Investments in Bangsamoro seen to trickle in

Posted on April 02, 2014

DAVAO CITY -- The signing of the peace agreement between the Moro Islamic Liberation Front (MILF) and the government will not result in overnight progress in the areas to comprise the Bangsamoro juridical entity. But, experts believe the agreement will spur a gradual but continuing influx of new investments.

This is given that the October 2012 signing of just the Framework Agreement on the Bangsamoro in Malacañang already spurred some companies to explore the areas within the Autonomous Region in Muslim Mindanao (ARMM) for possible opportunities.

The ARMM will eventually be replaced by the Bangsamoro political entity, whose expanse will depend on the result of a plebiscite to be set after its basic law is passed.

Romeo M. Montenegro, public affairs head of the Mindanao Development Authority, said that, right now, the agency has started assessing what high-value crops are suitable for the region as many companies have been expressing interest in helping economic development.

What is interesting, Mr. Montenegro told BusinessWorld, is that companies have already been prepared to enter the ARMM. Even without the agreement, he added, several companies have already indicated their willingness to invest or expand their investments.

Among them is La Frutera, Inc., a banana company started in Maguindanao by the late Ebrahim P. Paglas and which employs rebels.

Another company, Unifrutti Philippines, Inc. has partnered with the Mindanao Rural Development Program -- a World Bank-funded program that will soon be implemented nationwide as the Philippine Rural Development Program -- in establishing infrastructure facilities to make banana farms accessible, said Arnel V. de Mesa, deputy MRDP director.

Unifrutti, Mr. de Mesa said, has started developing farms in Maguindanao and is expected to also penetrate Lanao del Sur, two of the provinces in the proposed Bangsamoro region.

Mr. Montenegro said several other companies that he did not identify have also indicated their intentions to develop other crops like palm oil, coffee and even organic rice.

“We are looking at developing these crops because we already have initial studies that identify these as those with potentials in the areas of the region.”

Haron U. Bandila, chairman of the ARMM Business Council, said businesses have come to the region before, even before the peace agreement’s signing. “There are already big companies that have located here,” he said but, like Mr. Montenegro, declined to name them so they can continue their projects unnoticed.

Speaking to BusinessWorld over the phone, Mr. Bandila said most of the companies that have been in the region are in agribusiness. “They say the sector is a good area of investments,” he added.

Aside from agriculture and allied investment areas, some companies have also considered investing in energy and exploring the possible mineral deposits of the region, Mr. Montenegro said. For instance, there were reports years ago that some Malaysian companies were looking at the oil and natural gas deposits of Liguasan Marsh in Maguindanao.

The only way to realize these potentials, said Joji Ilagan-Bian, former chairwoman of the Mindanao Business Council, is for the region to market itself.

“The investments will not [come] immediately; investors will still need to see the act of Congress [on the Bangsamoro basic law] and [the result of the] referendum,” said Ms. Bian, adding that she is also considering investing in the area.

The government, she added, should invest heavily in infrastructure to prepare the areas for the influx of investments.

Ms. Bian is among the biggest school administrators in the region and focuses on tourism and other service-related courses. She suggested that tourism is one other big industry that needs to be developed but said: “Investments in tourism will definitely be a long wait.”

Mr. Montenegro said development will not be confined in the region, though, because other areas “will definitely benefit from the peace dividends.”

Davao City, considered Mindanao’s center for trade and commerce, is expected to be among such areas that will benefit even before the investments take off.

“New companies will have their offices here as they start their investments in the ARMM because it has all the facilities that they need, and it’s near their areas of investments,” he said, adding that companies may either build their own offices or rent spaces in newly built structures.

As a result, Mr. Montenegro added, the services sector of the city will also benefit as investors and their officials will need them as they start out.

Davao City has also become one of the go-to place of investors from the region. Officials of property development companies confirmed that many of the buyers in their projects, either for investments or residences, are from the region.

It is timely, said Tourism Assistant Secretary Arturo P. Boncato, Jr., that the city has also been identified as an area whose human resources will be trained, as part of the $71-million assistance from the Asian Development Bank and the Canadian government, through the Canadian International Development Agency. Other areas to benefit are the provinces of Bohol, Cebu and Palawan.

Still, companies may have second thoughts on investing because of danger perceived despite the agreement signing, observers have noted.

Mr. Bandila assured these investors that, as long as they coordinate with government agencies, “their investments are safe.”

The risks, he said, are mere perception. “But since it is hard to eliminate the perception, it would be better for them to deal only with government offices and must not resort to under-the-table arrangements,” he said.

ARMM Governor Mujiv S. Hataman told BusinessWorld in an earlier interview that his administration will make sure that investors and their investments are protected.

“Any worker or official of the regional government will face the consequences if they ask for bribes,” Mr. Hataman said.

Assurance may also come from local investors that lead the way. Bai Sandra S. Siang, external vice-president of the Muslim Chamber of Commerce and Industry of Kutawato, told BusinessWorld that local investors need to “place their money where their mouths are” because they are the ones who know the business environment.

Ms. Siang said that the region’s business leaders “must also start helping” raise new investors’ confidence that the region “is a good place for their capital.” -- Carmelito Q. Francisco