Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

HOUSE BILL NO. __ CREB

Introduced by Representative Michael L. Romero

EXPLANATORY NOTE

In the Republic of the Philippines, a Startup Ecosystem is created by people.
This startups in their various levels and types of organizations in a physical or
virtual location, interacting as a system to establish and scale new startup
companies.

These organizations can be further classified into categories such as
universities, funding organizations, support organizations, research

organizations, service provider organizations and other large corporations.

This House Bill seeks to provide benefits and therefore eliminate conflicts
intended at encouraging the establishment and operation of an ecosystem of
enterprise, government and nongovernment institutions that shall promote a

pioneering entrepreneurial culture in the country.

Thus, the Le Ssage of this bill is earnestly requested.

ROMERO Ph.D.


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

HOUSE BILL NO. gia2 3

Introduced by Honorable Michael L. Romero

AN ACT
PROVIDING INCENTIVES AND MECHANISMS TO CREATE NEW
JOBS AND OPPORTUNITIES, IMPROVE PRODUCTION, AND
ADVANCE INNOVATION AND TRADE IN THE COUNTRY, TO
FOSTER AND DEVELOP THE PHILIPPINE STARTUP
ECOSYSTEM

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

ARTICLE I
GENERAL PROVISIONS
SECTION 1. Short Title - This Act shall be known as the ‘Philippine
Startup Act of 2018.”

SECTION 2. Declaration of Policy — It is hereby declared a policy of the
State to promote a comprehensive growth development through a creative
economy by an efficient and effective government and non-government

initiatives, in both the local and international fields.

SECTION 3. Definition of terms — the following terms shall mean:


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(a) Innovation - 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;

(b) Research and Development - any activity which is a systematic,
intensive study directed toward greater knowledge or understanding of
the subject studied; a systematic study directed specifically toward
applying new knowledge to meet a recognized need; or a systematic
application of knowledge toward the production of useful materials,
devices, and systems or methods, including design, development, and
improvement of prototypes and new processes to meet specific
requirements;

(c) Startup - any person, or registered entity in the Philippines which aims
to develop an innovative product, process, or business model;

(4) Startup Enabler ~ any person, or registered entity in the Philippines
registered under the Philippine Startup Development Program that
provides goods, services, or capital identified to be crucial in supporting
the operation and growth of startups by the DTI in consultation with
DOST, DICT, and pertinent government and nongovernment
organizations;

SECTION 4. Philippine Startup Development Program - There is
hereby created a Philippine Startup Development Program herein after referred
to as the “Program.”

The Program shall be composed of programs, benefits, and incentives for
startups and startup enablers promulgated through the respective mandates of
national government agencies, and through additional mandates provided by
the provisions of this Act. The Program shall also include programs, benefits,
and incentives for startup and startup enablers extended by nongovernment
organizations in partnership with any national government agency.


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DOST, DICT, and DTI shall be the lead agencies that shall assess,
monitor, develop and expand the Program consistent with the objectives of this
Act. To this end, DOST, DICT, and DTI, in consultation with government and
nongovernment organizations shall set key metrics to track the impact and
development of the Program.

DTI shall promulgate the rules for the efficient registration and
assessment of startup enablers to be registered under the Philippine Startup
Development Program for the effective implementation of benefits or programs
provided under this act.

SECTION 5. Startup Objectives. — The Program shall aim to achieve the

following:

(a) Sustain the Research and Development of startups and startup enablers
in the Philippines;

(b) Sustain and encourage the access to startup development programs
offered locally and internationally for startups, startup enablers, and the
implementers of the programs, benefits, and incentives of the Program
such as, but not limited to, capacity building, exchange programs, and
expert training courses;

Sustain and uphold the involvement of startups in international
competitions and conferences integral to the promotion of the Philippine
startup ecosystem;

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(d) Sustain the contribution of startups in local and international events
which aim to link them to potential investors, mentors, collaborators,
and customers;

(

Sustain the cooperation and partnership of startups, startup enablers,
national government agencies, public and private academic institutions,
and industry partners to develop innovative products, process or


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business model which may be utilized in the delivery of public services,
programs, or projects of host agencies;

() Sustain the improvement and expansion of businesses whose innovative
product and service, or business model is integral to the creating a
competitive startup community in the Philippines;

(e) Expand and revise policies and regulations to address or remove undue
restrictions in implementation of the Program, and in the development,
establishment, and growth of startups and startup enablers to promote
ease of doing business.

