how is entrepreneurship viewed in the philippines?

The Philippines is a highly entrepreneurial country. The main reason that drives its entrepreneur spirit
is its poverty. Small and medium-sized enterprises (SME) account or the largest share o Philippine
entrepreneurs. SMEs! including micro-enterprises! account or "" percent o all #usiness esta#lishments
and $% percent o the e&porting irms in the Philippines. SMEs currently employ a#out '' percent o
the Philippine la#or orce and contri#ute (% percent to total domestic volume sales. )omen hold
signiicant leadership positions in national and local government! universities! #usiness corporations
and amily #usiness enterprises in the Philippines. '*+ o entrepreneurs in Philippines are emale.
,hallenges or entrepreneurs in Philippines include a lac- o research and development! inade.uate
access to technology! inancing/most entrepreneurs starting small #usiness in the Philippines have
diiculty ac.uiring capital! a lac- o mar-eting advice and logistical pro#lems.
The Philippines government sees that Entrepreneurial eorts will help ignite economic growth!
improve living standards! and #uild a worldwide mar-et or Philippine products so they welcome
oreign investors and oer incentive and support #y lowering taris! opening its entire economy!
including land ownership and 0ree trade.1
Entrepreneurship in the Philippines:
Opportunities and challenges for inclusive
growth
2ovem#er *'! 3%*(
4uthor(s)5
6yan Evangelista
4ddressing widespread poverty is the single most important policy challenge acing the Philippines.
2ot only is poverty high when #enchmar-ed against countries in 4sia! #ut also the rate o poverty
reduction has #een slow. )hile the Philippine economy has grown at an average o $ percent or the
last ive consecutive .uarters (since 3%*3)! poverty incidence remains a#ove 3% percent o the
population. The critical challenge is to spread the pay#ac- o this huge economic turnaround among the
people! especially the poorest o the poor. They should eel the #eneits o the growing Philippine
economy.
Entrepreneurship can provide the solution #y creating wealth! 7o#s! and social empowerment. 8 we are
to address the issue o poverty with some degree o success! history tells us we have no choice #ut to
actively encourage entrepreneurial ventures.
Entrepreneurship in the Philippines
8n the Philippines! entrepreneurship is viewed as important to empowering the poor! enhancing
production! and as an impetus to innovation. The *"9: Philippine ,onstitution recognizes
entrepreneurship as an engine o economic growth. 4rticle ;88 Section * highlights the role o private
enterprises in supporting e.uita#le distri#ution o income and wealth! sustaining production o goods
and services and e&panding productivity! thereore raising the .uality o lie.
The Philippine <evelopment Plan (P<P) urther reinorces the thrust on entrepreneurship through trade
Object 1
and investment to achieve the government=s goal o economic development and 7o# creation. >ased on
the plan! measures or macro-economic sta#ility! employment! trade and investment! agri#usiness!
power-sector reorms! inrastructure! competition! science and technology! and anti-corruption are
#eing pursued to strengthen Philippines=s competitiveness and contri#ute to 7o# creation.
8n 3%**! there were appro&imately 9(%!%%% #usiness enterprises in the Philippines. ? these! "".$
percent are classiied as micro! small! and mediumsized enterprises (MSME) which are responsi#le or
(9 percent o total 7o# growth.
Enterprise development and competitiveness
Enterprise development in the conte&t o competitiveness not only entails the a#ility to produce
products that can #e accepted glo#ally #ut also the level o support given to enterprises to help them
produce! innovate! and gain mar-et access.
)hile relatively mature and ree! enterprise development in the Philippines is #eset with critical
challenges. These challenges are ound within the conte&t o pillars identiied #y the @nited 2ations
<evelopment Programme in its report Unleashing Entrepreneurship5 rule o law! physical and social
inrastructure! domestic macro environment! and glo#al macro environmentA a level playing ield!
access to inancing! and access to s-ill development and -nowledge.
8 the challenges remain unresolved! gaps in enterprise development have the potential to thwart the
country=s competitiveness and a#ility to eectively unction within glo#al production networ-s.
