On the Mindanao Economy

Posted on Posted in 2012-2013
by Iesous Jireh Hernandez, Emmanuel Concina, and Dino Saplala

You have probably heard it many times that “the Philippines is a rich country pretending to be poor”. Dr. Cielito Habito, Economics professor of the Ateneo de Manila University and Philippine Daily Inquirer columnist, adds to this further by describing the “natural resource curse”. You can immediately recognize what this “curse” is by observing the various natural resources of the country. Have you ever thought about why the country is poor despite all these resources? Let’s focus on Mindanao. This region is arguably the poorest in the entire country. However, it is also commonly said that Mindanao alone is capable of feeding the entire Philippines. In order to understand this paradox, let’s look back and examine what Mindanao has been.

Land of Promise

Ever since the American Period, Mindanao has been known as a land of promise. The land down under has been known to be a development wonder: demonstrated by the American colonial government’s Homestead Act of 1903 which gives tracts of land to people who will dare brave the frontier, so long as the land to be given will be developed agriculturally. Dr. Habito describes Mindanao’s prospective qualities: superior agro-climatic conditions, abundant primary resources, large tracts of idle lands, and wage rates lower than elsewhere in the country. In fact, the region produces around 40% of the country’s agricultural, forestry, and fishery output, and one-third of the national food requirement.

Mindanao’s potential can be further emphasized when you consider the abundant reserves underneath. It literally sits atop a pile of gold as the region accounts for 75% of the whole Philippines’ gold reserves. There are also deposits of bauxite, copper, and chromite that are estimated to be worth more trillions of dollars. Claims of oil, amounting to 158 million barrels, underneath the Liguasan Marsh, a complex system of rivers channels and small lakes, by the Moro Islamic Liberation Front are also fuelling the hopes of the citizen for economic growth.

Likewise, the Muslim population of the area has a potential to play in the Muslim market of the ASEAN community. The producers in Mindanao are in an advantageous position to market their products to the ASEAN Muslim community as they are already practicing certified halal food production. Its close distance to Indonesia, which has the largest proportion of Muslim population than any other country in the world, and Malaysia makes Mindanao an attractive destination for people who want to tap the Muslim market.

Wars and Conflicts

As much as Mindanao seems to be a “land flowing with milk and honey,” the same Eden has been plagued by wars, conflicts, and skirmishes. For example, you know very well that the infamous Maguindanao Massacre took place in Mindanao prior to the 2010 elections. Much of Mindanao, as well as the rest of the country, is ruled by various political dynasties. Private armies are also common when conflicts related to these dynasties arise. For a deeper look at the issue of political dynasties, consult the article “Keeping Money in the Family: The State of Political Dynasties in the Philippines”

The other common conflicts in Mindanao involve those rooted in the Moro people’s struggle for self-determination. In the early 1960’s, many Filipino Muslims increasingly became displeased with the Philippine government due to the growing gap between the standards of living of Muslims and Christians. Furthermore, many of these Christians came to Mindanao as migrants, paving the way for massive land- grabbing. As a result, the Muslims felt they were being neglected by the Philippine government. In 1968, the Bangsa Moro Liberation Organization (BMLO) was born, paving the way for the various conflicts in Mindanao which would continue up to this day. The Moro National Liberation Front started from a split within the ranks of the BMLO. Later on, several other groups, including the Moro Islamic Liberation Front, which separated from the MNLF, and the Abu Sayyaf, would also appear.

One of the legacies of the Ramos administration was a peace deal between the Moro National Liberation Front and the Philippine government. Some sectors believe that this peace deal was a failure since conflicts in Mindanao continued even after the establishment of the Autonomous Region in Muslim Mindanao (ARMM).

Former President Fidel V. Ramos, in a previous interview with the Ateneo Economics Association, disagrees. For him, the Philippines “could not have asked for a better final peace agreement”. Ramos cited how it was praised by various countries from the Organization for Islamic Conference (OIC). “They said this agreement is phenomenal because it included the integration of the former rebels or mujahedeens into our Armed Forces and Philippine National Police [subject to basic qualifications such as literacy]. That has never happened in any other country,” said Ramos. In addition, he argued that the implementation of the agreement, especially by his successors, was the problem and not the agreement itself.

Giving Peace a Chance

With the “Bangsamoro political entity” looming as the political solution for Mindanao, Dr. Habito gives us insights on the economic status of Mindanao, and possible solutions to problems dwelling in the island group.

