COMMENT: Impact Overrated

GENERAL SANTOS CITY (MindaNews / 10 April) – Last April 1, Philippine Daily Inquirer posted online its editorial Mindanao’s promise. It is a pitch for the Government-Moro Islamic Liberation Front Comprehensive Agreement on Bangsamoro (CAB). However, it can be asked: Is the strike zone the Autonomous Region in Muslim Mindanao or the entire island of Mindanao and the Sulu Archipelago which cover six regions?

The pitch is zeroed in on the impact of peace on economic development. As a general principle, the pitch is perfect. Peace is essentially indispensable to economic development. People in any country or region in state of war or civil strife must support the restoration of peace to restart economic development. On this premise, the editorial emphasizes the impact of the CAB on the economy of Mindanao – although still just a promise.

However, when it comes to the CAB and the peace it is hoped to bring, there must be distinction between its impact on the ARMM region (soon to be renamed Bangsamoro) and the five other regions of Mindanao – Regions IX, X, XI, XII and Caraga. On the fulfillment of the CAB – the “promise” – hinges the peace and development of the ARMM and the Moros.  Can the same be said concerning the other regions of Mindanao?

The Editorial Says

 [1] The significance of the CAB: “The government’s agreement with the Moro Islamic Liberation Front has raised hopes that enduring peace will finally be attained in Mindanao. And beyond this is the tremendous economic impact that the agreement can bring the country.”

[2] The effect of “troubled peace” on investments: “Investors have avoided Mindanao for decades, despite its abundant natural resources and available manpower, because of the troubled peace particularly in the Autonomous Region in Muslim Mindanao.”

[3] The effect of the “troubled peace” on GDP. “The ARMM, which will be replaced by the Bangsamoro, accounts for 27 percent of Mindanao’s land area, which, in turn, is about the size of Luzon. However, the ARMM is the poorest of the regions, contributing less than 1 percent to the Philippines’ gross domestic product. The National Capital Region has the biggest share of the country’s GDP (35.7 percent in 2012), followed by Calabarzon (17.4 percent), and Central Luzon (9.2 percent).”

[4]  Equating the ARMM to Mindanao: “To many investors, a problem in the ARMM is a problem in Mindanao. The political uncertainty there has daunted investors from putting up factories and other job-generating businesses on the whole island.” (Bold supplied.)

[5] The change big businesses are hoping to see: (a) The MBC, “As the influential Makati Business Club has pointed out, peace in Mindanao will make it ‘a truly vibrant and essential part of the Philippine economic engine’.

“We believe that the success of the peace deal hinges largely on genuine economic development and the improvement in the quality of the lives of the people, both in the Bangsamoro and in Mindanao as a whole. We are hopeful that the effective implementation of the agreement will unleash the region’s vast potentials for agriculture and agribusiness investments, tourism and natural resource development, among others.”

(b) Based on its January 2013 study, the British financial giant Standard Chartered Bank said of the CAB: “We believe that a complete peace deal will accelerate economic growth in the ARMM over five years, and that this will spill over to the larger Mindanao island group,” adding that “a peace deal could narrow regional disparities and place the Mindanao island group on a faster growth trajectory.”

(c) Economic Planning Secretary Arsenio Balisacan stated during the multisectoral Mindanao Summit in January 2013 that tackled the Bangsamoro economic plan that if the government could achieve and sustain peace in Mindanao, the region was bound to surpass the growth of the whole of Luzon: “Mindanao will boom. It will grow faster than Luzon because the peace and order problem is the only one constraining it. If you get that [out of the picture], I’m very positive it will grow much faster than Luzon.”

[6] As Balisacan sees it, once the FAB is in place: (a) Investors will look at the region and plan for the long term to “give birth to industries that will usher in jobs and investments’. Mindanao, with (b) its agriculture thriving on abundant natural resources, would become a perfect “food bowl” and (c) with the richness of Muslim, attractive tourist destination – creating allied industries.

[7] The editorial concludes: “The path to prosperity for Mindanao will be long and at times winding and bumpy. But at last, the people of Mindanao finally have a view of the road ahead. Wonderful things do happen when peace is given a chance.”

Coming from the country’s leading newspaper, the editorial carries much weight. Some may take it as the gospel truth – a reference by which to assess the impact of the CAB, in particular, and, in general, of the peace in the Moro provinces to economic development in Mindanao as well as to the entire country. But its inaccuracies and fallacies can mislead and need clarification.