Rule of Law
6ule o law! which encompasses regulatory structures! policy environment! and enorcement o
regulations! is one o the more important dimensions in assessing the competitiveness o Philippine
enterprises. 4ccording to the )orld >an-=s 3%*( <oing >usiness Survey! the Philippines ran-s *(9 o
*9' economies with regards to the ease o doing #usiness. E&cept or the indicator 0trading across
#orders1 where the Philippines ared in the top third o the ran-ings (B'()! the country sits at the
#ottom third in all other enterprise development indicators such as starting a #usiness (B*$*)! dealing
with construction permits (B*%%)! registering property (B*33)! getting credit (B*3")! protecting
investors (B*39)! paying ta&es (B*C()! enorcing contracts (B***)! and resolving insolvency (B*$').
4long these lines! it can #e clearly noted that the Philippines= regulatory environment or enterprise
development is still wea- and needs urther reorm! harmonization and standardization.
Ta-ing the case o #usiness start-ups or instance! when entrepreneurs draw up a #usiness plan and try
to get under way! the irst hurdle they ace is complying with the procedures re.uired to incorporate
and register the new irm #eore they can legally operate. The Philippines re.uires at least *'
procedures and ta-es some (% or more days to start a #usiness. Malaysia re.uires nine procedures and
3C days while Taiwan re.uires eight procedures and C9 days. The rest o the Southeast 4sian region
averaged 9.: procedures and C$.9 days to start a #usiness.
Access to credit
4nother important dimension is access to inancing. )hile speciic laws such as the MSME Magna
,arta and >arangay Micro >usiness Enterprises (>M>E) development speciically mandate inancing
or enterprises! o#taining said unds is a dierent story. Most lending portolios re.uire collateral
accompanied #y tedious documentation and other technical re.uirements that are diicult or MSMEs
to comply with.
4n enterprise survey conducted #y the @niversal 4ccess to ,ompetitiveness and Trade (@-4,T) in
3%%9 revealed that access to capital and inancing are two o the most pro#lematic issues or
enterprises! primarily MSMEs. Seventy-two percent o the total respondents! or nearly three out o
our! o#served that investment andDor capital are currently diicult to o#tain. ?n the other hand! ive
out o *% surveyed MSMEs regarded access to and cost o credit as pro#lematic! in relation to their
#usinesses. 8n act! *C percent strongly stressed that credit availa#ility and cost pose a serious pro#lem
to the operation o their #usinesses.
Internationalization and global production networks
The rapid integration o economies and glo#alization o mar-ets has inluenced the evolution o
entrepreneurship over the years. Thus! rom the traditional concept o supporting the various actors o
production! entrepreneurship now entails the capacity to see an opportunity! come up with an idea! and
organize the capital! -nowledge! partners and managerial s-ill needed to develop and sustain #usiness
activities through internationalized value chains.
Ta-ing advantage o li#eralized trading environments is an emerging challenge or Philippine
enterprises. This is compounded #y the reality o limited opportunities or productivity and innovation.
The )orld Economic Eorum ()EE) Flo#al ,ompetitiveness 8nde& identiied inrastructure! la#or
mar-et eiciency! innovation! technological readiness! intellectual property protection! 6G< spending
#y private companies! and availa#ility o scientists as -ey areas in #usiness and enterprise development
where the Philippines is lagging.
Enterprises need to #e supported #y strong social and physical inrastructure! which include among
others! la#or productivity! la#oratories! #usiness incu#ators! #usiness planning! mar-eting and #randing!
and conormance to international standards. 4ll these should #e lin-ed to the supply chain while at the
same time economic clusters ound in local economies need to #e developed to allow specialization and
product complementarity.
Role of enterprise networks
8n addressing the a#ove mentioned challenges! there is a need to rally #ehind national advocacy to push
entrepreneurship to the ne&t level. This means nurturing micro-entrepreneurs rom purely 0survival1
into 0opportunity and innovation driven1 enterprise owners. This puts a premium on the role o
enterprise organizations such as cham#ers o commerce! industry associations and dedicated enterprise
networ-s.
