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PH ranks 2nd most ‘unfriendly country’ to startups


By Bernie Cahiles-Magkilat

The Philippines is the 2nd most startup-unfriendly country among 12 major economies in Asia Pacific as it was largely pulled down by business climate issues, including ease of starting a business and trust in public institutions, according to a consumer research survey.

Consumer research group Value Penguin’s ranking of most Startup friendly countries Asia is based on 18 economic indicators. The country ranked 12th in labor force quality, and 11th on business climate and 10th on cost of doing business and 12th on economic health.

On business climate, this category encapsulates many factors, ranging from businesses’ trust of public institutions, technological development and availability of funding. The rating based on these data points is designed to evaluate the ease of doing business and general business environment in each country.

The top four friendliest countries for startups are Singapore, with Japan and Hong Kong tied up for second slot, and Japan, fourth, followed by Malaysia.

The Philippines ranked lowest on four factors considered under the business climate category. These are on businesses’ trust of public institutions, ease of starting a business, Internet access, VC access, market dominance, and bank penetration. It also ranked poorly on internet access (55.5%), and banks per 100,000 adults (8.8%).

The country’s ranking was driven down by a lack of trust in public institutions, high unemployment (5.0%), low GDP per capita ($2,951) and high interest rates (10-year government bond: 6.5%). It has a composite score of 10.7 in this particular category.

On the cost of doing business category, the Philippines ranked 10th. This considers several costs associated with operating a business, including borrowing costs, tax rates and wage costs.

The Philippines emerged as the second lowest in terms of salary rate with Vietnam as the lowest. It also ranked third cheapest in terms of cost of living with India and Malaysia as the first two lowest, respectively.

The Philippines ranked 12th under the economic health category, which combines traditional economic indicators. These include GDP per capita, GDP per capita, unemployment rate and the proportion of adults with bank accounts. These measures give a picture of the relative strength of each country’s economy.

But the Philippines ranked relatively high on quality of labor force at 5th place. In this category, the survey considered secondary and tertiary education attainment rates. Singapore, Japan, Hong Kong, and Korea occupied the top four with the Philippines rounding up the top five.  This means these countries have very well-educated adult populations, which bodes well for startups hiring in these countries.

The survey showed that 26.6 percent of adults in the Philippines have tertiary education and 70.1 of adults have at least secondary education. The country, however, ranked lower at 6th in terms of availability of local training.

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