Market Burdens or Entry

Regulation 4.13 (32/62)

Government Policies: Taxes and

Bureaucracy 2.87 (52/62)

Government Entrepreneurship

Programs 3.58 (49/62)

R&D Transfer 4.06 (24/62)

School-level Entrepreneurship

Education 4.99 (2/62)

GEM

Philippines

Although there are

policies and laws

seemingly supporting

entrepreneurship in the

country, the population is

not well informed on the

existence of these

policies.school Entrep

The Philippines

ranked 1/62 in Post-

school Entrep

Education

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Financing for

entrepreneursGovernmental

support and

policies

Taxes and

bureaucracy

Governmental

programs

Basic-school

Entrepreneurial

Education and…Post-school

entrepreneurial

education and…R&D Transfer

Commercial and

professional

infrastructure

Internal market

dynamics

Internal market

openness

Physical and

services

infrastructure

Cultural and social

norms

2013

2014

2015

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

GDP

GDP

Economic growth and entrepreneurial

environment

Conclusion� Entrepreneurship as a career choice

� Established business gaining grounds

� More women engage in start-ups

� Government as entrepreneurship driver and barrier

WHERE DO WE GO FROM HERE?

Policy Recommendations

• Identification of industry priority areas where the country can be more competitive globally.

• Evaluation of the regulatory environment for start-up businesses and ease of doing business.

• Development of innovation capabilities of the business sector.

• Introduction of entrepreneurship and its different forms in all levels of education.

• Creation of new ways of accessing financing through equity and debt.

• Promotion of export capacity and ability to integrate in the global supply chain.

• Enhancement of entrepreneurial capabilities of women and the youth.

Questions that need more answers…

• What is the state of the Philippine entrepreneurial ecosystem?

• How does the Philippine ecosystem support the entrepreneurial intention, motivation, and aspiration of Filipinos?

• Why do Filipino businesses fail?

• Does education matter to succeed in entrepreneurship?

• …and many more

Acknowledgements

• International Development and Research

Center (IDRC)

• Angelo King Institute

• DLSU Science Foundation

• Ramon V. Del Rosario College of Business

• DLSU Publishing House

• Global Entrepreneurship Research Association

(GERA)

Maraming Salamat!

Philippine Entrepreneurship

Report 2015-2016

Aida Licaros Velasco

Brian Gozun

Paulynne Castillo

Mitzie Irene Conchada

Gerardo Largoza

Junette Perez

Emilina Sarreal