The growth of business startups in the country, particularly in technology enterprises, requires the abundance of very highly skilled workers, access to financing and fast and reliable internet and strong laws on intellectual property and ecommerce.
Albay Rep. Joey Sarte Salceda, chair of the House Ways and Means Committee, made these points in a speech before the Annual National ICT Confederation of the Philippines Summit.
Titled 'Formulating policies on transformation of incubation and start-up technologies in health and economy', Salceda enumerated “six key ingredients of growth,” that could push startups.
These are abundance of very high skilled workers, mostly from excellent local universities; access to financing, both from the private and public sectors; mostly from the private capital markets; fast and reliable internet; access to public data that startups can play around with to address the public’s problems; strong laws to guarantee ownership and beneficence from intellectual property; and strong electronic commerce laws.
Salceda principally authored three bills designed to help level up the business environment in the country, and are expected to hurdle Congress this year--Amendments to the Retail Trade Liberalization Act, Foreign Investments Act, and the Public Service Act.
Of these growth ingredients, he said the most critical is the “abundance of very highly-skilled workers, mostly coming from very strong universities, and since there is no way around it, the government should adequately fund its premier state university, the University of the Philippines, and its science endeavors, to attain it.”
“We must maintain economic independence. The entrepreneurial spirit dies in tightly controlled environments,” he said, adding that of the other elements, “capital market liberalization” is an enabler of an environment favorable to startups.
“Our foreign equity restrictions and low domestic savings rates, the lowest in the region, hamper the development of a liquid venture capital investment. We have to open up our investment environment to foreign equity. There is no way around it,” the lawmaker said.
Salceda explained that the “funds-of-funds model” allows the state to indirectly finance startups in a diversified, and therefore risk-reduced manner. “Here’s how it works: Smaller, private funds that can evaluate startups competently are infused with capital by state financial institutions. The state invests in a diversified portfolio of these funds to hedge risks. At the same time, startups not having to deal directly with the state reduces red tape and the opening for corruption.”
The lawmaker also pushes for the creation of the National Broadband Network, which would have been cheaper to pursue much earlier, “but there is no way around a strong fiber optic network. We just have to have one.”
Salceda also wants an open and usable government big data platform, strong intellectual property laws and modernization of the e-commerce Law, a bill for which he earlier drafted and filed in the House.
“In summary, how do we create a culture that enables strong startups? The state must not try to be another cook in the kitchen. After all, too many cooks spoil the broth. Instead, we give the cook the kitchen, the ingredients, and we guarantee their reward for cooking great food, but we let them take it from there,” he said.