SECTION 6. POWERS AND FUNCTIONS OF THE HOST AGENCIES. -
DICT, DOST, DTI and other host agencies shall have the following general roles
and responsibilities in the implementation of this Act:

(a) Disseminate the suitable policies and guidelines for the coordinated
implementation of Program;

(b) Evaluate impact and applicability of the benefits and incentives that
compose the Program;

() Foster the access to the benefits, incentives, and opportunities for
startups and startup enablers; and

(d) Guarantee the immediate and efficient provision of the benefits and
incentives provided under this Act.

ARTICLE I
STARTUP BENEFITS AND INCENTIVES

SECTION 7. General registration and operational benefits and
incentives - Host agencies shall be authorized to provide the following benefits


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and incentives to startups and/or startup enablers who have passed their

selection and application process:

(a) Full or partial subsidy for the registration and cost in the application and
processing of permits and certificates required for the business
registration and operation of an enterprise with the appropriate local or
national government agencies;

(o)

Endorsement of the host agency for the expedited or prioritized
processing of applications with other government agency;

(d

Full or partial subsidy for the use of facilities, office space, equipment,
and/or services provided by government or private enterprises or
institutions;

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Full or partial subsidy in the use of repurposed government spaces and
facilities of the host agency as the registered business address;

(e) Grants-in-aid (GIA) for research, development, training, and expansion
projects.

Provided, That the full or partial subsidies provided by the host agency
may be incorporated in the approved GIA of the startup or startup enabler, or
may be issued through vouchers issued by the host agency. Provided, further,
That government or public institutions shall honor the issued vouchers in
relation to the implementation of this provision and charge such fees or
charges to the issuing host agency.

DTI shall be the agency tasked to initiate and coordinate with national
and local government agencies involved with the registration, licensing,
certification, including those who levy fees and charges for services subsidized
by host agencies, and such other bureaucratic and regulatory process to be
undertaken by startups and startup enablers endorsed by host agencies, in
order to promulgate the necessary issuances to facilitate the effective
implementation of this act.


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SECTION 8. General benefits for participation in Local and
International startup events. — Host agencies shall be authorized to provide
the following benefits and incentives 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:

(a)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;

(b) Full or partial subsidy for fees and charges incurred in the application of
applicable travel documents;

(c) Full or partial subsidy for baggage allowance for materials, equipment,
and/or products pertinent to the participation in the local or
international startup event;

(d) Full or partial airfare subsidy for roundtrip airfare; and/or
(e) Per diem allowance.

The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) shall
exempt members of startups or startup enablers endorsed by any host agency
from paying the Philippine Travel Tax for departures related to their
participation in international startup events or competitions. TIEZA shall issue
promulgate the necessary rules and regulations in consultation with DTI,
DOST, and DICT for the effective implementation of this provision.

SECTION 9. Philippine Startup Ecozones ~ The Philippine Economic
Zone Authority (PEZA) in consultation and coordination with DTI, DOST, and
DICT shall pursue and promote the creation of Philippine Startup Ecozones, or
Special Economic Zones to spur the growth and development of startups and
startup enablers through either private initiative, local government initiative

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with the assistance of the national government, and/or national government
initiative consistent with the provisions of Republic Act No 7916, as amended
by Republic Act No. 8748, otherwise known as The Special Economic Zones Act
of 1995, and its implementing rules and regulations.

DICT, DOST, DTI and other host agencies, through their respective
regional and provincial offices, shall promote and facilitate the registration of
qualified startups and startup enablers in established Special Economic Zones
in the Philippines.

PEZA shall assist DICT, DOST and DTI in training their respective
personnel assigned to assist startups and startup enablers in meeting
standards and regulations for registration and compliance requirements in
Special Economic Zones.

