From Dreams to Reality: Maximizing Opportunities with the Philippine Innovative Startup Act 

Did you get swept up in the wave of the K-drama “Start-Up”? If so, you’re not alone! This series has captured the hearts of many Filipinos, inspiring dreams of launching the next big startup. But even if you’re not into K-dramas, the idea of creating a successful business from a simple yet innovative idea is a universal dream. Whether you’re an aspiring tech mogul or someone with a groundbreaking idea, the Philippines offers a wealth of opportunities for startups, thanks to the Innovative Startup Act.

The Innovative Startup Act is a game-changer for the Philippine economy. By fostering inclusive growth through innovation, this act aims to provide benefits and programs designed to strengthen the startup ecosystem. It’s all about creating new jobs, improving production, and advancing innovation and trade.

What is a Start-Up?

Startups are all about turning new and innovative ideas into successful businesses. According to the Innovative Startup Act, a startup in the Philippines is any person or registered entity in the Philippines which aims to develop an innovative product, process, or business model.¹

Innovation means the creation of new ideas that results to the development of new or improved products, processes, or services which are then spread or transferred across the market.² To be legally considered an innovation, one must have a new or significantly improved product or process or a new business model.³

For instance, imagine a small team of engineers who invent a new, eco-friendly packaging material that can replace single-use plastics. This material is cheaper to produce, and decomposes signicantly faster than traditional plastics, making it an innovative product. Another example is the creation of mobile app that revolutionizes the way local farmers distribute their produce, connecting them directly with consumers and reducing food waste. This is an example of an innovative process. Lastly, think of a company that devises a new subscription-based business model for delivering personalized healthcare kits to people’s doorsteps. This represents an innovative business model.

Why You Should Know About the Innovative Startup Act

The Innovative Startup Act is designed to support and grow the startup ecosystem in the Philippines. It offers various benefits and programs to help startups thrive. To foster a thriving ecosystem for startups and investors, a range of targeted benefits designed to support and accelerate growth at every stage are introduced by the law. From streamlined visa processes and financial subsidies to specialized funds and strategic development plans, these initiatives aim to remove barriers, enhance opportunities, and create a robust environment for innovation. In the following sections, we will outline the comprehensive benefits available to startups and investors, providing a detailed overview of how these programs can help unlock new possibilities and drive success in the Philippine startup landscape.

What Are the Benefits a Startup is Entitled To?

General Registration and Operational Benefits and Incentives

Startups in the Philippines can benefit significantly from the Innovative Startup Act, which offers a range of support measures designed to ease the burden of business operations and foster growth which includes:

1. Full or partial subsidy for the registration cost of business permit applications;
2. Endorsement for expedited or prioritized processing of government applications;
3. Full or partial subsidy for the use of facilities and services provided by government or private enterprises or institutions;
4. Full or partial subsidy in the use of repurposed government spaces and facilities of the host agency as the registered business address;
5. Grants-in-aid (GIA) for research, development, training, and expansion projects.⁴

These benefits may be applied from the so-called host agencies enumerated in the Innovative Startup Act, which includes the Department of Science and Technology (DOST), Department of Trade and Industry (DTI), Department of Information and Communications Technology (DICT). or other national government agency, local government unit, or public academic institution that provides programs, benefits and incentives to startups or startup enablers.

Startup Visas

To make the Philippines a premier destination for global talent and investors, the Innovative Startup Act introduces specialized startup visas and enhanced travel benefits, which includes the following:

• Startup owner visa – for prospective or current foreign owner of startup or startup enabler registered in the Philippines;
• Startup employee visa – for foreign employee of a startup or startup enabler registered in the Philippines; and
• Startup investor visa – for prospective or current foreign investor of a startup or startup enabler registered in the Philippines.⁵

Applications for these startup visas will need an endorsement from a host agency, along with meeting the DFA’s visa requirements. These visas will be valid for an initial five years and can be renewed or extended for another three years. Prospective startup owners, investors, or enablers can receive multiple-entry interim startup visas, valid for six months to one year, for free with a host agency endorsement. Visa holders will not need to secure an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE).⁶

Incentives for Participation in Startup Events

In addition to these government subsidies and aids, host agencies may also provide the following benefits to in order to support members of startups and/or startup enablers who have passed their respective selection and application process for the purpose of participating in local or international startup events or competitions:

• Endorsement of the host agency for the expedited or prioritized processing of travel documents, such as, but not limited to, passport and/or visa application;
• Full or partial subsidy for fees and charges incurred in the application for pertinent travel documents;
• Full or partial subsidy for baggage allowance for materials, equipment, and/or products pertinent to the participation in the local or international startup event:
• Full or partial airfare subsidy for roundtrip airfare; and/or
• Per diem allowance.⁷

Additionally, Filipino executives from qualified startups can benefit from the APEC Business Travel Card (ABTC), further enhancing their ability to engage in international business activities.⁸

The Innovative Startup Act provides a wealth of opportunities for entrepreneurs and investors in the Philippines. From financial benefits to operational support, this legislation is designed to help you turn your innovative ideas into thriving businesses.

Navigating the complexities of incorporation and maximizing the benefits of this groundbreaking legislation can be challenging.  

Our law firm specializes in guiding companies through every step of the incorporation process, ensuring you make the most of the opportunities provided by the Innovative Startup Act. With our expertise, you can confidently transform your vision into a successful reality and unlock the full potential of your startup in the Philippine market.

Contact us today to learn how we can support your startup journey and help you capitalize on the exciting possibilities ahead.

Prepared by Cee Jay P. Sabile.

FOOTNOTES

1. Section 3(g), R.A. No. 113377.
2. Section 3(b), R.A. No. 113377.
3. Section 3(c), (d) and (e), R.A. No. 113377.
4. Section 7, R.A. No. 113377.
5. Section 13, R.A. No. 113377.
6. Id.
7. Section 8, R.A. No. 113377.
8. Section 14, R.A. No. 113377.