Mindanao is open for business
by Chiara Mesiona
Is safety an issue in Mindanao? For owners and executives of large companies that are searching for novel opportunities to expand business, this is a fair question to ask. The continued implementation of martial law in Mindanao has created fear in some business owners, potential investors and foreign visitors.
But, contrary to the negative clout surrounding it, martial law has been shown to be effective in lowering crime rates. According to information provided by the PNP, there had been a 36.12% reduction in the rates of eight focus crimes in Mindanao between May 2017 (when martial law started) and August 2018. This indicates that, despite its restrictions, martial law has contributed to Mindanao’s peace and order.
The large budgetary appropriation for Mindanao also signals the government’s aggressive fight for the region’s sustained safety and development. Now, Mindanao is back in business, and international investors have warmed up, looking past the restricting nature of martial law and placing their bet in the Philippines’ southern islands.
Foreign investments in Mindanao
The volume of foreign investment entering Mindanao continues to go up. This steady inflow of investments not only indicates that the fear associated with martial law had been temporary; it also proves that international companies are ready to explore their business opportunities here.
And the bets they are making are not small.
For example, a Russian group is investing Php 8 billion in the banana industry, specifically for a Cavendish banana planation project in the Moro Islamic Liberation Front (MILF) district of Camp Abubakar, in Maguindanao.
The largest steel manufacturer in China (third largest in the world), HBIS Group Co. Ltd. is also investing $4.4 billion [Php 231 billion] in Mindanao to develop a major steel complex. This is reportedly the largest industrial investment from China to the Philippines. The development will involve two phases. Phase 1 involves the production of $7.5 billion [Php394 billion] worth of hot rolled coils and slabs; this is expected to generate 10,000 jobs. Phase 2 is dedicated to boosting the steel manufacturing capacity; this is expected create 40,000 jobs.
The money is in Mindanao
Foreign investors are more comfortable now to choose Mindanao as an investment hub due to the Philippine Government’s strong support for the region’s economic growth. Indeed, Mindanao is set to receive 16% of the 2019 national budget, which amounts to Php 585 billion. In 2018, Northern Mindanao also received the largest piece of appropriation from the Board of Investments (BOI) – approximately Php 907 billion worth of investments.
The government’s support for Mindanao is visible in the ongoing infrastructure development projects, one of which is the Mindanao-wide railway system. The railway bases have already been raised in Tagum City and other municipalities. The construction of Davao City’s portion of the rail is also expected to begin this first quarter. The construction of railways, as well as bypass roads and coastal roads, makes clear the path for an investment boom in Mindanao.
In addition, power companies have also steadily prepared, as they expect a surge in the demand for power in the industrial sector. For example, demand for electricity has peaked in Davao, General Santos and Zamboanga. A soon-to-operate steel plant in Cagayan de Oro is also expected to drive the demand for power. Power producers have been prepping to ensure a reliable supply of electricity and power in the south.
Mindanao business potential is ripe
The government’s support for Mindanao is not unfounded. Three things characterize the southern region: land, people and potential.
First, Mindanao is a huge island with so much land ready for agricultural and industrial development. Due to the significance of the agricultural industry here, the region is also considered as the country’s fruit and vegetation basket, providing raw materials and resources to various sectors.
Second, Mindanao is home to a large group of diverse Filipino peoples. The Mindanao population stands at 25 million, approximately one-quarter of the national population.
Lastly, the potential for economic growth in the south remains high. According to data from the Mindanao Development Authority (MinDA), almost half of the sectoral growth Mindanao is in services. Almost 35% sectoral growth is in industry and less than 20% is in agriculture and fisheries. Given that so much of our country’s resources grow in Mindanao, these figures indicate a huge opportunity for investors to bet on agriculture, fisheries and industry.
Mindanao is ready for the world to see its resources and talents. Given the spotlight that the Philippine government has shone on Mindanao, we believe that the major investments from China and Russia are only the beginning of a string of massive foreign investments. In the next five years, the question of whether Mindanao is safe will gradually fade, and in its place, investors will be asking, “How can I take part in Mindanao’s growth and progress?”