Enhanced Startup Law

Ofir: oi TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL 29 P1:59 SENATE RECEN S. No._ 760 Introduced by Senator Bam Aquino AN ACT AMENDING REPUBLIC ACT NO. 11337, OTHERWISE KNOWN AS THE "INNOVATIVE STARTUP ACT," BY EXPANDING THE DEFINITION OF STARTUPS, STRENGTHENING INTER-AGENCY COORDINATION, ESTABLISHING A STARTUP PROGRAM SECRETARIAT, AND PROVIDING ADDITIONAL MEASURES TO PROMOTE INNOVATION-DRIVEN ENTERPRISES EXPLANATORY NOTE Republic Act No. 11337, or the Innovative Startup Act, was enacted in 2019 to support the growth of innovative startups in the Philippines through streamlined processes, incentives, and inter-agency collaboration. It was a landmark step in recognizing startups as key contributors to innovation, job creation, and inclusive economic development. However, in the years since its enactment, the startup landscape has rapidly evolved. Startups are now emerging in a broader range of fields, including green technology, biotechnology, advanced manufacturing, creative industries, and social innovation. At the same time, global competition for talent, capital, and innovation has intensified significantly, prompting many countries to update their policies and ecosystems to attract and retain high-potential enterprises. This bill seeks to future-proof and strengthen the Innovative Startup Act by: • Clarifying the legal definition of "startup" to reflect the realities of today's innovation landscape and capture emerging high-impact sectors; • Designating the Department of Science and Technology (DOST) as the lead agency of the Philippine Startup Development Program (PSDP), with support from the Department of Trade and Industry (DTT) and the Department of Information and Communications Technology (DICT);

• Establishing a permanent PSDP Secretariat under the DOST to coordinate inter- agency efforts, manage startup-related data and platforms, and ensure effective program delivery; • Requiring the Department of the Interior and Local Government (DILG) and local government units (LGUs) to streamline startup-related permitting and registration processes; • Enhancing the Startup Venture Fund (SVF) by allowing new investment instruments and introducing incentives for early-stage investors and angel funds; • Supporting startup talent through streamlined visa processing, a Filipino Startup Returnee Program, and fast-tracked pathways for foreign and returning Filipino startup founders; • Providing grants to higher education and training institutions to develop specialized curricula in deep tech, startup management, and entrepreneurship, and establishing a national internship and apprenticeship program to link students with startups; and • Institutionalizing an annual Startup Ecosystem Report and performance tracking, with oversight and monitoring by the National Innovation Council. This measure is a timely response to the growing need for a more cohesive, inclusive, and competitive innovation ecosystem in the Philippines, empowering Filipino startups to scale, thrive, and lead in the global economy. In view of the foregoing, the passage of this bill is earnestly sought. Ban aquin

"Office of TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session JUL 29 P1:59 SENATE RECEIVED S. No. 760 Introduced by Senator Bam Aquino AN ACT AMENDING REPUBLIC ACT NO. 11337, OTHERWISE KNOWN AS THE "INNOVATIVE STARTUP ACT," BY EXPANDING THE DEFINITION OF STARTUPS, STRENGTHENING INTER-AGENCY COORDINATION, ESTABLISHING A STARTUP PROGRAM SECRETARIAT, AND PROVIDING ADDITIONAL MEASURES TO PROMOTE INNOVATION-DRIVEN ENTERPRISES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Enhanced Startup Law."

Sec. 2. Section 3(g) of Republic Act No. 11337, otherwise known as the

3 "Innovative Startup Act," is hereby amended to read as follows: 4 Sec. 3. Definition of Terms. - As used in this Act, the following terms shall mean: 5 xxX 6 "(g) 'INNOVATIVE STARTUP' OR 'Startup' - [any person or registered entity in the 7 Philippines which aims to develop an innovative product, process, or business model] 8 ANY ENTERPRISE OR REGISTERED BUSINESS ENTITY, INCLUDING BUT 9 NOT LIMITED TO, THOSE ENGAGED IN DIGITAL TECHNOLOGY, GREEN 10 TECHNOLOGY, BIOTECHNOLOGY, ADVANCED MANUFACTURING, CREATIVE INDUSTRIES, AND SOCIAL INNOVATION, THAT IS LESS THAN TEN (10) YEARS OLD FROM ITS DATE OF REGISTRATION, WHOSE PRIMARY BUSINESS MODEL OR PRODUCTS/SERVICES ARE CHARACTERIZED BY INNOVATION, HIGH GROWTH POTENTIAL, AND SCALABILITY, AND WHICH

