A House leader on Saturday urged Congress to pass a bill regulating online commerce aimed at encouraging the flow of venture capital to Filipino technology entrepreneurs who need close to $4 billion in startup funding over the next 10 years to cash in on today’s digital economy.
Camarines Sur Rep. LRay Villafuerte made the call as he cited a joint study done by Google and Temasek, which showed that in the next decade, the Philippines’ startup entrepreneurs need at least $4 billion, or roughly equivalent to P195 billion, to allow the country’s digital economy to hit $19 billion (about P930 billion) by 2025.
“We cannot cash in on the new frontier of digital economy, which offers unparalleled business opportunities for Pinoy startups if we do not put in place the necessary regulatory reforms to help them tap the billions of dollars and pesos in funding available from foreign and local sources,” Villafuerte, vice chairman of the House committee on appropriations, said.
The Google-Temasek study noted that some $200 billion in digital opportunity is available in Southeast Asia alone by 2025, of which the Philippines’ share is about $19 billion in 10 years’ time, Villafuerte said.
The $19-billion share is more than 10 times the current value of $1.7 billion, according to the joint study.
Villafuerte said that based on the study, the country’s digital economy is primarily fueled by online shopping and travel spending but is sadly lacking the investments needed to spur the growth of Filipino startups.
“We can tap both foreign and local sources for funding, but they would be wary about investing in our startups if we do not have a concrete set of rules and the incentives that would encourage them to park their money here, instead of, say, Singapore or Indonesia,” said Villafuerte, who was a successful young entrepreneur before his three-term stint as CamSur governor from 2004 to 2013.
Citing a separate study, Villafuerte said that in terms of electronic commerce, the Philippines, and the countries of Indonesia, Malaysia, Singapore, Thailand and Vietnam in the Association of Southeast Asian Nations (Asean-6) account for under one percent of the total global online retail market out of the sales projected to top $1 trillion this year.
The study showed that retail e-commerce is projected to expand to nearly $2.7 trillion in 2020, but with the Asean-6 tapping only a small percentage of this market even if it accounts for 3 to 4 percent of the global Gross Domestic Product and around 8 percent of the world’s population.
“This is very unfortunate because e-commerce could be a very powerful instrument in helping our SMEs [small and micro enterprises] thrive not only here but in the global market as well,” Villafuerte said.