New Marcos admin has work cut out to support Filipino startups

As the Philippines transitions into its next leadership, members of the local startup community are looking for a stable business environment that could generate investor confidence. 

Ferdinand Marcos Jr., the late dictator’s son and namesake, is set to assume the presidency after winning in the hotly contested May 9 general election.

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Marcos Jr., whose father was ousted nearly 40 years ago after he plundered billions in public funds, is seen as less “market-friendly” than his closest competitor, incumbent Vice President Leni Robredo. A Bloomberg poll showed that investors are lukewarm to a Marcos presidency, while a think tank warned that his economic policies remain unclear.

Tech in Asia talked to some members of the local startup community before the elections, and they pointed out that the next administration needs to inspire investor confidence in its political leadership. 

“There’s a strong amount of confidence in Philippine startups and the creativity of Filipinos – their ability to come up with great ideas and potentially, big startup companies,” says Butch Meily, president of tech accelerator IdeaSpace Foundation. 

“Maybe that same confidence hasn’t always been there for the political leadership. Maybe that’s something the next administration could work at,” he adds. 

With the continued growth of industries hinging on the decisions of the Southeast Asian country’s leadership, the incoming administration is faced with the task of improving investor perception while grappling with issues surrounding long-standing corruption and plodding internet speeds.

New cabinet appointments, policy continuity

Although trailing behind regional giant Indonesia, the Philippine startup scene has produced its first two unicorns. Mynt, the company behind payments platform GCash, attained over US$2 billion in valuation after it raised US$300 million in November. Voyager Innovations, the firm behind e-wallet Maya and digital bank Maya Bank, joined the club after raising US$210 million in April.

Historically, local startups have trouble raising funds. A 2020 PricewaterhouseCoopers survey found that nearly half had secured no external funds at the time, and these financial constraints prevented them from being disruptive.

Since then, however, there have been hints of optimism. This year, Tiger Global led a US$50 million funding round for crypto exchange Philippine Digital Asset Exchange, while ecommerce platform GrowSari raised US$77.5 million from global investors, including KKR and the International Finance Corporation.

The incoming administration can keep the ball rolling by laying out clear economic policies and appointing cabinet members who can spur investor confidence.

After his victory, Marcos Jr. said he would focus on appointing economic managers who will deal with recovery from the effects of the pandemic. Outgoing President Rodrigo Duterte has signed an administrative order forming a transition team, which includes Karl Kendrick Chua, secretary of the National Economic and Development Authority. Chua said that in terms of fiscal policy, Marcos Jr. should pick up where the Duterte government left off, including its tax reform plans.

Economic policies would include an agenda for small businesses, including plans for startup growth. Marcos Jr. floated plans to allocate part of local government funds to MSMEs and to continue the outgoing administration’s infrastructure program, emphasizing the need for better digital networks that help small firms keep up with bigger brands. The presumptive president-elect has yet to choose his economic team, but he has made offers for cabinet positions involving labor and migrant workers. 

Fighting corruption, cutting red tape

Slow internet speeds holding startups back