Who’s afraid of ARMM?

Tacurong, Sultan Kudarat—I write this after coming out of Sunday Mass in this city where barely a week ago, a car bomb purportedly meant for Maguindanao Gov. Esmael Mangudadatu killed two persons in his entourage. In church, I found it remarkable how people confidently left their handbags and personal effects on their seats as they went to receive Holy Communion. People don’t do that in my home parish at the UP Los Baños campus in Laguna; few would feel secure that their bags would still be in their seats when they return—and mind you, that is an academic community.

The military is supposedly on high alert here, but I certainly don’t feel it. Contrary to what one might expect, no conspicuous uniformed personnel are around apart from those manning checkpoints along the national highway. Despite last week’s bombing, there is no visible sign of tension in this bustling city. Life goes on as usual, and even on a Sunday afternoon, one can feel the dynamism of the local economy that largely thrives on trade and commerce. Before driving us to the Catholic church, Abubakar, the driver of our hired van who is on his Ramadan fast, asks for a little time to pray at a mosque, which we readily grant. My son at home sends me a text message: “Isn’t it dangerous there? I hope you are safe.” I get a similar text message from a friend in the United States. I tell them I have no worries. This, after all, is a place where people leave their bags on their seats when having Communion, and where Muslims and Christians coexist with differences in their faith seemingly farthest from their minds.

I am here to interview officials of firms that have successfully invested and done business in conflict-affected areas in Mindanao, part of my continuing work to help enliven the economy in our southern regions. I’m out to learn and document the stories of those who dared to put their stakes here, and how they managed to thrive in an area otherwise shunned by investors of fainter heart. The stories I’ve heard so far have a consistent message: fears by investors who think the area is too dangerous to operate in are misplaced. Those who are known to bring jobs into the area are in fact welcomed and protected by the local populace, my respondents tell me. They only need to be sensitive to local cultures and traditions in dealing with their workers, and they can thrive just as well as they could, and even better than in any other part of the country devoid of conflict.

There are, in fact, a number of reasons why doing business in Muslim Mindanao can be attractive. One, there is much idle but fertile land yet to be tapped. Unifrutti and Agumil Plantation have reaped the benefits of expanding into ARMM for their production of bananas and oil palm, respectively. Two, labor costs are low. Minimum wages mandated by the ARMM Regional Wage Board are among the lowest in the country (next only to the Bicol region), reflecting labor market realities. Three, the ARMM government has the authority to grant certain exemptions and incentives not legally possible elsewhere in the country to firms that locate here. La Frutera, for example, managed to overcome the then-prevailing limit on total banana hectarage when it opened its banana plantation in Datu Paglas, Maguindanao, in 1996. The ARMM can pass its own Omnibus Investment Code that can potentially grant more attractive incentives to investors than the national Board of Investments can under national laws. And Ishak Mastura, chair of the ARMM Board of Investments, hopes to see this happen in the near future.

Extraordinary incentives will indeed be necessary if the ARMM is to attract more investors, local and foreign. The image problem has been the region’s biggest liability, and this has rubbed off on the rest of Mindanao as well. The stories of La Frutera and Agumil need to be told far and wide, and again and again, to help overcome this image problem borne out of misplaced cultural biases and exaggerated security risk assessments. Meanwhile, potential investors will be looking for additional come-ons for them to even take a second look. And for this, the usual rules and paradigms will have to give way to more pragmatic approaches. Government must take a more activist approach, throwing in catalytic investments if need be, to get a momentum of investments going.

But apart from large enterprises, smaller producers and processors also need to be attracted to take a more active role in the conflict-affected areas, as this is the way to democratize local economies anywhere. While large plantations indeed bring new jobs and incomes, the division of the benefits will still be lopsided unless there is benevolent management and ownership—rare animals in today’s business world driven by profits. A structure characterized by smaller producers would promote more broad-based economic growth, especially if the small producers band together into clusters that could benefit from the same economies of scale enjoyed by their large counterparts, but without the lopsided income shares resulting from the latter.

The Sultan Kudarat Muscovado Farmers and Millers Corp. has shown how. Over the past five years, this grouping of some 15 small muscovado sugar millers sourcing from organic sugarcane farmers tilling a total of 1,200 hectares has grown from a base of seven millers and 300 hectares—and is still growing. If replicated in the ARMM for cassava, rubber, coffee, abaca and other crops suited to it, the region can yet be salvaged from the “failed experiment” it is seen to have become, and transformed into a showcase for inclusive economic development in Mindanao for all to emulate.

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