Why entrepreneurs are critical to the Philippine economy --[Reported by Umva mag]

IN BRIEF:

• While entrepreneurs represent 10% of the adult population, their ventures account for 70% of employment, making them the most important drivers of job creation

• Entrepreneurs solve the most complex challenges in today’s world and boost the overall economy

• The Philippines ranks as the world’s 18^th most entrepreneurial country, besting developed nations like Denmark, Switzerland, Taiwan, Japan, Singapore, Italy, and New Zealand

There are 594 million entrepreneurs worldwide, according to the Global Entrepreneurship Monitor, representing 7.5% of the global population, or about 10% of the adult population. This makes entrepreneurs a minority, but their impact on the world is unmistakably massive, as ventures by entrepreneurs account for 70% of total employment — making them significant drivers of job creation and critical for economic development.

In this article, we run down the reasons why we should celebrate the successes of entrepreneurs and why we should enable more of them to succeed and flourish.

SOLVING THE MOST COMPLEX CHALLENGES
We recognize the importance of entrepreneurs because they solve the most complex challenges in today’s world by bringing new ideas, products, and services to the market. The essence of entrepreneurship is finding innovative ways to solve seemingly impossible problems — from driving healthcare revolutions to enabling financial inclusion and advancing education technology. The pandemic showcased how entrepreneurial agility in startups can respond to global health crises, giving rise to telemedicine, AI-driven diagnostics, personalized medicine, and vaccine development at unprecedented speeds.

Entrepreneurs have created platforms that provide financial services to underserved populations, making it easier for people to access banking services, thus enabling economic growth and helping reduce poverty. Through EdTech, free or affordable education has bridged the gap between formal education and those who need it most, at a time and place they prefer.

Entrepreneurs are also bringing the world closer to solving the toughest challenges, such as climate change and the destruction of natural ecosystems. The World Economic Forum points out certain grim realities — 10% of the global population still live in extreme poverty, 8 million tons of plastic are deposited into the ocean each year, and an area the size of a football pitch is deforested every second. However, the new generation of entrepreneurs is using technology such as drones and satellites to monitor and heal our planet.

Being able to solve problems can also potentially attract capital and investments. The Philippines has already produced three “unicorns” — privately-held startups valued at $1 billion or more — with each finding its niche. Two of these unicorns notably emerged during the pandemic. Specifically, a developer of prefabricated properties became the nation’s first unicorn in October 2017. A digital wallet and lending platform followed in November 2021, and a payment gateway solutions provider joined the ranks in April 2022.

CREATING JOBS AND BOOSTING THE OVERALL ECONOMY
We celebrate entrepreneurs because they excel at creating jobs and boosting economic growth by introducing innovative technologies, products, and services. In the Philippines, MSMEs make up 99.59% of businesses, providing 65.1% of national employment.

Filipinos are very entrepreneurial. Data compiled by the business publication and news site CEOWORLD Magazine ranks the Philippines as the world’s 18th most entrepreneurial country, besting developed nations like Denmark, Switzerland, Taiwan, Japan, Singapore, Italy, and New Zealand.

This buoyant entrepreneurial environment is likely to inspire more entrepreneurs to join the ranks. A recent research survey by polling firm OCTA found that four out of five Filipinos would prefer to own their own business. Conducted among 1,200 Filipinos aged 18 and above, the survey revealed that 31% of respondents were motivated by the desire to manage their own time and explore horizons that offer limitless opportunities.

By offering something better or new, entrepreneurs create competition within the ecosystem, challenging existing firms to become more competitive. This, in turn, creates more jobs and investments in a wide range of industries.

All of this results in increased productivity — which Ray Dalio, founder of the world’s largest hedge fund firm, Bridgewater Associates, and author of Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail — argues is the most important force in causing the world’s total wealth, power, and living standards to rise over time.

“Without innovation, productivity growth would grind to a halt,” he said. “In a market-based system, the most powerful way to drive innovation is to bring new ideas to market and to commercialize and profit from them. The marketplace is incredibly efficient at weeding out bad ideas and pricing good ones. In this way, the concepts of innovation and commercialism go hand in hand.”

By encouraging a culture of innovation, entrepreneurs enable countries to produce more relative to the rest of the world, making them more attractive places to do business.

By doing what they do best, entrepreneurs also create a platform with the potential to lift people out of poverty and improve the overall quality of life. Many studies have shown that entrepreneurship has a positive and significant impact on poverty reduction. There is evidence proving that entrepreneurship increases the probability of individuals moving out of poverty and remaining above the poverty threshold in the Philippines.

EMPOWERING ENTREPRENEURS TO  SHAPE OPPORTUNITIES
To empower more entrepreneurs to shape the future of their businesses with confidence, we are pleased to have once again launched a search for entrepreneurs who are shaping opportunities through the EY Entrepreneur Of The Year Philippines 2024.

Formed in 1986, the EY Entrepreneur Of The Year program seeks to honor entrepreneurs whose ingenuity and perseverance have created and sustained successful ventures. In 2003, the SGV Foundation first launched the program in the Philippines and has since been recognizing impactful business who can mold and reshape the country’s economic landscape to build a better Philippines and a better working world.

This year’s theme, “Shaping Opportunities,” honors individuals who are turning possibilities into realities and making a profound impact on both the country and the world. The current theme recognizes the transformative ability of Filipino entrepreneurs in reimagining and advancing economic and national development with vision, passion, and innovation, according to the SGV Foundation.

Inspired by their dreams and propelled by their unwavering resolve, these Filipino business leaders have played a pivotal role in elevating the country. Over the recent weeks, their narratives have been featured in BusinessWorld, sharing their stories of challenges and triumphs to hopefully encourage current and aspiring entrepreneurs. 

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Henry M. Tan is a partner and the Entrepreneur Of The Year Philippines program director of SGV & Co.

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