Is Mindanao catching up?

Is the Mindanao economy catching up and narrowing the gap with Luzon and Metro Manila, now that we have the country’s first President from Mindanao?

The Philippine Statistics Authority recently released the regional breakdown of the 2018 gross domestic product (GDP) data, and there are interesting observations to be made from these gross regional domestic product (GRDP) figures. Last week, the National Economic and Development Authority (Neda) came out with the general observation that regional disparities are widening, based on data spanning the last 10 years.

“The government has to continually increase its efforts in pushing for regional and rural development,” stated Neda Undersecretary for Regional Development Adora Navarro. “We need to improve connectivity across regions and enhance the efficiency of transport, communications and overall logistics network. Poor regions must catch up fast.”

I’ve pointed out in this column before that over the last two decades, so-called “Imperial Manila” and “Imperial Luzon” had become even more “imperial.” The share of Metro Manila in overall GDP had grown over the years from 30 percent in 1996, up to 33 percent in 2006, and now even higher at 37 percent. Taken together with Calabarzon and Central Luzon, our two most industrialized regions, their combined share was 63 percent last year, whereas it was just 53 percent in 1996, and 56 percent in 2006. These trends are a disappointment to those of us interested to see better development in the countryside, and more geographically inclusive growth.

But things appear to be changing. Having a President from Mindanao, particularly from Davao, appears to be making a difference, judging from trends in the GRDP data since 2016, when President Duterte came into office. There is a clear albeit gradual rise in the GDP share of Mindanao, from 14.36 percent in 2016, to 14.41 percent in 2017, and on to 14.52 percent in 2018.

Not surprisingly, the rising share is somewhat more pronounced for the Davao Region, whose overall GDP share rose from 4.10 percent in 2016 to 4.26 percent in 2017, and 4.35 percent in 2018. Soccsksargen’s share also increased slightly from 2.62, to 2.66 on to 2.68 in those three consecutive years. However, GDP shares of the other Mindanao regions either remained stagnant or declined (for Caraga Region and Zamboanga Peninsula).

The Mindanao economy has been diverse, and growth disparities therein remain wide. In 2017, GRDP growth ranged from a low of 2.4 percent (Zamboanga Peninsula) to 10.7 percent (Davao Region). The range narrowed somewhat last year, ranging from 3.2 percent (Caraga) to 8.6 percent (Davao). Caraga was affected by slower growth in mining and quarrying and in wood-based manufactures, while Davao’s spectacular 10.7-percent growth in 2017 had tempered a bit to 8.6 percent. Still, it was among the three fastest-growing regions nationwide (together with the Bicol Region with 8.9 percent, and Mimaropa, also with 8.6 percent).

Meanwhile, Metro Manila’s economic growth slowed from 6.2 to 4.8 percent, lower than the overall national growth rate. Thus, Davao and Mindanao (7.1-percent average GRDP growth), with growth rates exceeding the overall 6.2 GDP growth rate, help pull up the rest of the economy, whereas Metro Manila now drags it down. This also suggests that the wide income gap between Metro Manila and Mindanao is narrowing. The ratio has indeed gone down from 4.979 in 2017 to 4.919—still a wide 5-to-1 ratio, but nonetheless showing visible improvement.

Even as there is a long way to go, there is much going for Mindanao that should permit it to sustain the way it is catching up with Metro Manila and Luzon. Infrastructure development in Mindanao is already proceeding briskly to the point of construction labor shortages there. The recent formalization of the Bangsamoro Autonomous Region in Muslim Mindanao could also unleash new investment potentials in the region, especially in the context of the Asean Economic Community, which is a predominantly Islamic market.

I’ve written it here before more than once, and I continue to believe, that Mindanao is the future of the Philippines.

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