SECTION 10. Startup Investment Development Plan - DICT, in
collaboration with DTI, DOST, and BOI shall spearhead initiatives to develop
the short, medium, and long-term strategies in order to spur investment in,
and promote the growth and development of startup and startup enablers in
the Philippines.

DTI in coordination with the Board of Investment shall promote and
facilitate the provision of applicable benefits to current and prospective
investors of startups and startup enablers.

The Board of Investments (BO!) shall assist DTI, DICT, DOST, and other
host agencies in training their personnel tasked with assisting in current and
prospective startups and startup enablers in order to access and maximize
benefits and incentives which may be extended consistent with the powers and
mandate of the BOI.


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SECTION 11. Startup Commercialization and Impact Fund - There is
hereby created a Startup Commercialization and Impact Fund (SCIF) under the
DOST and DICT, in the amount of One Billion Five Hundred Million Pesos (PHP
1,500,000,000.00) for each aforementioned department, to be administered in
coordination with DTI.

The SCIF shall be used for the following:

(a) Phase I Grants of up to Seven Million Five Hundred Thousand Pesos
(PHP 7,500,000.00) shall be awarded to startups for research and
development that shall be undertaken for no more than six (6) months to
determine the scientific and technical merit and feasibility of ideas with
international or local commercial potential or those that may address
needs and challenges of programs of national or local significance;

(b) Phase II Grants of up to Fifty Million Pesos (PHP 50,000,000.00) shall be
awarded to startups for further research development of up to twelve (12)
months in order develop and test a prototype of the innovative product,
and/or to implement and test an innovative service or business model
following either:

1. The favorable results of a Phase I Grant or other similar or
comparable privately or publicly funded research and development
initiatives in support of the international or local commercial potential
of the innovative product, service, or business model of the startup, or
its potential to address needs and challenges of programs of national
or local significance;

2. The commitment of private sources of funding to co-fund the Phase II
Grant of the startup;

3. The commitment of a private source of capital to commercialize the
innovative product, process, or business model being developed by the
startup, or the commitment on an international or national
government agency, or a private source of capital to fund the
production or implementation of the innovative product, process, or
business model to address needs and challenges of programs of
national or local significance.


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Provided, That:

(¢) DOST and DICT, in consultation with pertinent pertinent representatives
from the academe and/or industry, shall be the lead agencies that shall
assess the scientific and technical merit of the research and development
of startups;

(d) DTI, in consultation with private sector investors, shall be the lead
agency that shall assess the commercial potential of startups;

(c) DTI and BOI shall promulgate the necessary rules to ascertain the
legitimacy of the intent, and the capacity of the private source of funding
to co-fund the Phase II Grant in Section 11(b.2) and the commitment of
the private source of capital to commercialize or to fund the production
or implementation of an innovative product, process, or business model
in Section 11(b.3);

() DOST, DICT, and DTI shall select and match the appropriate
representatives from either the academe, industry, or private sector
investors to assess proposal from startups depending on the field of
research or expertise tackled in the proposals.

(g) DOST, DICT, and DTI shall be authorized to use the SCIP in order to
secure or maintain the services of the representatives that must be
consulted in the assessment of proposals;

(h) Government agencies shall be authorized to directly procure innovative
products, services, or business models of startups that have yielded
favorable results based on research and development conducted through
a Phase II Grant. Provided, That the use of the innovative product,
service, or business model addresses needs and challenges of programs
of national or local of the procuring agency;

Host agencies shall be authorized to co-fund or provide additional
funding to startups currently or prospectively undertaking research and
development under a Phase I or II Grant, Provided, That the application
or the results of the research and development co-funded or additionally
funded is consistent is consistent with its mandate, or supports its
implementation of a program of national or local significance;

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() Phase I and II Grants shall be sourced from the SCIF of the agency who
approves the proposed research and the development of a startup after
due assessment of the local or international commercial potential,
and/or or its potential or demonstrated capacity to address needs and
challenges of programs of national or local significance.

SECTION 12. Startup Investment Matching Fund - There is hereby
created a Startup Investment Matching Fund (SIMF) under the DTI in the
ion Pesos (PHP 1,500,000,000.00), to
be administered in coordination with DOST and DICT. DTI, in collaboration

amount of One Billion Five Hundred Mil

with the Board of Investments (BOI) shall develop and implement the rules and
regulations for the implementation of this Section.

