The Philippines CAN become southeast Asia’s Silicon Valley!


silicon_valleySilicon Valley — the real one in California, that is — is hot, and it may be overheating the San Francisco Bay Area. Property prices are soaring as the Valley’s seemingly insatiable appetite for tech talent is drawing in the best and the brightest. But the downside to all this is that the techo scene may be facing a social backlash from the community, so much so that solutions are now being explored around how the tech industry might step up efforts to give back to the community. But Silicon Valley insiders, for their part, have also criticised the government for not doing enough to address the social issues caused by the increasing wealth disparity in the area. Stepping back from this raging debate it is quite easy to see that opportunity exists to exploit this simmering malaise that could potentially stall the boom in the Bay Area.

Thomas Clayton, CEO of Bubbly writes in a article how southeast Asia may offer a brilliant alternative to Silicon Valley…

One part of the world that I highly recommend entrepreneurs seriously consider relocating to is Southeast Asia. It is quickly becoming one of the best places to grow a startup in today’s ecosystem.

I made the decision to move my Silicon Valley-based startup to Singapore several years ago, and the network here and the opportunity in Southeast Asia has grown exponentially in the past few years alone.

Clayton cited Singapore (of course) as the country offering the best package to would-be startups in the region. But, overall, the legendary Asian work ethic is also seen to be a big plus. And combined with an equally legendary boom-boom nightlife scene, southeast Asia can potentially be tops.

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There is also the minor detail of operating cost. In this area, being at the bottom is good, and Asia is pretty much bang-on lowest buck for bang…

I’m on the board of one of the top app companies in Thailand (No. 1 in its category in the App Store), which has 25 employees and is burning less than $30,000 per month. The company has been working for nearly three years on less than $700,000 in angel funding! I see the same thing all of the time across the Philippines, Vietnam, Indonesia — burn rates are abysmally low here.

The Philippines as a host to hi-tech startups leaves a lot to be desired, however. The relatively high costs of energy and Internet access compared to similar economies in the region as well as its decrepit physical infrastructure puts it at a huge disadvantage. Philippine Senator Bam Aquino’s Senate Bill 2217, the proposed “Go Negosyo” Law, despite being touted as long-overdue “pro-startup legislation” is rather inward-looking, geared primarily towards encouraging players in the country’s vast underground local economy to go legit and not exactly one that seeks to put the Philippines squarely in the global scramble to attract tech investment…

[Aquino] pointed out that a large part of the economy is being sustained by the “underground economy” (the vendors, sari-sari store owners, et al.) and by the remittances of overseas Filipino workers. Of every one million Filipinos who enter the labor market, about 240,000 find jobs here and another 200,000 go abroad to work, he said. The rest go to the underground economy, and they should be taught how to be successful small businessmen.

Seemingly beyond Aquino’s range of vision is an immense pool of capital out there looking for viable ventures to park itself. Adam Bender of Techworld Australia writes about how southeast Asia’s attractiveness as an investment destination will make securing funding for startups increasingly easier. But Bender also quotes Vinod Nair, founder of Singapore startup Catapult Ventures who cites a critical weakness in the Singapore market that favours emerging markets like the Philippines’…

Nair said a challenge for startups in Singapore is hiring help. Hiring is almost as expensive as it is in Australia, and the talent pool in Singapore is as small as the country, he said. In addition, the government has recently made it harder to secure work visas for foreign workers, he said.

HotelQuickly moved its headquarters to Thailand in part because hiring is inexpensive and the cost of living is low, said the hotel booking startup’s founder, Benjamin Forgan. The location is still very central in the region, he said.

Hardless stressed that it’s easy to set up a business in Southeast Asia, saying it often only takes three to four days in Singapore. Bangkok, Manila and Jakarta are similarly welcoming to startups, he said.

That’s a goldmine of opportunity Filipinos can tap as wealthy Singapore increasingly becomes a victim of its own success. What the Philippines needs to be able to eat Singapore’s lunch are more aggressive, outward-looking, and visionary initiatives and a strong drive to succeed at world-class levels. Perhaps Senator Aquino’s Go Negosyo bill may be a first step to that. But Filipinos need to be more ambitious and think global rather than local. Only with that kind of ambition can real social and political will emerge to change fundamental problems that hinder even local entrepreneurship, like the country’s infamously slow and cumbersome business registration process.

It would, indeed be a tragedy of epic proportions if the Philippines, which possesses the more hard-to-replicate social edge needed to attract tech investment than its regional competitors (English-language proficiency and a relatively more Westernised society), fails in this aspect. The thriving outsourcing industry is, by itself, a testament to this bigger potential it might miss out on.

Filipinos need to pull their fingers out of their asses and join the bigger world. Tricycle and jeepney drivers, sari-sari store and carinderia operators, taho and balut vendors, and wash-your-car boys may benefit from quaint legislation like Go Negosyo. But to make it big Filipinos need to overcome their renowned Heritage of Smallness and start learning how to think big.

12 Replies to “The Philippines CAN become southeast Asia’s Silicon Valley!”

  1. This is an optimistic article. One good potential destination for investors to thrive in the years to follow is the recently approved master development plan of clark green city that would give favorable environment to harness talents and skills and would suit investors taste of investments and income generation. If completed, it would contribute approximately P1.57 trillion per year to the economy of the country and generate 925,000 jobs.

    1. @jigs, kevin

      Consider the following first before you get drunk.

      Before any company puts up any business to the likes of Silicon Valley….

