Bangsamoro’s economic prospects
Hopes run high that the newly signed Comprehensive Agreement on the Bangsamoro (CAB) will pave the way for a new era of economic dynamism in Muslim Mindanao. With violent political conflict hopefully now behind us, departure from the economic stagnation that marked the region’s recent history could yet turn it into a vanguard of growth for Mindanao and the entire national economy.
What has been known as the Autonomous Region in Muslim Mindanao (ARMM) comprises two mainland provinces (Lanao del Sur and Maguindanao) and three island provinces (Sulu, Tawi-Tawi and Basilan, excluding Isabela City). The ARMM’s contribution to our total economic output (gross domestic product) has been a measly 0.76 percent. And yet it accounts for 3.5 percent of the country’s total population, and over 9 percent of total land area. I am certain that if we measured the value of natural resources, the ARMM would account for an even higher proportion. These suggest to me that the economic potential of this region that will henceforth be known as Bangsamoro is simply tremendous. Tapped more fully and managed properly, the region’s human and natural assets could well support multiplication of its economic output from where it is now by anywhere from four to 12 times or more—or growth of 300 percent to over 1,100 percent!
How could the Bangsamoro get there? Answering this entails taking stock of its strengths, weaknesses, opportunities and threats (SWOT). Let’s do a rudimentary SWOT analysis here.
The Bangsamoro’s strengths lie in its natural endowments. It has superior agro-climatic conditions, with crops such as cassava, white corn and coffee reaping better yields here than elsewhere. And even as Mindanao is no longer typhoon-free, Maguindanao and Lanao del Sur have become attractive due to the natural shield Mt. Apo and adjacent mountains provide them from the Pacific typhoons. The Bangsamoro areas as a whole are blessed with an abundance of primary resources, spanning from minerals to marine resources. Large tracts of arable land running into tens of thousands of hectares remain idle. And wage rates, both official and de facto, are well below those in most areas of the country; its daily minimum wage goes as much as P200 less than those in economically active parts of Luzon.
The region’s most prominent weakness could well be its lack of skilled manpower, following decades of lagging health and education performance due to both government neglect and violent conflict. But certain successful investors already in the area have shown that this need not be an insurmountable hurdle. Lessons from their stories are featured in the booklet “Braving It and Making It: Insights from Successful Investors in Muslim Mindanao” that I had written for AusAID (see https://braintrustinc.org/wp-content/uploads/2012/12/Booklet.Braving-It-and-Making-It.pdf). Weak infrastructure had also been a drawback, but is now being addressed with substantial infusions of public investments; much more will be unleashed with the recent signing of the peace agreement.
The Bangsamoro possesses vast opportunities for economic growth and diversification, with Mindanao being the direct link to the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (Bimp-Eaga)—a market that is predominantly Islamic. Relative to the rest of the country, Muslim Mindanao should have a natural edge in serving this market. In particular, rapid expansion is projected in the market for Halal products, spanning meat and poultry, processed food and personal care products such as shampoos, conditioners, bath and shower gels, cleansers, creams, lotions, talc and baby powders, makeup, perfumes and oral care products. The Halal industries also cover services such as food retailing, restaurants and food service, logistics and shipping, and Islamic banking and finance. Various studies have estimated a global market size of around 2 billion consumers for Halal products, spending around $500 billion annually. With growth projected at 15 percent annually, the market is projected to soon reach up to $2.1 trillion.
Still another important opportunity comes from the recent devastation of farm areas in Davao Oriental and Compostela Valley, pushing agribusiness investors to look elsewhere to reestablish and expand operations. As mentioned earlier, the natural shield that Mt. Apo provides, along with the presence of world-class Polloc Port, is making Maguindanao and Lanao del Sur attractive relocation and expansion sites. Meanwhile, other tree crops like oil palm, rubber, coffee and cacao, together with traditional field crops corn and cassava, are poised for substantial growth, with companies like Agumil, Nestlé, Rocky Mountain Coffee, Kennemer Foods, San Miguel and Unifrutti looking to extend or expand their presence in the Bangsamoro.
To be sure, this nascent economic takeoff is not without threats, which could come from the very people who would manage, or possibly mismanage, the entry of new investments into the region. Violent conflict due to rido or clan feuds will not go away with CAB, unless the autonomous authorities find creative ways to quell them. The temptation for corruption, and the risk of this undermining the region’s investment attractiveness, will have to be guarded against. And with its economic assets built mainly on its natural wealth, the threat of unsustainability due to environmental mismanagement is very real.
All told, the Bangsamoro simply cannot afford to be yet another “failed experiment.”
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