I AIMS TO DEVELOP OR OFFER NEW OR SIGNIFICANTLY IMPROVED 2 PRODUCTS, SERVICES, PROCESSES, OR BUSINESS MODELS. FOR 3 PURPOSES OF THIS ACT, A MAJORITY OF ITS OPERATIONS, INCLUDING 4 CORE TEAM AND RESEARCH AND DEVELOPMENT ACTIVITIES, SHALL BE 5 BASED IN THE PHILIPPINES, REGARDLESS OF WHERE IT IS LEGALLY 6 REGISTERED, PROVIDED IT ADHERES TO PHILIPPINE LAWS." 7 XXX

Sec. 3. Section 4 of the same Act is hereby amended to read as follows:

9 "Sec. 4. Philippine Startup Development Program. - There is hereby created a 10 Philippine Startup Development Program hereinafter 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 NGOs in partnership with any national government 16 agency. 17 The DOST I, DICT, and DTI shall be the lead agencies that shall assess, monitor, 18 develop anG] SHALL BE THE LEAD AGENCY THAT WILL DEVELOP, IMPLEMENT, AND expand the Program consistent with the objectives of this Act. DICT AND DTI SHALL SUPPORT DOST AS PROGRAM IMPLEMENTATION PARTNERS. To this end, the DOST, DICT, and DTI, in consultation with government and NGOs, shall set key metrics to track the impact and development of the Program. The DTI shall promulgate the rules for the efficient registration and assessment of startup enablers to be registered under the Program.

Sec. 4. A new section, to be designated as Section 7-A, is hereby inserted after

Section 7 of the same Act to read as follows:

1 "SEC. 7-A. LGU REGISTRATION AND OPERATIONAL BENEFITS AND 2 INCENTIVES, - THE DILG SHALL SUPPORT THE DTI IN ENSURING THAT 3 LGUS ARE STREAMLINING ALL PERMITTING PROCESSES AND CORPORATE 4 RESTRUCTURING PROCEDURES FOR STARTUPS, WITH A FOCUS ON 5 EFFICIENCY AND ACCESSIBILITY THROUGH ONLINE PLATFORMS. THE 6 DILG SHALL ALSO MONITOR AND REPORT THE NUMBER OF STARTUPS PER 7 LGU, AND THE PROCESSING TIME OF THEIR LGU PERMITS AND OTHER 8 REQUIREMENTS, IN PARTNERSHIP WITH LGU OFFICIALS."

Sec. 5. Section 12 of the same Act is hereby amended to read as follows:

10 "Sec. 12. Startup Venture Fund. - There is hereby created a Startup Venture Fund 11 (SVF) under the DTI, to be administered in coordination with the National 12 Development Company (NDC). The SVf shall be used to match investments by 13 selected investors in startups based in the Philippines. 14 THE SVF SHALL DIVERSIFY ITS INVESTMENT INSTRUMENTS TO INCLUDE FUND OF FUNDS, CONVERTIBLE NOTES, AND BLENDED FINANCE, IN ADDITION TO MATCHING INVESTMENTS. TO SUSTAIN THE SVF, THE DTI AND NDC SHALL IDENTIFY AND PROVIDE INCENTIVES FOR ANGEL 18 INVESTORS AND EARLY-STAGE VENTURE CAPITAL FUNDS INVESTING IN 19 STARTUPS. 20 The NDC and DTI shall jointly develop and issue the appropriate rules and regulations for the selection of investors and the effective management and utilization of the SVF. 22 The initial and succeeding appropriations for the SVF shall be proposed by the DTI and included in the budget of the NDC under the annual General Appropriations Act.