      1. take into consideration that the government requires part Filipino ownership. If I was the foreign investor I would think about that. Other asian countries offer more attractive options there.

      2. cost of utilities such as electricity, water, waste treatment, etc. The electricity rates in our country is one of the highest in the region. Fuel prices are on it’s all time high aggravated by massive traffic jams, guaranteed to shoot your overhead costs sky high.

      3. government red tape, corruption that you have to go through before you can put up your own business.

      I can add more, but the aforementioned should be enough to give you an idea why a foreign investor would rather look at other locations.

      1. Yep all this and more Joeld (how do I say that?), add to that list of yours- flying cockroaches that bite and give you staph infections. See where there is poverty – red tape – corruption, I see empowerment, disruption and capability. Think about it- the opportunity lies in the very things you are stating as detractors, that’s the joy, if it where wonderful and perfect and ready to go, it wouldn’t be a point of discussion. Granted Startup and Innovation and Investment is not the mature point on the whole bell curve…but isn’t that also the value? So you are stating the obvious – I ask = what about the possibilities? Shine the light on the lack and the darkness. Change the Hunger and Want of poverty to empowerment and growth. Yea I am an optimist, but I would have to be to be here working as I do, and trusting that the tide as we see it (innovation in Philippines) is changing. In America, sigh BORING! It is the Wild Wild West here- what have we? The bone dogs of hunger at our doorstep, Roving private Armies, Web Connection that you can never rely on, a culture that approves tardiness and has an insane number of holidays. AWESOME. I am serious here. My Culture (American) is brash, loud, and focused on making Millions and Millions as the superstar investment tech story of the day. Really American innovation may have the bucks but what about the innovation that is quiet and growing. The next disruption will come from the daughter of a fisherman. Innovation here is born of raw human madness, the stuff poets write about. America (Northern California Bay Area San Jose to SF, has what? A bunch of awesome infrastructure, ok. Fat wide freeways, that work. Ok. Bandwidth you can only dream of, sigh yes that too. ok. And Mexican food. Okay other than Mexican food, Philippines has opportunity, to directly improve lives and human experience daily. For that, I say, I have a purpose albeit a hopeful one, that this nation of 7000+ islands will wake up and find its place as a foundation in Asia and example of what consciousness can do to turn the tide of poverty and kawawa to can do and done. Africa is next.

        1. Heh, way to be the shining beacon of the White Man’s Burden and being proud of it. I hope you’ve come to realize that behind those shit eating grins and “creativity” and “diligence” lies much more sinister motives for those people. To them, you being a white foreigner is pretty much a walking magic golden ticket out of their poverty and will and may have already take advantage of you until you’re dried up and move on to the next ‘Kano to milk him dry.

          Sorry, but just because you see them as equals doesn’t mean they share the same sentiments you do. Don’t enable their behavior. Filipinos, in general, are in dire need of hard direction and discipline. Set them rules that once they disobey, they’re outta the workplace. A well defined sense of harmony and cooperation will lead to more productivity. I hope you take all this under consideration and wish you luck to you and your business.

      2. @ kevin

        You see, kevin, you can go on and feel all warm and fuzzy inside all because of the “possibilities” you say. But in between that possibility and making it into a reality, people, especially filipinos, need to take a good hard look at obstacles in making that possibility in to reality. Solve, overcome, hurdle, work around…. etc. Filipinos need to look and find out what is WRONG, face it and correct it.

        1. Are We Children or are we Men? Come let us reason together here Joeld – really I see your point but I am Not just warm and fuzzy, I’ve helped build a shelter to rescue street kids in Manila, for past 6 years donated my time to speak and teach at Universities. Coach and mentor and be an active part of the tech scene here. Add to that a lot of brands and ideas, I help launch or connect. I eat my own dog food. It isn’t warm and fuzzy – it is a living breathing ecosystem wherein we are all connected. You would be surprised at that condescending tone even I would take just years ago. I stopped talking about things and started doing. I would encourage you to also connect with me personally, I have very good friends like Bryan Thomas stopping child soldiers and building infrastructure in Mindanao – see you build schools and enable the local tribes people to sustain themselves (in this case Logging Fallen Geotagged Hardwood from the many typhoons) Millions of dollars created where poverty war, and insanity once stood. warm and fuzzy, sigh, that is simply a great way to excuse yourself from action. Point is, we are all more a like than different… we have a lot of work to do here- and like I said, Africa is next… People for the most part CARE, and Filipinos are the same flesh and blood breathing men and women as anyone else. So I challenge you pick something you think needs fixed that pisses you off, and begin working for a solution. I find that you may just surprise yourself buddy.

  2. The Philippines simply lacks: the Technology, Manpower, knowledge and Know-how to produce a Silicon Valley. Science and Technology in our country is obsolete. A century behind , compared to any industrialized country.

    The Philippine has no financial means to attract the best and the brightest thruout the world.

    Besides, if you are technically competent…would you go to work in a Third World country? To legislate such matter, to summon them into reality is laughable…

  3. I totally agree with you, Toro Hyden.

    I wouldnt buy a house in Phili if I cant own it (as foreigner). For business purposes its probably enough to only rent a site/premises.

  4. Infrastructure, Infrastructure, Infrastructure.

    I cannot stress this enough that this needs to be top priority if the PI wants to join its neighbors to eat the emerging Tech industry pie. The uninitiated could not possibly imagine how much is affected when utilities and transportation are running less than optimal (in this case abysmal.). You can’t get to work on time because of constant flooding from crappy sewage and roads which results in loss of productivity. It’s a big, steep slippery slope from there.

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