Bangsamoro: hopes and thorns

Seasoned analysts tell us it is too early to rejoice unduly over the framework peace agreement recently signed between the government and the Moro Islamic Liberation Front (MILF). The devil is in the details, former Presidential Peace Adviser Jess Dureza warns. Former Regional Board of Investments Chair Ishak Mastura points out that prospects for private investments are clouded by legal risks and uncertainties, as a new Basic Law for the new Bangsamoro entity will have to replace the Organic Act creating the Autonomous Region in Muslim Mindanao (ARMM). Asian Development Bank’s Philippines Country Director Neeraj Jain believes that investors will wait until there is clarity in the fiscal regime (translation: revenue and expenditure sharing arrangements between the national government and the autonomous Bangsamoro). Indeed, a thorny path lies ahead as the exact nature of Bangsamoro’s autonomy is fleshed out. Some prefer to describe it as a land mine-ridden path, i.e., that a misstep in the detailed negotiations could still prove fatal.

Still, spirits are high and hope springs eternal, as should be the case. Both sides need to proceed on the course with good faith and a positive outlook; anything less won’t do. I am confident that insiders in Muslim Mindanao and outsiders who know enough about the area and its people would affirm that there is much more reason to be optimistic than otherwise. For anyone with the broader interests of Muslim Filipinos at heart, hence those of all Filipinos in turn, the way to go would be to capitalize and build on the positives, and work hard to address the negatives in the Bangsamoro equation.

I have written much on the prospects for Mindanao being the primary growth driver for the entire Philippine economy, and I continue to assert so. It is more than a prospect, in fact. We had already seen Mindanao’s overall economic growth exceed (and therefore drive) that of the entire Philippine economy in recent years. Based on 2011 data, only ARMM and the Zamboanga Peninsula performed below par. But this was largely before a new reformist regional government led by interim ARMM Gov. Mujiv Hataman had begun to make a difference on the mood and economic outlook for the region. Major investments have in fact entered in the past year alone—in telecommunications (EA Trilink Corp.) and in agribusiness (Del Monte Corp.), to cite a couple—apparently emboldened by the positive directions the region is now taking.

There is good reason indeed why investments would pour into Muslim Mindanao now and in the years ahead, as it is actually endowed with key ingredients for a prime investment area. It possesses superior agro-climatic conditions, being largely typhoon-free and blessed with extremely fertile soils. In fact, certain crops such as cassava, white corn and coffee attain better yields in the Muslim areas than elsewhere in the country. The region is also blessed with an abundance of other primary resources, including marine products and minerals. It still has large tracts of idle lands. And wage rates, both official and de facto, are lower compared to most of the rest of the country.

On top of the region’s inherent assets described above, Bangsamoro possesses a vast scope for economic growth and diversification owing to Mindanao’s link to BIMP-EAGA (Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area)—a linkage that is of greater significance and potential for Muslim Mindanao relative to the rest of the country. I like to call attention to the fact that while Muslims comprise the minority ethnic and religious group in the Philippines and even in the whole of Mindanao, they comprise the majority in Southeast Asia. This gives Bangsamoro the potential edge in meeting the regional market’s particular demands for goods and services.

But the thorns (land mines, for others) need determined attention for the above advantages of the region to be translated into a vibrant economy attractive to investments from within and without. On the downsides of the investment climate, long-time Mindanao expert Fermin Adriano cites the results of various surveys on the foremost impediments to private investments in Mindanao’s conflict-affected areas. These are the unstable peace and order situation, land access and tenure security issues, inadequate and poor infrastructure, poor local governance performance (including graft and corruption), and the highly unskilled labor force in the area.

Given the unique environment in Muslim Mindanao, and in particular the urgent need to help Bangsamoro succeed, there is a strong argument for extraordinary measures and incentives that the autonomous government must be prepared to provide, with the necessary policy support from the national government. Apart from focused fiscal incentives, enticements could include an effective investment guarantee and insurance scheme, creative financing mechanisms that may include government equity participation in promising joint business ventures, and labor market flexibilities attuned to local cultures. Assistance in gaining access to land, e.g., from the regional government or by LGUs, whether individually or as allied LGU clusters, is also important.

The task ahead is not only to promote but to also facilitate investments in Muslim Mindanao. I am confident that whoever eventually takes the helm of the new Bangsamoro government will do what it takes to ensure that investor interest, which is running high, will turn into actual entry of investments that will boost jobs and incomes in the long-troubled region at the soonest possible time.

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