Sec. 6. A new section, to be designated as Section 13-A, is hereby inserted

after Section 13 of the same Act to read as follows: "SEC. 13-A. STARTUP TALENT VISA STREAMLINING. - THE DFA SHALL STREAMLINE AND FURTHER EXPEDITE THE PROCESSING OF STARTUP OWNER, EMPLOYEE, AND INVESTOR VISAS, AND ENSURE THAT THE

1 EXEMPTIONS FROM ALIEN EMPLOYMENT PERMITS (AEP) BY THE 2 DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) ARE CONSISTENTLY 3 APPLIED. REGULAR REVIEWS OF VISA CATEGORIES AND REQUIREMENTS 4 SHALL BE CONDUCTED TO ENSURE COMPETITIVENESS WITH OTHER 5 ASEAN NATIONS."

Sec. 7. A new section, to be designated as Section 13-B, is hereby inserted

after the new Section 13-A of the same Act to read as follows: 8 "SEC. 13-B. FILIPINO STARTUP RETURNEE PROGRAM. - THE DOST SHALL 9 ESTABLISH A PROGRAM SIMILAR TO THE BALIK-SCIENTIST PROGRAM, IN 10 COLLABORATION WITH THE COMMISSION ON FILIPINOS OVERSEAS (CFO) 11 AND DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE), TO INCENTIVIZE HIGHLY SKILLED FILIPINO PROFESSIONALS AND ENTREPRENEURS RESIDING ABROAD TO RETURN TO THE PHILIPPINES AND CONTRIBUTE TO THE LOCAL STARTUP ECOSYSTEM THROUGH MENTORSHIP, INVESTMENT, OR DIRECT INVOLVEMENT IN STARTUPS. THIS MAY INCLUDE FAST-TRACK IMMIGRATION PROCESSES, TAX INCENTIVES, AND RELOCATION 17 SUPPORT."

Sec. 8. A new section, to be designated as Section 13-C, is hereby inserted

after the new Section 13-B of the same Act, as amended, to read as follows:

SEC. 13-C. SPECIALIZED TECH AND ENTREPRENEURSHIP

21 EDUCATION. - THE DOST SHALL PROVIDE GRANTS TO HIGHER EDUCATION INSTITUTIONS (HEIS) AND TECHNICAL VOCATIONAL EDUCATION AND TRAINING (TVET) PROVIDERS TO DEVELOP AND OFFER SPECIALIZED 24 CURRICULA IN EMERGING TECHNOLOGIES (INCLUDING BUT NOT LIMITED 25 TO AI AND AI ETHICS, BLOCKCHAIN DEVELOPMENT, CYBERSECURITY, 26 DATA SCIENCE, QUANTUM COMPUTING), STARTUP MANAGEMENT, AND 27 STARTUP ECOSYSTEM MANAGEMENT INCORPORATING PRACTICAL, 28 INDUSTRY-LED PROJECTS. THE DOST SHALL ALSO ESTABLISH A NATIONAL 29 INTERNSHIP AND APPRENTICESHIP PROGRAM WITH STARTUPS,

1 ALLOWING STUDENTS TO GAIN PRACTICAL EXPERIENCE AND FOSTERING 2 A PIPELINE OF SKILLED TALENT FOR THE ECOSYSTEM."

Sec. 9. A new section, to be designated as Section 17-A, is hereby inserted

4 after Section 17 of the same Act to read as follows: 5 "SEC. 17-A. SECRETARIAT FOR THE PHILIPPINE STARTUP DEVELOPMENT 6 PROGRAM. - THERE IS HEREBY ESTABLISHED A PERMANENT SECRETARIAT 7 FOR THE PHILIPPINE STARTUP DEVELOPMENT PROGRAM (PSDP). 8 THE PSDP SECRETARIAT SHALL BE AN ATTACHED UNIT TO THE DOST AND SHALL PERFORM THE FOLLOWING FUNCTIONS: (a) PROVIDE TECHNICAL AND ADMINISTRATIVE SUPPORT TO THE PSDP IN THE FULFILLMENT OF ITS MANDATE, INCLUDING THE PREPARATION OF POLICY RECOMMENDATIONS, PROGRAM GUIDELINES, AND ANNUAL REPORTS; SERVE AS THE PRIMARY COORDINATING BODY AMONG THE (b) HOST AGENCIES AND OTHER GOVERNMENT ENTITIES INVOLVED IN STARTUP ECOSYSTEM DEVELOPMENT; MANAGE AND MAINTAIN THE STARTUP PHILIPPINES WEBSITE (c) AND OTHER RELEVANT GOVERNMENT PLATFORMS FOR STARTUP ECOSYSTEM DEVELOPMENT; (d) CONDUCT RESEARCH, DATA COLLECTION, AND ANALYSIS ON THE PHILIPPINE STARTUP ECOSYSTEM, LEVERAGING RELEVANT MARKET INFORMATION SYSTEMS AND PARTNERSHIPS; (e) ORGANIZE AND FACILITATE STAKEHOLDER CONSULTATIONS, WORKSHOPS, AND PROMOTIONAL EVENTS FOR THE STARTUP COMMUNITY; (f) ACT AS A LIAISON FOR INTERNATIONAL PARTNERSHIPS AND ENGAGEMENTS RELATED TO STARTUP DEVELOPMENT;