Data at Random

To emphasize the effect of the “troubled peace”[3], the ARMM, “contributing less than 1 percent” to the GDP of the Philippines in 2012, is compared with three most industrialized regions of Luzon – the National Capital Region or Metro Manila (GDP 35.7%), Region IV-A or Calabarzon (GDP 17.4%), and Region III or Central Luzon (GDP 9.2%). This can mislead. The ARMM is identified with Mindanao, which is qualified as “about the size of Luzon”.

Is Mindanao as poor as the ARMM and lagging as far behind Luzon in economic development? The editorial should have come out with the GDPs of the five other Mindanao regions to give a balance and true picture.

Here are some data obtained at random:

In 2003, Luzon (including NCR) contributed 66 percent to the country’s GDP; Mindanao, 18 percent (By Region: North Mindanao – X, 27.1% of 18 ; Davao Region – XI. 25.4; Soccsksargen – XII, 20.1; Zamboanga Region – IX,14.8; Caraga, 7.6; ARMM, 5.12.) (From a U.P. Paper, 2010)

From 2002-2009, Mindanao’s average share in the country’s total GDP was 18.2%; Luzon (with NCR), 64.91%; Visayas, 16.9%.  (From: Mindanao Strategic Development Framework 2010-2020)

In 2012, of the country’s total GDP, Luzon [if with NCR — 72.3%], contributed 37.1 percent; Visayas, 12.7; and Mindanao, 14.4. (From: National Statistical Coordinating Board)

In terms of economic growth, NSCB reports: “Luzon’s economy (excluding NCR) accelerated from 3.3 percent in 2011 to 6.3 percent in 2012. The economy of the Visayas island group remained constant with 5.6 percent growth in 2011 and 2012. The economy of Mindanao posted a robust growth of 8.2 percent in 2012, almost double its 4.2 percent growth in 2011. This was largely due to the faster growth posted by all regional economies in Mindanao.”

What are significant to note?

1. For the last ten years, the GDP contribution ranking has been constant: first, Luzon including MCR; second, Mindanao; and, third, Visayas.

2. Without NCR, Luzon is second to Mindanao in percentage economic growth – 0.9 percent better in 2011; 1.9 percent in 2012 – more than doubled.

3. The breakdown of the 18 percent Mindanao GDP in 2003 shows that ARMM’s contribution to the country’s total GDP that year was 0.92 percent. By the editorial’s data, the ARMM GDP has stagnated.

4. Should the ARMM economic development as the effect of the “troubled peace” be construed as the condition of the Mindanao economy? Unfortunately, the editorial can so mislead.

What are the other random data?

In 2008, of the country’s nine major agricultural products, Mindanao has the following percentage shares in the total national output: rubber, 100%; pineapple, 88.3%; banana, 81.1%; coffee, 72.6%; coconut, 60.3%; corn, 53.0%; palay, 22.8%; mango, 22.6%; sugar cane, 18.7%.  – sharing from 53 to 100 percent in six of the nine. (From: MSDF 2010-2020)

Mindanao produced 43 percent of country’s agricultural output – 23 percent of the palay and 60 percent of the corn; supplied 40 percent of national food requirement, 30 percent  of national food trade; and had 51 percent of its farm areas planted to commercial and export crops – to coconut, tobacco, rubber, sugar, banana, palm oil, coffee, abaca, fruits. In 2008, foreign investment, citing the now defunct MEDCO (Mindanao Development Corporation), amounted to P1.704 billion – 60% from Japan and 21% from Canada. (From the UP paper presented at the UP Academic Congress in University of the Philippines – Diliman on February 2, 2010).


More data from studies and government reports will show that while the ARMM economy has stagnated because of the “troubled peace”, Mindanao has kept pace with the country’s progress. Eduardo Climaco Tadem, author of that UP paper referred above (Development and Distress in Mindanao: A Political Economy Overview) sees it correctly:

“It is widely believed that economic growth and development have bypassed the southern regions of the Philippines.   This is seen as the cause of political problems that now plague Mindanao. A closer look at Mindanao’ economic development, however, reveals that far from being isolated from the mainstream of the national economy, the island has been a major performer and a primary contributor  to the country’s productive capacities”.

But perceptions in the editorial differ.