The ?E,< )or-ing Party on SMEs and Entrepreneurship in its 3%%" study on 0>arriers and <rivers to
SMEs 8nternationalization1 underta-en #y Hoc-er and >uhl points out that institutionalization o
networ-sDsocial ties and supply chains is a -ey driver o SME international competitiveness. The study
noted 0the importance o networ-Dsocial ties and supply chain lin-s in triggering an SME=s irst
internationalization step and e&tending internationalization processes.1
*
8n the Philippines! apart rom institutions li-e cham#ers o commerce and industry clu#s!
entrepreneurship advocacy is mainstreamed #y the creation o enterprise networ-s li-e the Philippine
,enter or Entrepreneurship (P,E). P,E=s concrete goal is to spawn the creation o so-called 0Fo
2egosyo ,ommunities1 everywhere. These are communities where the academic! #usiness and
government sectors are drawn into a triangle o almost seamless colla#oration. 8n such an ecosystem!
there is constant networ-ing! mentoring and cooperation among proessors! entrepreneurs! industry
e&perts and venture capitalists! with the government providing support through a via#le policy
inrastructure. Every 0Fo 2egosyo1 community is distinguished #y its a#ility to produce a continuous
stream o start-up ventures.
P,E also see-s to em#ed strong entrepreneurship lessons into the school curriculum. 8 the goal is to
develop a culture o enterprise and cultivate tomorrow=s competitive entrepreneurs! they must start at a
young age. Primary and secondary schools can teach the values and develop the mindsets o an
entrepreneur. 4t the college level! enterprise networ-s are loo-ing at how to assist in the area o
curriculum enhancement! providing manuals! training the teachers! and involving real entrepreneurs in
the learning process.
urturing the entrepreneurship paradigm
Entrepreneurship is more than 7ust an economic term / it is a way o thin-ing. ,reating 7o#s!
empowering people! and giving individuals access to #etter lives or themselves and their children is a
wonderul git. Today! it has #ecome a dynamic! developing part o the economy promoting inclusive
growth. Entrepreneurship is a way o inspiring creative individuals to pursue opportunities despite its
ris-s.
8n closing! the challenge or countries li-e the Philippines is to accelerate #oth the political and
economic leadership that can muster social reorms through entrepreneurship. Entrepreneurs have the
power to achieve great things. Entrepreneurs will emerge as the well-oiled wheels that will -eep the
economy going and the society eiciently running.
wh! does the econom! need entrepreneurs"
Our Econom! eeds Entrepreneurs#
Entrepreneurs eed Economic $reedom
Entrepreneurs are vital to a healthy economy. They loo- or unmet needs in society and then try to ill
them with a new good or service. They ta-e ris-s without any certainty o reward. They push orward
new technology. They try things that others might consider unli-ely to succeed! and occasionally this
results in successes that would never have even #een attempted otherwise. 8n diicult economic times
entrepreneurs help in multiple ways #y creating 7o#s and inding uni.ue and creative ways to provide
society with the goods and services they desire. 8t=s hard wor-! and many new endeavors ail! #ut the
contri#ution o entrepreneurs to a productive economy cannot #e overstated.
The economy needs entrepreneurs! #ut what do entrepreneurs need? Iow can we help these
entrepreneurs create 7o#s and drive new ideas to mar-et? Study ater study shows that entrepreneurs
need economic reedom. This ma-es senseA economic reedom is the a#ility to control your own
resources ree rom government intererence! and having control o your own resources is o#viously
important to an entrepreneur. ,onsider how the the ive indicators used in the Eraser 8nstitute=s
Economic Ereedom o the )orld 6eport impact entrepreneurial activity.
The size o government determines what amount o resources are consumed #y the stateA i the
government remains relatively small then there are more resources or entrepreneurs.
Security o property rights is essential to entrepreneursA very ew people would ta-e the ris- o
starting a #usiness i they weren=t certain that their property rights were going to #e upheld.
Iaving access to sound money is also essential or similar reasons. 8 the value o money isn=t
certain then the investment #ecomes su#stantially more ris-y.
Ereedom to trade internationally ensures that the products or services that the entrepreneur
creates will not #e restricted to domestic sales! and it also helps them get the products and
services they need rom oreign countries.
Jastly! the regulation o credit! la#or! and #usiness is also crucial. 4 country with a high level o
regulation in these areas ma-es it very diicult to start or maintain a #usiness when the cost o
compliance is so high! and it also ma-es it more diicult to engage in the least costly paths to
#eing an entrepreneur (or e&ample! starting a ood truc- instead o a restaurant).
