Building Bridges: Exploring the DTI-Japan Partnership's Impact on the Philippines' Thriving Startup Ecosystem

The Department of Trade and Industry (DTI) is the primary government agency responsible for promoting and regulating trade, industries, and investment in the Philippines. Its mission is to create a competitive and innovative business environment that will promote the growth and development of the ecosystem, improve the standard of living of Filipinos, and contribute to the country's economic development. The DTI has programs and services aimed at supporting the growth and development of startups, which includes business registration assistance, product development, market promotion, technology transfer, and access to finance. In addition to its support for SMEs, the DTI also plays a crucial role in promoting domestic and foreign investments in the Philippines. 

The Department of Trade and Industry (DTI) of the Philippines and Japan have a strong partnership in various areas such as trade, investment, and economic cooperation. The two countries have been collaborating closely for many years, with Japan being one of the Philippines' biggest trading partners and foreign investors. The DTI and Japan have also been working together to promote startups in the Philippines. Japan has been providing training and assistance to Philippine SMEs in areas such as product development, marketing, and finance. With that, why don’t you join me in learning more about the Department of Trade and Industry with its Division Chief, Karl Pacolor.  

What role does the Department of Trade and Industry of the Philippines play? 

The Department of Trade and Industry’s (DTI) is mainly responsible for realizing the country’s goal of a globally competitive and innovative industry and services sector that contributes to inclusive growth and employment generation. The DTI is anchoring its interventions under the Science, Technology, and Innovation-Based Industrial Strategy in order to put industries in a much better position, to compete in the global and domestic market, and achieve inclusive and sustainable industrial development. As one of its strategic actions, we aim to develop Innovative MSMEs & Startups. Through innovation, we want to upsize our MSMEs. We are also working towards building and empowering the Philippine tech startup ecosystem which would be critical in developing new innovations and supporting the digital transformation of SMEs.

How does the Department of Trade and Industry support  startups and assist small and medium-sized enterprises (SMEs) in the country, and what kind of assistance is available for them?

The DTI is working towards empowering the startup ecosystem and assisting in the Digital transformation of enterprises by providing strategic interventions stemming from the Innovative Startup Act (ISA) and Philippine Innovation Act (PIA). DTI is  mainly responsible for guiding startups in their commercialization stages by implementing support programs that build the entrepreneurial capacity of startups and its founders with interventions such as incubation, acceleration and mentorship programs, support for internationalization, providing access to the Startup Venture Fund and linking with partners and investors. Alongside this, SMEs are being assisted on their Digital Transformation journey by helping them embrace new Industry 4.0 technologies such as AI towards transforming industries and increasing the share of STI-intensive sectors to GDP.

Let me identify DTI Competitiveness and Innovation Group’s Startup Develop programs  namely the IDEA, ADVanCE, and GAP. IDEA is an acronym for Incubation Development and Entrepreneurial Assistance where-in we help startups in introducing to fundamentals of entrepreneurship and helping them professionalize their organization. On the other hand, ADVanCE is Accelerating Development Valuation and Corporate Entrepreneurship. Through ADVanCE, we help startups that are preparing to scale-up and help transform from backyard operations to running the startup as a real business. Most of the interventions in ADVanCE focus on how we will be able to aid the startups in scaling products and services to  cater to bigger clients. This is also a way for us to be able to help them expand at least locally and prepare startups for significant investments. For GAP, which is the Global Acceleration Program, we want to expose and provide our startups access to global markets and open up partnership opportunities with international organizations. We aim to connect our startup stakeholders to possible investors and clients across different countries in the world. As part of our pilot implementation, we helped startups scale in the ASEAN region recognizing ease in trade facilitation and geographical proximity. To complete our support programs, we are also implementing iLEAP and providing access to the Startup Venture Fund. iLEAP stands for International and Local Exposure Assistance Program where we have been supporting local startups by helping them join different conferences, exhibits, startup gatherings and competitions to help promote startups and products outside the country. For the Startup Venture Fund SVF, the National Development Company and DTI partners with different co-investment partners that would be able to provide equity funding for startups with the government sharing the risk of investing together with private investors.

Can you tell us more about the partnership between the Department of Trade and Industry of the Philippines and Japan in building the startup ecosystem in the country? How did this partnership come about, and what are its main objectives?

DTI over the years has built a strong relationship with Japanese government and private business counterparts. Through various Philippines-Japan Trade Missions, DTI has welcomed a number of delegations to the Philippines in order to talk about the different opportunities across industry collaborations and investments. In the most recent Philippine-Japan Trade mission, one of the key highlights of the meeting was the knowledge exchange on how to create a more collaborative environment for startups for both countries. The mission also brought some startups from Japan who are seeking opportunities to set up operations in the Philippines and likewise we showcased some of our own startups to promote their technologies. Some other collaborations that we’ve previously worked together with the Japanese Space Agency, JICA and JETRO is the S-booster challenge, a space-based pitch competition for ventures, individuals, and businesses in different industries in Japan and the Asia-Oceania region that aim to commercialize their business ideas utilizing space assets businesses in space such as satellite data and technology. Through the National Development Company NDC, Real Tech Holdings, a Japanese investment company, has also been recently accredited as a co-investment partner for Startup Venture Fund.

How has the collaboration between the Philippines and Japan in the startup space benefited both countries? Can you share any success stories or examples of startups that have benefited from this partnership?

Although the Philippines and Japan have been working closely supporting traditional enterprises and industries, we are still building on our collaboration for Startups. Our goal is to be able to build from our existing relationship and work on new technologies and enrich our respective Startup ecosystems. Last October 2022, led by our PTIC-Osaka office, a Kansai Economic Federation (Kankeiren) Business Mission was organized to have a better understanding of the Philippine Startup ecosystem and explore areas of collaboration. Delegates from Japan met with Startup Incubators and Philippine Startups in the process. In April of this year, three startups were given the opportunity to do an online pitch and participate in a business matching event. These opportunities provide an opportunity for our local startups to get promoted and be exposed into the global markets.

Can you share any future plans or initiatives that the Department of Trade and Industry has in store for the Philippine startup ecosystem?

In the next few years, our main goal is to accelerate the growth and empower the Philippine startup ecosystem. Since the pandemic has also catalyzed more investments into the Philippine startup scene, we will continue this by consistently working on operationalizing policies like the Innovative Startup Act and implementing Startup Development programs that will provide our startups various opportunities to scale up and be exposed to local and international industries, most especially to Japan. Japan is one of the most high-tech countries when it comes to developing technologies. We want to collaborate more in terms of collaborating on technologies for future mobility, artificial intelligence, space and climate technologies among others. Most importantly, we welcome Japanese investments to come here in the country as it will significantly contribute to fueling the growth and development of our industries and economy.

Mr. Karl Lyndon Pacolor is currently the Division Chief of the Innovation and Collaboration Division of the Department of Trade and Industry. Karl is responsible for leading and coordinating the Department’s innovation related initiatives and programs for startups, micro-, small-, and medium enterprises (MSMES) and large enterprises; implementing the two new innovation legislation towards creating globally competitive and innovative industries; and formulating programs to prepare the country for Industry 4.0, which is crucial as we developed new products, services, and new business models. Mr. Pacolor completed his Masters in Entrepreneurship course at the Asian Institute of Management and obtained his Bachelor’s Degree in Electrical Engineering at the University of the Philippines-Diliman. Prior to joining the government, he was the Technical Services Manager of an Electric Tricycle manufacturing company in the Philippines and served as a Secretary of the Electric Vehicle Association of the Philippines. 

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