On the other hand, the country's business discontinuance rate (12.6%) far exceeds the ASEAN average (4.8%). Poor profitability and a lack of access to capital are the major reasons for business closure. 70.5% of Filipinos engaged in early-stage entrepreneurship are driven by the opportunity to improve their financial standing while only 29.4% are necessity-driven.
Nearly half (46%) of all Filipinos have a very positive view of the entrepreneurial opportunities in their country; furthermore, 66% believe they have the entrepreneurial capabilities needed to start a business. Although perceived entrepreneurial capabilities of Filipinos are high, 89.5% did not receive formal training at school. Filipino entrepreneurs see owning a business as a path to being independent as well as the opportunity to earn a living and improve one’s economic lot.
More than half (52%) of Filipino entrepreneurs are in the age group 18-44 years. Eighty –three percent of entrepreneurs are involved in retail trade, hotels, and restaurants while only 3% are involved in the transformative sector – manufacturing, construction, and transportation. Four percent (4%) are in agriculture, forestry, and fishing. Notably, there are more women (58%) involved in entrepreneurship at the early stage as well as in established business (55%).
Enablers and Constraints
Entrepreneurship is seen by Philippine society as a very good means to improve one’s economic and social standing. This social and cultural orientation serves as one of the major drivers promoting entrepreneurship. The large domestic market with high consumer spending as well as good education and training also drives the population to try entrepreneurial activities. There are also several government programs that support entrepreneurship.
On the other hand, there are several constraints to the development of entrepreneurship in the country:
- A lack of financial support and working capital, hindering business expansion;
- Poor information dissemination – the inconsistent implementation of government policies and programs that support entrepreneurship;
- Poor provision of training aimed at expanding and sustaining businesses.
Initiatives Supporting Entrepreneurship
Entrepreneurship is encouraged in the Philippines through the activities of the different government departments, such as the Department of Trade and Industry, the Department of Science and Technology, Bangko Sentral ng Pilipinas and the Commission on Higher Education.
Entrepreneurship is offered as a formal degree program at both bachelor and graduate levels (BS, MS, and PhD) aiming to provide formal training to aspiring entrepreneurs. Financial institutions like banks are required to set aside a certain percentage of their loan portfolio to the capital requirements of small and medium sized businesses.
The Department of Trade and Industry, through the Bureau of Small and Medium Enterprise Development, have programs that assist SMEs in developing their entrepreneurial capabilities.
The technological needs of SMEs are also being addressed by the Department of Science and Technology thanks to a program known as the Small Enterprise Technology Upgrading Program (SETUP). Partnerships between government, academia and industry are implemented in developing technology-based entrepreneurship through the business incubator and technology parks programs.
Trends Over Time
Among Filipino youth, a new attitude is forming; they are progressively viewing entrepreneurship as a viable alternative to employment. The supporting framework for this is slowly improving, with the offering of formal academic degrees on entrepreneurship, the encouragement of industry, new graduate partnerships on start-ups, and enhanced interest from civil societies/ NGOs in supporting entrepreneurial development and activities.
Challenges for the Future
The biggest challenge the country faces in promoting entrepreneurship is to develop the capability and skills of Filipinos in starting and growing businesses; furthermore, it needs to promote innovation to increase penetration in both domestic and global markets. All this has to be well supported by the inclusion of entrepreneurship and management courses in the formal education system as well as the teaching of creativity and innovation among the youth. Capability building of entrepreneurs through formal and informal training has to be more actively pursued. The country must take advantage of new developments in the basic education sector, and make entrepreneurship a formal part of the curriculum; it should also redesign tertiary education programs to promote entrepreneurship as an alternative to employment.
For more information, visit: http://www.gemconsortium.org/country-profile/98
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