John Lennon once told us to “give peace a chance.” Apparently, if peace would be given a chance in the Mindanao region, this would mean a lot for the region. The war-torn land’s development has been halted by violence and conflict caused by clashes between the Moro Islamic Liberation Front and the Philippine Military, and terrorist activities by groups such as the Abu Sayyaf and the Jemaah Islamiyah. Recently, hope for resolution came back to life when the government and the MILF signed an agreement to establish a Bangsamoro government.

However, the framework is simply the start of a long process towards the restoration of peace and order in the region. Peace talks between the Philippine government and the Moro Islamic Liberation Front are still ongoing. A comprehensive peace pact has yet to be signed, the target deadline for which has been pushed back from the end of 2012 to early March, because of contentious details like power and wealth-sharing between the two entities. After the peace pact, the Organic Law, which created the Autonomous Region of Muslim Mindanao, has to be repealed and replaced by a Bangsamoro Law, which is being drafted by the Transition Commission.

Braving It and Making It: Investing in Mindanao

In the hope of peace, however, Habito quotes a report from the World Bank, saying that “recovering to original growth paths takes an average of 14 years of peace,” and “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.” But should we really wait 14 or 20 years before we see Mindanao fulfill its promises? Dr. Habito argues otherwise. According to him, to wait for more than 10 years would be tiring for the people and it could even trigger the return of previous conflicts. “Ciel,” as he would be fondly called, gives us certain measures to do so that the economy of Mindanao can thrive even in midst of the conflicts.

In his column “Braving it and making it,” Dr. Habito tells us of several examples to follow and measures to do in investing and developing in Mindanao. A booklet published by AusAID in partnership with the Autonomous Region in Muslim Mindanao (ARMM) Regional Board of Investments, ARMM Business Council, and Management Association of the Philippines entitled “Braving It and Making It: Insights from Successful Investors in Muslim Mindanao” gives insights on success stories of businesses and industries who thrived in midst of peace and war in Mindanao. According to Habito, to “do things right” in Muslim Mindanao, one must gain the trust of the locals, particularly the cooperation of local leaders and the support of local communities and stakeholders. This is particularly true with investors from outside Mindanao. It is also important that these leaders are influential in their communities as Muslims value the hierarchy in their social system.

Likewise, to succeed in a market and environment like that of Muslim Mindanao, respect of the traditional culture and religion of the locals must be achieved. Concrete actions would be like adjusting working hours during the Ramadan feast and respecting the halal standard of Islam. Businesses can also take advantage of local culture like what La Frutera did when it relied on the local leader to discipline the workers. This allowed La Frutera to maintain a strong worker-management relationship while respecting the culture of its worker at the same time.

Conclusion: The Key to Economic Success in Mindanao

We can observe by these that the key to economic success in Mindanao is respect of Mindanao culture. Even though majority of the people in Mindanao are Christians as well, the minority of Muslims concentrated in the ARMM provinces demand our utmost respect and understanding in their tradition and culture. In economics like that of Saudi Arabia, the United Arab Emirates and other successful Middle Eastern countries, modernization was able to coincide with the traditions of the people. Why can’t we do the same with Bangsamoro?

Habito, Cielito. Braving It and Making It: Insights from Successful Investors in Muslim Mindanao. AusAID, 2012. Print.

Habito, Cielito. “Cursed with wealth.” Philippine Daily Inquirer. PDI, 6 July 2009.Web. 5 Mar. 2013. <http://business.inquirer.net/money/columns/view/20090706-214012/Cursed-with- wealth>.

Habito, Cielito. “ARMM to Bangsamoro: A ‘Golden Transition’?” Philippine Daily Inquirer. PDI, 29 Oct. 2012. Web. 5 Mar .2013. < http://opinion.inquirer.net/39728/armm-to- bangsamoro-a-golden-transition >.

Habito, Cielito. ”Braving it and making it.” Philippine Daily Inquirer. PDI, 10 Dec. 2012. Web. 5 Mar. 2013. <http://opinion.inquirer.net/42541/braving-it-and-making-it>.

Magno, Alexander. “The Moro Uprising.” Kasaysayan: The Story of the Filipino People, Vol. 9. Print.

Tan, Antonio, and Cielito Habito. Managing Mindanao’s Natural Capital: The Environment in Mindanao’s Past, Present and Future. Brain Trust: Knowledge and Options for Sustainable Development Inc., 2012 . Print.

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