The Philippines dropped by two notches in the Global Startup Ecosystem Index 2023, with the country sliding from 57th last year to 59th place this year.
The index, compiled by global startup ecosystem map and research center StartupBlink, features the latest research on the global startup economy and showcases the rankings of 100 countries and 1000 cities.
The Philippines retained a total of five cities — Manila, Cebu, Cagayan de Oro, Naga, and Davao — in the index, four of which climbed the rankings.
The country was ranked 6th in Southeast Asia, closing the gap with neighboring Vietnam (5th).
Despite the decline, the report said the Philippines is making progress toward becoming a formidable startup ecosystem in the Asia Pacific region.
“The country enjoys a talented English-speaking population, with many already working remotely for international startups.
“Its attractiveness to foreign entrepreneurs and digital nomads, and the massive knowledge that local remote workers have gained while working in international startups, should allow for successful ecosystem growth, provided more of the local population embraces entrepreneurship,” it noted.
The study also noted that the country has dozens of government programs to encourage entrepreneurs, including the QBO Innovation Hub and the P3 Program.
KMC, the largest co-working chain in the country, along with several startup incubation programs, are also supporting the Philippine startup ecosystem, the study observed.
“The public sector is creating a regulatory framework through the Innovative Startup Act to empower early stage startups. Under the law, three types of visas are set to attract entrepreneurs, investors, and startup employees,” it said.
“Another public sector initiative is a recent amendment to the Foreign Investment Act. The amendment aims to encourage global SMEs to set up fully-owned businesses in the country,” it added.
The report said the public sector also supports the ecosystem with grants.
“For example, The Department of Information and Communications Technology (DICT) is a public sector organization that is highly involved in startup ecosystem development through grants for early-stage startups,” it said.
However, the report said the Philippines faces several challenges that could delay the country’s development into a fully mature startup ecosystem.
“The lack of infrastructure is a limiting factor to the country’s economic growth, and entrepreneurs struggle with slow regulatory support for their startups. Tackling these issues is important due to common interests from both international and local venture capitalists,” it said.