DTI and BOI shall:

(a) Establish the criteria and qualifications in the selection of accredited
investors, and categorize them based on type and investment capacity;

(b) Accredit investors and determine the allocation of available funds from
the SMF per investor for the fund matching based on the categorization
of investors;

(c) Set the minimum investment requirement per category of investor;

(d) Co-invest up to fifty (50) percent of the total required capitalization in a
startup based in the Philippines;

(c) Require the periodic update on the status of startups by the accredited
investor.

Provided, That the DTI and BOI shall develop the appropriate rules and
rates that shall allow the investor to the buyout the shares of the DTI within
five (5) years from the infusion of capital into the startup by returning the
capital with a corresponding interest rate to be determined by DTI and BOI.


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Provided, further, That the DTI in consultation with the BOI shall manage
the SIMF, and allow for the re-application of previously accredited investors
and the application of new investors to utilize available funds from the SMF
every three (3) years.

ARTICLE III
STARTUP VISAS

SECTION 13. Startup Visas — There is hereby created a Startup Visa,
herein after referred to as the “Visa.” The Visa shall have an initial five (5) year
validity and may be renewed or extended with a three (3) year validity.

Multiple-entry interim Startup Visas valid for six (6) months to one (1)
year shall be issued to prospective startup owners, investors, or enablers upon
the endorsement of the appropriate host agency. The visa shall be issued
gratis.

Bearers of the Visa shall be exempt from securing an Alien Employment
Permit (AEP) issued by the Department of Labor and Employment (DOLE). The
suspension or revocation of the Visa shall likewise terminate the benefit of the
exemption from securing the AEP.

‘The Department of Foreign Affairs (DFA) shall promulgate the rules and
regulations for the issuance of the Startup Visas by Philippine Consular
Officers consistent with the provisions of this act in order to enforce this

provision.

The Bureau of Immigration (BI) shall promulgate the immigration and
admission rules and regulations consistent with the provisions of this Act in
order to enforce this provision.


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The DFA and BI shall:

(a) Consult DOLE and host agencies in the promulgation of the rules and
regulations for this provision;

(b) Immediately publish and disseminate requirements, rules, and
regulations on the application and the issuance of the Visa and the
admission and stay of visa holders;

() Coordinate the immediate and periodic training of its personnel, and
their counterparts in government agencies and public academic
institutions, tasked to process and oversee the application for and the
issuance of the Visa and the admission and stay of visa holders;

(d) Develop and maintain a database for all the bearers of the Visa and their
immigration records, and ensure public access to such information
subject to existing rules and regulations, including on Freedom of
Information and Data Privacy; and

() Reserve the right to deny and revoke applications subject to the

promulgated rules and regulations to implement this provision, and
applicable rules and regulations governing immigration.

SECTION 14. Visa Eligibility — The following shall be eligible to apply for
the Visa provided under this Act:

(a) Startup Owner Visa — Prospective or current foreign owner of startup or
startup enabler registered in the Philippines;

(b) Startup Employee Visa - Foreign employee of a startup and startup
enabler registered in the Philippines;

(c) Startup Investor Visa - Prospective or current foreign investors of a
startup and startup enabler registered in the Philippines; or

Provided, That DFA and BI, upon the endorsement of a host agency, may
extend the provision of the Visa to foreign nationals whose presence in the

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country contributes to the implementation of the Program, and such other
government or government-supported programs that aim to support the
development of startups in the Philippines as justified in the endorsement.

SECTION 15. Visa Application - Foreign national may lodge their visa
applications at relevant Philippine Embassies or Consulates. In addition to
standard visa requirements, the following shall be required in the application of
the Visa:

(a) Endorsement of a host agency;

(b) Copy of the terms and conditions on the endorsement for the Visa
application as may be required or agreed with the endorsing host agency;
and

(c) Proof of eligibility.

