Nurturing, developing Asean winners

IN ANY GAME-CHANGING development such as the creation of a unified Asean Economic Community (AEC), there will be winners and losers. As to what will emerge winners or losers, it all depends on how well each country has prepared for the dawning of the AEC. The idea is to groom as many winners as possible and to prepare safety nets for the prospective losers.

While the big boys of corporate Philippines have long prepared for this development, it has been acknowledged that micro and small and medium enterprises (MSMEs) could be among the most vulnerable. There are also fears that the Philippine farm sector could not compete in the production of traditional crops that are common to Asian countries like rice and sugar.

But what about startups and the MSMEs? Based on a research by GEM Consortium, the Philippines has the highest number of MSMEs in the region but it also has the highest number of closures. The high failure rate is partly attributed to the lack of financing available to help these small guys scale up.

Recognizing the importance of MSMEs, the Philippine game plan for AEC as drawn up by the Department of Trade and Industry seeks to "strengthen local businesses, make them more competitive and sustainable, and ensure that the Philippines comes out ahead."

We asked innovation advocate Maoi Arroyo, who teaches at AIM while managing her four businesses, what sectors or industry subsectors were likely to thrive in a unified Asean economy. Arroyo is the CEO and founder of Hybridigm Consulting, the first biotechnology consulting firm in the Philippines, which has now facilitated more than $3.5 million in biotech investments and trained about 15,000 aspiring entrepreneurs. The scientist, who studied biotech commercialization in Cambridge and MIT, came up with the following list of potential winners:

  1. Software
    Commonly referred to as “tech,” this sector covers everything from mobile apps to healthcare. There are more than 100 companies in this sector, with 10 local startups put up in 2015. This sector’s champions aim to have 500 startups formed by 2020, with total capital of $200 million raised from investors at a valuation of $2 billion.

    Watch out for: Zipmatch (real estate portal), Mobkard (mobile engagement platform that allows customers to receive exclusive privileges), Paynamics (online payment provider), SALT (the company that makes an innovative lamp powered by water and saltwater—the one that US President Barack Obama cited during the recent Asia Pacific Economic Summit) and FlipTrip (an online travel platform).

  2. Agriculture
  3. Creative
  4. Social
  5. Health and Wellness

After identifying potential winners in AEC, however, Arroyo cited five essential ingredients to ensure the success of SMEs in the unified Asean community:

  1. Strong teams
  2. Innovation
  3. Partnerships
  4. Access to capital
  5. Enabling environment

This story was produced under the Reporting Asean: 2015 and Beyond series of IPS Asia-Pacific in cooperation with Probe Media Foundation. This program is supported by the Rockefeller Foundation, the Asean Foundation and the Japan-Asean Solidarity Fund.

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