4ccording to the Small >usiness 4dministration! 0Small irms accounted or $' percent (or ".9 million)
o the *' million net new 7o#s created #etween *""( and 3%%".1 8 the economy needs entrepreneurs to
drive 7o# creation and innovation! and entrepreneurs need economic reedom to thrive! then we need to
increase economic reedom to get our economy #ac- on trac-.
- See more at5 http5DDwww.economicreedom.orgD3%*3D%$D3%Dour-economy-needs-entrepreneurs-
entrepreneurs-need-economic-reedomDBsthash.EK9L?@3?.dpu
why does the economy need entrepreneurs?
8t is through entrepreneurship thatimportant innovations enter the mar-et leading to new products or
production process which eventually increases eiciency through #ringing competition in the mar-et!
which naturaly increases the countries national Production. )e need entrepreneurs #ecause they
innovate! provide products and services! and create 7o#s.
%hat do we need an entrepreneur"
In economics& there are four basic t!pes of resources: land 'natural resources(&capital
(tools! machinery)! la#or! and entrepreneurial a#ility. People who have entrepreneurial a#ility --
entrepreneurs-- are essential to the economy. Entrepreneurs perorm several -ey unctions5 *)
Entrepreneurs ta-e initiative to com#ine land! capital! and la#or to produce goods and services. Their
initiative is the driving orce o production.3) Entrepreneurs ma-e #asic decisions a#out #usiness
policies.() Entrepreneurs are innovators. They create new products! new production techni.ues! and
new orms o #usiness organization. This innovation helps the economy grow.C) Entrepreneurs #ear the
ris- o starting #usinesses. They e&pend their time! eorts! and a#ilities without #eing sure that they
will proit rom it.
) Reasons Our *ociet! eeds Entrepreneurs
$irst& it fosters competition in a rapidl! changing world+ ,hrough competition&
companies have a compelling reason to cut costs& produce more efficientl!& and
deliver a better product or service to their customers+
Secondly! entrepreneurship facilitates the incorporation of new technologies that uel economic
growth and #ring a society to the ne&t level. >eyond the 4pples and Foogles o the world creating
cutting-edge technological products! small startups are creating the ways o the uture. 4ll you have to
do is #rowse Hic-starter or *% minutes to discover some o the amazing ways that small-time
entrepreneurs are transorming technology as we -now it.
Jastly! entrepreneurship provides opportunity and supports reedom. Many o the top #usinessmen and
#illionaires in the @.S. did not graduate college. They #ro-e out o the traditional mold o success and
changed the destinies o not only themselves and their amilies! #ut o everyone their success aected!
rom employees to customers.
Entrepreneurs create 7o#s! pay ta&es that support their communities! and create demand or products
and services! #ut most importantly o all! entrepreneurs transform lives.
%hat are the challenges facing entrepreneurs"
8nternet Mar-eting Supervisor Melissa 4nswers
The ollowing are the challenges or pro#lems aced #y small entrepreneurs5
(a) Jac- o ade.uate credit
(#) @nrelia#le supply o raw materials! inputs! power! inance! la#our!etc
(c) Iigh cost o raw materials and other inputs
(d) @navoura#le mar-et luctuations
(e) ,omple& rules! regulations and procedures ramed #y the Fovernment
Economic Impacts of -rowth Entrepreneurship and *upporting Policies . A
Preliminar! *tud!
Abstract
8 entrepreneurs are understood to #e individuals who perceive new opportunities! introduce them in the
mar-et place! and ma-e decisions regarding the organization o production! they may #e considered to
#e the primary source o a societyMs economic well-#eing. 8 such entrepreneurship is lac-ing! an
economy is necessarily regressive. Measuring such entrepreneurship! which may also #e
intrapreneurship within e&isting organizations and among wage-earners! is challengingA practical
applications capture only some acets o a #roader phenomenon. Particularly e&panding enterprises
have a considera#le direct economic impact. They also have an indirect impact on the esta#lishment o
new and the discontinuation o old esta#lishments as well as on mar-et shares o continuing
esta#lishments. 4lso ailed growth entrepreneurs and their companies may have lasting economic
impacts. This preliminary study considers the economic role o growth entrepreneurs have in principle
as well as considers their empirical role and characteristics in Einland #y employing an esta#lished
?E,< deinition. 8t is ound that some ive per cent o Einnish companies may #e considered growth
irmsA their share was on the rise prior to the inancial crisis.