Provided, That in the case of prospective or current foreign investors of a
startup or startup enabler registered in the Philippines, the following shall be
required:

(d) Certification under oath of duly-authorized officers of any accredited
depository bank in the Philippines as to the amount of foreign exchange
inwardly remitted by the alien applicant, and its conversion to pesos
through the said bank. Provided, That for inward remittances sent
through non-accredited correspondent banks, the total amount of
remitted money be immediately transferred to an accredited bank;

(e) Certified true copy of peso time deposit with a maturity period of at least
thirty (30) days, amounting to at least Two Million Pesos (PHP
2,000,000.00); and

(f) Compliance agreement to invest at least Two Million Pesos (PHP
2,000,000.00) in startups or startup enablers registered in the
Philippines.

Provided, further, That the Board of Investments (BOI), in coordination
with DFA and BI, shall reserve the right to create rules and regulations on the

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investment requirement for the maintenance of the Visa. The BOI shall also
require the periodic reporting of the investments to be determined in the
implementing rules and regulations of this Act.

Provided, finally, That the DFA and BI shall:

(g) In case spouse and dependent children are included in the application,
require a marriage contract duly authenticated by the Philippine
Consulate or Embassy in the applicant’s country, or the embassy of the
country of the applicant in the Philippines;

(h) Levy reasonable fees and charges for the processing of the Visa
application to implement this provision;

() When warranted, provide access to existing visas or approve a Visa with
limited validity of less than five (5) years, upon the request and
justification of the endorsing host agency for applicants engaged in
short-term programs for the development of startups in the Philippines;

(i) Automatically waive visa and admission fees and charges for the first
cumulative five (5) years of entry and stay of Startup Visa holders; and

(k) In no case disapprove, suspend, revoke, or delay the release and
approval of any Visa application or renewal on the basis of delayed claim
of payment from, or delayed remittance of payment by, any host agency.

SECTION 16. APEC Business Travel Card (ABTC) ~ Bona fide Filipino
executives of qualified startups shall be eligible to apply for an ABTC. They
shall lodge their applications with the DFA, which shall promulgate the rules
and regulations for the evaluation and approval of their ABTC applications.

ARTICLE IV
FINAL PROVISIONS

SECTION 17. Startup PH Website - The DICT, in collaboration with DTI
and DOST, shall develop and maintain a website that shall serve as the

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primary source of information on statistics, events, programs, and benefits for
startups and startup enablers and related enterprises in the Philippines not
limited to those defined under this Act. This shall involve the integration of any
existing websites and content on programs for startups and startup enablers
implemented by the government.

This website shall at least have the following features:

(a) Online database of startups and startup enablers, indicating basic
information such as business address, founders, contact information,
and funding received;

(b) Online inquiry, registration, application, and release of results for
endorsements, and applications for programs, benefits, and incentives
provided under this Act;

(c) Statistical information, annual reports, and studies pertinent to the
implementation of this measure, and such other content in line with
the goals and objectives of this Act.

SECTION 18. Creation of Positions - The Department of Budget and
Management (DBM) shall undertake the assessment and creation of positions,
whether temporary or permanent, in coordination with host agencies in order
to provide the clerical and technical capacity required in each host agency to
undertake the implementation of the programs and benefits under this Act.

SECTION 19. Implementing Rules and Regulations ~ The departments
and agencies charged, to be led by the Department of Information and
Communications Technology (DICT), Department of Science and Technology
(DOST) and the Department of Trade and Industry (DTI) with carrying out the
provisions of this Act, shall within sixty (60) days after the effectivity of this
Act, formulate the necessary rules and regulations for its effective
implementation.


SECTION 20. REPEALING CLAUSE - All laws, decrees, executive orders,
rules and regulations, or parts thereof inconsistent with the provisions of this
Act are hereby repealed or modified accordingly.

SECTION 21. SEPARABILITY CLAUSE - If, for any reason, any section
or provision of this Act is held unconstitutional or invalid, the other sections or
provisions hereof shall not be affected thereby.

SECTION 22. EFFECTIVITY CLAUSE - This Act shall take effect after
fifteen (15) days from its publication in the Official Gazette or in at least two (2)

national newspapers of general circulation whichever comes earlier.

Approved,