David Cagahastian

September 8, 2014

The Philippines has the highest rate of business start-ups in micro, small and m
edium enterprises in South East Asia in 2013, according to a recent survey condu
cted by the De La Salle University (DLSU) using the internationally recognized G
lobal Entrepreneurship Monitor (GEM) standards.
In its report, the Philippines
GEM national team composed of DLSU professors said t
hat in 2013, approximately 18.5 million Filipinos were starting or running a new
business, while close to 6.6 million Filipinos were engaged in a business for a
t least three and a half years.
This high rate of start-up businesses is attributed to the fewer opportunities f
or employment in the Philippines, and partly to the optimism of Filipinos that t
hey can start a business and succeed in it.
The Philippines exhibits the highest rate of business start-up in the Asia-Pacific
and South Asia region. On the other hand, the country has the highest business d
iscontinuance rate. Majority of the entrepreneurs in the Philippines are driven
by necessity given the high unemployment rate and few job opportunities in the c
ountry,
the report said.
According to Dr. Aida L. Velasco, GEM Philippines national team leader, 43.6 per
cent of Filipino start-ups were driven by necessity, while only 38 percent were
driven by opportunities to do business.
She cited that by July 2013, the average age of Filipinos is at 23.4 years, with
more than 70 percent of the population being below 30 years old. At the same ti
me, the unemployment rate is 7.3 percent.
The conclusion that these business start-ups were driven by necessity is also bo
lstered by the fact that most of these businesses are not focused on generating
more jobs for the economy.
Only 15.3 percent of the businesses considered as in
three and a half years in operation) expect to have
ears of business operations. Only 0.8 percent expect
oyees in the next five years, while only 0.3 percent
enty employees in the next five years.

the start-up process (up to

five employees after five y
to have more than five empl
expect to have more than tw

The report said that 89.9 percent of Filipino entrepreneurs surveyed are not reg
istered with the Securities and Exchange Commission, and most of them are single
proprietorships. In such cases, registration is only with the local government and
the Department of Trade and Industry. A significant portion of entrepreneurs ha
ve only one employee: the entrepreneur himself of the business owner.
Canadian Embassy First Secretary Genevieve Asselin said that the challenge for t
he Philippines is to ensure that the strong economic fundamentals of the country
will trickle down to the poor. She said that the Canadian government will suppo
rt the Philippines
initiatives to promote entrepreneurship in the country, not the
entrepreneurship driven by necessity, but the entrepreneurship that can contribu
te to economic growth through job creation.
GEM is the largest study of entrepreneurship participated in by 70 countries as
of 2013. It aims to measure differences in the level of entrepreneurial activity
across countries.

The study on entrepreneurship conducted using the GEM framework surveyed 2,500 e
ntrepreneurs representing the 17 regions in the country. The study was supported
by the International Development Research Centre of Canada, and the Angelo King
Institute for Economic and Business Studies of DLSU. (David Cagahastian)