If you want to set up a startup, report suggests you do it in Area 55


Makati City, home to the startup cluster known as Area 55, is the most economically competitive region in the Philippines. This finding comes courtesy of the Cities and Municipalities Index (CMCI) 2014, which is created by the National Competitiveness Council with support from the United States Agency for International Development. Image courtesy of the Make it Makati Facebook page This is good news for Philippine entrepreneurs, particularly those who already have offices in Area 55.Incubator Kickstart Ventures, Bitcoin umbrella company Satoshi Citadel Industries, and GrabTaxi Philippines are all located in Area 55.

Why does Area 55 kick ass?

The CMCI ranked Makati City as the most economically competitive city with a composite score of 53, besting the next two cities – Cagayan de Oro City and Naga City – by four points. This figure was based on three equally weighted categories, including economic dynamism, government efficiency, and infrastructure, each with its own particular indicators.

Economic dynamism should be of most immediate interest to Philippine entrepreneurs, given that it reflects the overall health of business and employment in an area. It takes into obvious factors, such as the size of the local economy and its growth, along with less obvious factors, such as that area’s capacity to create jobs in the future and the presence of professional development and networking organizations.

For economic dynamism, Makati City earned a sub-score of 17.2, placing it in second place after top scorer Paranaque City and before third place Manila City, all of which are in the National Capital Region (NCR).

The category of government efficiency may strike some as a euphemism, as it could be more accurately titled as government inefficiency – in a place like the Philippines, which is infamous for corruption and red tape, the only real question is the extent of inefficiency.

Makati City, however, fares well in this category, too. Its sub-score of 20.9 is good enough to earn it fourth place behind Naga City, Iloilo City, and Angeles City. This category measures the ease with which a business can operate in a given city in addition to how well the local government supports entrepreneurship.

Reflected in this score is everything from how easy it is to register a business to how well the local government promotes investment, along with the quality of education, healthcare, and security in the area. Local government officials should ideally use this score to improve policy-making.

The infrastructure category is particularly notable because a recent New York Times article singled out the Philippines’ inadequate roads as a major stumbling block to the country’s continued growth. While that argument is no doubt true in principle, the CMCI suggests that Philippine infrastructure is not as universally bad as the article might make it seem.

Makati City, for example, earns a sub-score here of 15, placing it again in fourth – this time behind Davao City, Cagayan de Oro City, and Marikina City. This rating measures such things as the quality of the road system, the quality of health and education infrastructure, the annual budget devoted to infrastructure, the availability of basic utilities, and the number of ATMs and public transportation vehicles an area has.

Much more than chest-thumping

The CMCI is put together for more than just bragging rights. On their official website, the National Competitive Council gives this suggestion:

“For the business community, the Index can serve as a guide in deciding where to locate. Aside from the overall score, data on the different indicators will prove valuable depending on the specific needs of their business.”

Given that Makati City has the highest overall score, along with very high sub-scores across the three categories, the CMCI suggests that aspiring entrepreneurs should carefully consider setting up their offices there. Area 55 evidently has more than just good branding.

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