Philippines needs to invest heavily on developing technology, following the models of such countries as India, Korea, Japan and the United States, among others, a prominent engineer and entrepreneur said.
Philippine Development Corp. (PhilDev) Chairman Diosdado Banatao, in a recent interview, pointed out that India, instead of being hobbled by its large population, used its human capital to build a strong capability in software development.
Cebu, he said, ought to push for more training so it could build a "technology-based ecosystem" that can create new applications or solutions to solve problems.
This way, he said, the country can slowly transform from a buyer into a major player in the global market.
"We are limited in our own markets. But, we have the ability to be part of the global market because we have way more people than Japan and Korea," said Banatao, the managing partner of Tallwood Ventures.
He pointed out that what made countries like Korea, Japan, US, Germany and France succeed is that they have built a strong capability and produced technologies that were embedded into their products.
"Imagine that 90 percent of the value goes back to the product creator, and if this is ploughed back to its local economy through investments on research and development to create more products, this alone will have a huge impact on the lives of the people as well as the economy in general," Banatao explained.
High risk, high reward
Eric Manlunas, co-founder and managing partner of Siemer Ventures, advised companies to invest on early-stage firms given the high liquidity in the market today.
"We need to promote angel investing here, for our start-ups to take off," he said.
Banatao added investors should start looking at technology development as an investment, aside from pouring all their money into real estate and shopping among others, to build a community of venture capitalists (VCs).
However, he admitted that some investors in the Philippines fear the fact that success rate among VC-supported ventures is low.
"This involves huge risks, but high returns. But VCs should be there to lead and mentor start-ups," said Banatao.
Aside from the lack of financial capital to build a community of VCs, the other challenges include a shortage of experienced technology entrepreneurs and managers, of scientists and engineers, and insufficient access to a global network of experts.
PhilDev trustee Winston Damarillo said everyone needs to participate—industry players, academe and government—to address all these concerns, considering that the Philippines is among the Next 11 emerging markets.
"We need everyone's involvement so we can turn the brilliant ideas of our people into money-earning products and services, which could further economic growth," said Damarillo, also the founder Developers Connect (DevCon) Philippines and software companies Morphlabs and Exist.
The next 11 markets are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, South Korea, the Philippines, Turkey and Vietnam.
Making Local Products Globally Competitive
SMALL and Medium Enterprises (SMEs) play a major role in socio-economic development, through their creation of jobs and business opportunities, use of indigenous resources, dollar earnings, and linkages with other industries. With the growing demand for local products abroad, SMEs have begun to adopt a more aggressive campaign to promote their products and search for new markets.
This accounts for the popularity of trade fairs and expositions being held in Metro Manila and the provinces. Entrepreneurs see them as venues to introduce products and services, and the public patronize them for innovative and affordable items.
SMEs comprise 99.6 percent of the country's 80,000 business enterprises, mostly in export, and employ 63 percent of the labor force. While most jobs can be found in Metro Manila, SMEs also provide employment in economic zones and science parks nationwide. The government supports SMEs as the backbone of the Philippine economy. Small enterprise is business with capital and total assets of above R3 to R15 million, while medium enterprise has a capital and total assets of over R15 million to R100 million.
Republic Act 6977 the "Magna Carta for Micro, Small and Medium Enterprises (MSMEs) of 1991," was a landmark legislation for MSMEs. Two other laws –RA 9178, the Barangay Micro Business Enterprises Act of 2002, and RA 9501, the Magna Carta for Micro, Small, and Medium Enterprises of 2008 – provided incentives to barangay-based micro businesses and expanded the SME sector to include microenterprises.
As more community-based enterprises continue to innovate and tap more markets here and abroad, the government and private sector assist them in product development, introduction of new technologies and marketing strategies to improve operations, increase productivity and reduce production costs.
