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No Free Lunch

ARMM to Bangsamoro: a ‘Golden Transition’?

/ 09:01 PM October 29, 2012

“Recovering to original growth paths takes an average of 14 years of peace,” writes the World Bank in its 2011 World Development Report (WDR) that focused on development challenges facing conflict-affected areas. Findings from cross-country studies went into WDR 2011, and observations reflect experience across various countries that went through civil war and subnational violent conflict. The report further asserts: “Trade can take many years to recover as a result of investor perceptions of risk… it takes on average 20 years for trade to recover to pre-conflict levels.”

Will it take that long for Muslim Mindanao to reap the so-called peace dividend, as the recently signed framework peace agreement will have the Autonomous Region in Muslim Mindanao (ARMM) give way to a new entity called Bangsamoro? Need it take that long? The people of these long strife-torn areas have waited for far too long. To have to wait for yet another 10-20 years before their local economies could keep in step with the rest of the Philippine economy is to court a return to violent conflict.

All Filipinos stand to benefit from lasting peace and development in Mindanao. We need to work together to make peace work in those areas where a whole generation has known nothing but persistent violent conflict. “Give peace a chance”—the timeless message of John Lennon’s 1969 ditty—has lately become a popular call. In practical terms, making peace work would entail normalizing the economy, attracting investments, and creating lasting and meaningful jobs especially for those who have known no other work but to carry arms and fight battles with fellow Filipinos. I have written enough on why it makes good sense to invest in Muslim Mindanao, and will not repeat them here.  Suffice it to say that others, both foreign and local, have already done so and not only have they not regretted it; they have actually done good business. Their stories are told in a forthcoming booklet jointly published by the AusAID, ARMM Regional Board of Investments, ARMM Business Council and Management Association of the Philippines titled “Braving It and Making It: Insights from Successful Investors in Muslim Mindanao.”


The experiences of these firms—including multinational Unifrutti, Malaysian-owned Agumil Philippines Inc., and nearly century-old Matling Industrial and Commercial Corp.—prove that other investors need not wait 10 years to place their stakes in Muslim Mindanao. My conviction is that with the right legal framework and the support of all concerned working together and doing their part, we can all help Bangsamoro succeed. In so doing, we would help ourselves win sustained economic dynamism for the whole country in the years ahead.

The idea is to make investing in Muslim Mindanao especially attractive during the interim period leading to the agreed establishment of the new Bangsamoro government by 2016. That is, make it worthwhile for the daring “first movers” who could start the momentum of sustained new investments in the years ahead. This is a tall order, to be sure, given the uncertainty investors would have to deal with. But if the key parties involved—government, the Moro Islamic Liberation Front (MILF) leaders, other Muslim leaders including those of the Moro National Liberation Front (MNLF)—truly have the interests of the long-suffering residents of these conflict areas at heart, they can actually work together to minimize if not eliminate this uncertainty.

What might it take? How do we make it especially attractive to jump in now rather than later, thereby make the transition period one of golden opportunities (a “Golden Transition”) for those who would go right ahead to create jobs and raise incomes for residents of Muslim Mindanao? Prospective investors eye certain incentives and guarantees to even think seriously of putting money in an uncertain environment. The Board of Investments routinely extends such incentives. With its autonomy, the ARMM Regional Government can improve on these by enacting further enhancements, including culture-sensitive labor flexibilities, which the existing investors therein cite as important. Government banks and international financial institutions can make special financing windows available for first movers.  All these may be provided on a “limited time only” basis to make the transition period an even more attractive window for coming in.

What’s needed is a creative legal framework, and firm and convincing assurances of all authorities concerned, so that special terms and conditions applying to these first movers would be guaranteed and protected against future changes in the rules of the game by the new Bangsamoro government or the national government. Creative ways of eliminating or minimizing such political risk are critical. International financial institutions like the Asian Development Bank and the Multilateral Investment Guarantee Agency of the World Bank are already studying investment insurance facilities tailored for investors in Bangsamoro. The Philippine Export-Import Credit Agency (PhilEXIM) may be called upon to do the same, especially for domestic investors. On the other side, big-name domestic investors may be challenged to place catalytic “missionary investments” in Bangsamoro. After all, “missionary” need not mean “unprofitable.”  As such, Bangsamoro may yet defy the world experience.

Am I dreaming? Am I being naively idealistic? Maybe so. But all great achievements started with dreams.  And like many Filipinos, I dream of a peaceful and progressive Mindanao, where much of the economic energy would come from Bangsamoro itself.



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TAGS: Cielito F. Habito, column, economics, investments, Mindanao, peace process
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