(g) DEVELOP THE ANNUAL PHILIPPINE STARTUP ECOSYSTEM REPORT, WHICH SHALL BE SUBMITTED TO THE PRESIDENT AND CONGRESS, DETAILING KEY PERFORMANCE INDICATORS SUCH AS: NUMBER AND VALUE OF REGISTERED INNOVATIVE STARTUPS AND ENABLERS; TOTAL INVESTMENTS ATTRACTED BY PHILIPPINE STARTUPS (DOMESTIC AND FOREIGN); NUMBER OF JOBS CREATED DIRECTLY AND INDIRECTLY BY STARTUPS; GROWTH IN SPECIFIC INNOVATIVE SECTORS (SUCH AS DEEP TECH, GREEN TECH); GLOBAL RANKING OF THE PHILIPPINE STARTUP ECOSYSTEM; SUCCESS RATES AND STORIES OF STARTUPS COMPLETING GOVERNMENT RECOMMENDATIONS FOR FURTHER POLICY PROGRAMS; ENHANCEMENTS AND BETTER PROGRAM IMPLEMENTATION; (h) REPORT QUARTERLY ALL PROGRESS AND IMPACT OF THE PROGRAM TO THE NATIONAL INNOVATION COUNCIL, WHICH WILL SERVE AS THE LEAD MONITORING AND EVALUATION BODY FOR STARTUP ECOSYSTEM DEVELOPMENT; AND (i) ADMINISTER AND OVERSEE THE ALLOCATION OF FUNDS FOR SPECIFIC PROGRAMS AND GRANTS APPROVED BY THE PSDC, AS MAY BE DELEGATED."

Sec. 10. A new section, to be designated as Section 17-B, is hereby inserted

after the new Section 17-A of the same Act to read as follows:

SEC. 17-B. STAFFING AND STRUCTURE OF THE SECRETARIAT. - THE

SECRETARIAT SHALL BE HEADED BY AN EXECUTIVE DIRECTOR IV (SALARY GRADE 29) WHO SHALL BE APPOINTED BY THE PRESIDENT OF THE PHILIPPINES. THE EXECUTIVE DIRECTOR IV SHALL BE AT LEAST THIRTY (30) YEARS OF AGE AT THE TIME OF APPOINTMENT; MUST POSSESS GOOD MORAL CHARACTER; BE A PERSON OF PROVEN INTEGRITY; IS A HOLDER OF A COLLEGE DEGREE IN A RELATED FIELD OF DISCIPLINE; A PERSON OF 29 PROVEN ADMINISTRATIVE PROFICIENCY, INDEPENDENCE, EXPERIENCE,