The implication that “enduring peace” is still to be attained in Mindanao [1] is not true. Despite the Moro rebellion since 1972 and the Ilaga-Blackshirt “atrocious war” preceding that, peace has endured outside of what is now the ARMM – in varying degrees depending on proximity to the conflict areas.  The realization of peace in the Moro region through the CAB will have a “tremendous economic impact” on the region; but on the rest of Mindanao and the entire country, expectations should be tempered and qualified.

That “to many investors, a problem in the ARMM is a problem in Mindanao [4]is true and unfortunate. That without qualification “investors have avoided Mindanao for decades [2]and were “daunted from putting up factories and other job-generating businesses on the whole island [4] is outright lie. Maybe, foreign investors have avoided Mindanao. But Filipino investors, small and big, from Mindanao or Manila and elsewhere, have invested in industries, commerce and services. Canaries, malls, hotels, resorts, power plants, etc. mean big investments.

Let it be admitted that big Filipino investors would prefer Region XI or XII or X to the ARMM which is not Mindanao. The “equation of CAB to economic development” in the ARMM or the future Bangsamoro must be distinguished from that in the rest of Mindanao where the economy has continued to develop despite the Moro rebellion. The “random data” above, and more, must stimulate questions to challenge perceptions.

Changes Foreseen

The hope for the successful implementation of the CAB and the changes it will bring must be deeply appreciated. [5] The Makati Business Club foresees Mindanao to become “a truly vibrant and essential part of the Philippine economic engine”. The British Standard Chartered Bank predicts the acceleration of “economic growth in the ARMM over five years”, the spilling of this “over to the [greater] Mindanao” and the narrowing of “regional disparities”. Economic Planning Secretary Arsenio Balisacan believes “Mindanao will grow faster than Luzon” since only “the peace and order problem” is constraining its growth.

MBC is influential; Standard Chartered Bank is a financial giant; and Balisacan is the chief economic planner of the Aquino III government. But while their focus hits the ARMM at dead center, it is way off greater Mindanao. Obviously, to them, “investment” only means foreign capital; and “investors”, big foreign capitalists. None are in the ARMM; only a few in the other regions of Mindanao. Hence, the development discussed in a UP study and reported by MSCB and detailed in the MSDF is not development.


In his last term, Sen. Aquilino Pimentel Jr. had repeatedly complained that while Mindanao had been contributing 33 percent or more to the national coffers, it had been getting back just a little over 20 percent in development funds. Before he finally stepped down, Mindanao’s share had been increased to more than 30 percent.

What “will unleash [Mindanao’s] vast potentials for agriculture and agribusiness investments, tourism and natural resource development, among others” is the fair allocation of national funds not “the effective implementation of the agreement” which, despite the euphoria, is still in limbo. Development funds are concentrated to support industries in the economic zones of Metro Manila, Calabarzon, Subic, Olongapo and Clark Air Base. Why not give Davao City, General Santos City, Cagayan de Oro City and other cities their fair shares? That will spill over!

What economic benefits can the other five regions in Mindanao expect from the CAB? It has had the peace that together with the Mindanaons’ investment initiatives and industry have generated economic progress. As shown in NSCB and MSDF statistics covering the first 12 years of 2000, Mindanao has been constantly second to Luzon in GDP contribution and by 2012 its percentage growth showed a more robust economic development than Luzon without NCR.

The economic impact of the CAB is primarily intended for the Bangsamoro. The Annex on Wealth-Sharing, the economy-relevant agreement, refers only to Bangsamoro. What the other regions in Mindanao can hope is a “spillover” [5]. But the assistance funds from the national government and foreign sources are specifically for the Bangsamoro. In all probability, these funds will just be enough if not inadequate. What spillover can be expected?

Should the CAB be badly implemented, the Bangsamoro will not progress as expected. Will the other five regions of Mindanao also suffer? Already progressing, will they stagnate or regress?

The Inquirer editorial only echoes the rhetoric from the Palace for the all-out support of the CAB especially that it’s about to go through the wringer – the Congress and, perhaps, the Supreme Court. There’s nothing wrong with that. The CAB and peace with the Moros must be supported.  But overrating its impact is fallacious [6][7].

Is Manila covering up its eschewed distribution of development funds biased against Mindanao?

(To Be Continued: Personal Testimony)

(“Comment” is Mr. Patricio P. Diaz’ column for MindaViews, the opinion section of MindaNews. The Titus Brandsma Media Awards recently honored Mr. Diaz with a “Lifetime Achievement Award” for his “commitment to education and public information to Mindanawons as Journalist, Educator and Peace Advocate.” You can reach him at [email protected])