Despite the noise and war, Mindanao’s economy performed really well.
Looking at key figures and indicators we can safely say that growth has continued despite the political noise, and the war in Marawi.
Macroeconomic figures bode well for us
On the macroeconomic front, Inflation has remained within manageable bands of between 1 and 3.5 percent, which is still lower than the spikes we experienced in 2014 under the past administration. Interest rates remain low and steady, allowing business expansion to continue, condominiums to be bought and investments to be made.
Throughout the year, our Gross Domestic Product growth rates remained above expectations and forecasts of international aid agencies. Hovering between 6-6.7 percent it still outpaces China in Asia. With commitments such as the Build Build Build Program, pushing agricultural economic reforms such as the Tax Reform for Acceleration and Inclusion (TRAIN), the growth may even be boosted.
Agriculture starts growing and is boosting Mindanao’s growth
Kudos to the Department of agriculture for pushing greater productivity in a long-neglected sector. The early distribution of once locked up farm machinery in mod 2016 obviously did well to enhance farmer capabilities and improve yields.
The steady 5 percent decline of this important food bearing sector under the past government has been erased. We now celebrate actual 4% growth and hope for higher yields. In sum, growing agriculture means more and better food, and an improvement in the incomes of rural folk
Despite criticism, the desire to improve rice self sufficiency through productivity improvements is laudable given our exit from Quantitative Restrictions for rice under the GATT WTO . These that have hampered our ability to import the cheaper rice stocks we need in order to lower rice prices for the people.
Note that our rice prices are much higher than Indonesia’s, and were never cheap as we insisted on limiting our imports through QRs to protect local farmers despite the lack of real assistance to improve productivity and increase production.
It must be noted that keeping rice prices low is a priority of any government, which perhaps explains why Malaysia imports 30 percent of its rice to keep prices stable. We, on the other hand, import less than 10 percent.
Perhaps the desire to import much cheaper and high quality rice and impose tariffs may be a batter solution to ensure food for all, even for farmers who can barely afford the food they plant. This will eventually change.
Enabling farmers this way allows them to embark on better, higher yielding and climate resilient varieties and, perhaps, encourage the cultivation of other high value crops we nonetheless need to produce for our own consumption.
We await and will measure the impact of expanded agricredit programs and the strict implementation of the agri-agra law that in the past was ignored by many banks by using loopholes. The 20 or so lending cooperatives tasked to implement the estimated 650 million peso Landbank loan facility will go a long way to push greater topline production. The machinery, inputs and better credit will provide the needed push for aging farmers, perhaps encourage even their children to go into farming. This agriculture’s hope.
Davao and CDO lead Mindanao’s growth
Coming off a 9.4 percent Gross Regional Domestic Growth rate for Region 11 in 2016, we expect this trend to be sustained, as recent announcements of the Department of Trade and Industry point to 7.6 billion pesos in investments for the region, including the heralded dressing plant of San Miguel Corporation in Davao del Sur.
This figure only includes the Board of investments (BOI) registered activities and do not include companies that did not avail of incentives. Conservatively, we expect this figure to actually exceed last year’s P10-billion investment figure, as companies start building their high rise projects in places such as the Azuela Cove, Matina IT Park and Park District near SM Lanang.
A surprise performer is Region 10 in Cagayan de Oro (CDO). Despite being at the doorstep of the Marawi conflict, it managed a 1,200-percent increase in new investments in 2017, hitting P15.9 billion in the first three quarters of 2017 alone compared to 2016.
In an article by Mike Banos in resurgent.ph, 80 percent of these new investments include 80 percent for agriculture including a second San Miguel brewery and a new Purefoods meat processing plant, a new Gardenia bread plant able to produce 130,000 loaves per day, and 10 percent to new energy projects led by Sta Clara and Philnew Energy Corporation.
As you may have noticed, these all are meant to produce products for local consumers, signs that large conglomerates have recognized this potential and have put their money into projects that will fill these needs, creating local jobs in the process.
Located between Cebu and Davao, CDO is Mindanao’s gateway to the Visayas and the our exit port to Luzon. With this, it is clear that the war in Marawi was contained so much that it did not affect business prospects in nearby provinces.
In sum, things are looking up for Mindanao. Having proven its resilience despite war and calamity, and despite all the political noise in manila, it has grown and will continue to do so well into 2018.