1 KNOWLEDGE, AND COMMITMENT TO THE PROMOTION AND DEVELOPMENT 2 OF THE PHILIPPINE STARTUP ECOSYSTEM; AND WHO HAS SERVED IN A 3 POSITION OF LEADERSHIP FOR AT LEAST TEN (10) YEARS IN AT LEAST ONE 4 (1) STARTUP OR INNOVATION-RELATED DOMAIN PRIOR TO THE DATE OF 5 APPOINTMENT. 6 THE EXECUTIVE DIRECTOR IV SHALL BE ASSISTED BY TWO (2) DEPUTY 7 EXECUTIVE DIRECTORS IV (SALARY GRADE 28) AND AN ADMINISTRATIVE 8 STAFF CONSISTING OF AT LEAST ONE (1) OF EACH OF THE FOLLOWING 9 OFFICERS AND EMPLOYEES: (a) POLICY DEVELOPMENT MANAGER (SALARY GRADE 24); (b) RESEARCH AND ANALYTICS MANAGER (SALARY GRADE 24); (c) INTERNATIONAL ENGAGEMENT MANAGER (SALARY GRADE 24); (d) LOCAL ECOSYSTEM DEVELOPMENT MANAGER (SALARY GRADE 24); (e) PROJECT MANAGER: REGULATORY SANDBOXES (SALARY GRADE 24); (t) PROJECT MANAGER: DIGITAL PLATFORM (SALARY GRADE 24); (g) PROJECT MANAGER: TALENT DEVELOPMENT (SALARY GRADE 24); (h) LEGAL AND INTELLECTUAL PROPERTY SPECIALIST (SALARY GRADE 22); (i) FINANCIAL SERVICES SPECIALIST (SALARY GRADE 22); AND G) ADMINISTRATIVE SECRETARIAT (SALARY GRADE 18). 24 THE DEPUTY EXECUTIVE DIRECTORS SHALL HAVE THE SAME 25 QUALIFICATIONS FOR APPOINTMENT AS THE EXECUTIVE DIRECTOR,

1 WITH RELEVANT EXPERIENCE IN STARTUP ECOSYSTEMS, INNOVATION, 2 OR PUBLIC POLICY. 3 THE PRESIDENT OF THE PHILIPPINES SHALL APPOINT THE EXECUTIVE 4 DIRECTOR AND THE DEPUTY EXECUTIVE DIRECTORS FROM A LIST OF AT 5 LEAST FIVE (5) NOMINEES SUBMITTED BY THE PSDP. THE EXECUTIVE 6 DIRECTOR AND THE DEPUTY EXECUTIVE DIRECTORS SHALL SERVE FOR A 7 TERM OF THREE (3) YEARS, WITH REAPPOINTMENT FOR ANOTHER TERM. 8 IN CASE OF DEATH, RESIGNATION, OR REMOVAL FOR CAUSE, THEIR 9 REPLACEMENTS SHALL SERVE ONLY THE UNEXPIRED PORTION OF THEIR 10 RESPECTIVE TERMS. 11 WITHIN ONE HUNDRED TWENTY (120) DAYS AFTER THE EFFECTIVITY OF 12 THIS ACT, THE PSDP SHALL DETERMINE THE ORGANIZATIONAL 13 STRUCTURE, STAFFING PATTERN, AND COMPENSATION SYSTEM OF THE SECRETARIAT, INCLUDING THE DUTIES, QUALIFICATIONS, RESPONSIBILITIES, AND FUNCTIONS OF ITS OFFICERS AND STAFF MEMBERS, AND SUBMIT THE SAME TO THE DBM FOR APPROVAL. THE 17 OFFICERS AND EMPLOYEES OF THE SECRETARIAT SHALL BE APPOINTED IN 18 ACCORDANCE WITH CIVIL SERVICE LAWS, RULES, AND REGULATIONS."

Sec. 11. Implementing Rules and Regulations. - Within ninety (90) days from

20 the effectivity of this Act, the DOST and other Host Agencies shail promulgate the 21 necessary rules and regulations for the effective implementation of this Act.

Sec. 12. Appropriations. - The amount necessary for the initial implementation

of this Act, including the operational expenses, personnel services, and program support of the Philippine Startup Development Program (PSDP) Secretariat, shall be charged against the current appropriations of the Department of Science and Technology (DOST). Thereafter, such sums as may be necessary for the continued implementation of this Act shall be included in the annual General Appropriations Act under the budget of the DOST.

Sec. 13. Separability Clause. - If any provision of this Act is declared

unconstitutional or invalid, the other provisions not affected thereby shall remain in full force and effect.

Sec. 14. Repealing Clause. - All laws, decrees, executive orders, rules and

regulations, and other issuances inconsistent with this Act are hereby repealed or 6 modified accordingly.

Sec. 15. Effectivity. - This Act shall take effect fifteen (15) days after its

8 publication in the Official Gazette or in a newspaper of general circulation. Approved,