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Bringing Mindanao into the fold

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By Elijah Joseph C. Tubayan, Reporter

THE PHILIPPINES’ bid to become a prosperous nation and reduce poverty hinges on what becomes of Mindanao’s development.

The World Bank itself had said that without progress in the region, “it is hard to see how the country can achieve sustained and inclusive growth,” according to the Washington-based lender’s October 2017 Philippines Economic Update report.

The new administration, in its medium-term Philippine Development Plan, listed countryside development as one of its priorities. And with the first ever election of a Philippine president from Mindanao, things can only get better.

DEVELOPING AN AGRI-INDUSTRY HUB
“Mindanao is envisioned to become the country’s agri-industry center — a competitive and sustainable agri-industrial and resource-based economy,” National Economic and Development Authority (NEDA) Undersecretary for Regional Development Adoracion M. Navarro said in an e-mailed response to queries.

“The government’s ultimate goal in Mindanao is to reduce poverty and create massive quality employment.”

“Through partnerships with the private sector and coordination among LGUs (local government units) and government agencies, Mindanao is envisioned to have significant economic progress and human development,” added Ms. Navarro.

Mindanao currently hosts about 40.4% of the country’s total poor population with poverty incidence rate at 36.2% in 2015 (lower than 2012’s 41.3%) versus Luzon and Visayas’ 13.1% and 28.2%, respectively.

Poverty in Mindanao remains high

Mindanao’s economy accounts for 14% of the country’s gross domestic product. The region grew 4.9% in 2016 against Luzon’s 5.5% and Visayas’ 9.1%.

Even as Mindanao trails the rest of the Philippines in terms of growth, one of its urbanized cities, Metro Cagayan De Oro (CDO), is expected to emerge as the fourth metropolitan center in the country after Metro Manila, Metro Cebu, and Metro Davao.

Under the Philippine Development Plan (PDP) 2017-2022, Metro CDO will become the country’s fourth metropolitan center by 2025, which would function as Northern Mindanao’s gateway and trans-shipment hub of Mindanao’s agricultural products.

Agriculture, forestry and fishing make up more than 40% of Mindanao’s market, being the country’s largest supplier of major crops such as pineapples and bananas.

Indeed, Mindanao’s large agricultural base would be the main component of its growth story, according to the World Bank.

This is not just because the region produces bulk of the country’s major crops, but also employs a large share of the poor in that region.

The multilateral lender said that developing this sector would make the country more competitive in the export market, and would also bring down food prices across the country.

Mara K. Warwick, World Bank country director for the Philippines, however said that the region’s agriculture is currently “below its potential,” as it is only focused on a few export products.

She traced that to land issues in Mindanao, as well as poor logistic networks, that hinder farmers from diversifying into more high-value crops.

“Land is a really challenging area, in Mindanao, the issues are particularly acute,” Ms. Warwick said in an interview.

“Many areas, overlapping land titling, land proclamations, unclear ownership of the land. And also there is still remaining uncompleted agrarian reform in many areas.”

However, a broad value-chain development effort would be needed to fully unlock agriculture’s potential.

“We really hone in on agriculture productivity and value-chain development, including all infrastructure and logistics and trade-related issues. That whole support is the critical thing that needs to be done to really get the economy moving,” according to the World Bank official.

“What it requires really is a coordinated and consolidated approach. Solving one piece of this puzzle by itself is not going to solve the problem, it needs a coordinated approach,” she added.

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LINKING GROWTH CORRIDORS
NEDA’s Ms. Navarro said the government is adopting a multi-nodal spatial strategy that would establish trade linkages between regional centers and Metropolitan areas.

The strategy involves linking growth corridors of Metro Davao, Metro CDO and the 10 regional centers, namely: Zamboanga City, General Santos City, Butuan City, Cotabato City, Dipolog City, Jolo, Surigao City, Pagadian City, Koronadal City, and Tagum City.

“These regional centers function as markets and service centers to several provinces. They also form a network of growth centers intended to improve internal economic integration, as well as the creation of multiple linkages that provide redundancy and reduce vulnerability,” said Ms. Navarro.

On top of that, some 2,130 government-led infrastructure projects worth P547.9 billion have also been lined up for Mindanao until 2022.

The NEDA official said that 68% of that budget will be allotted for the transportation sector, while 16% will go to water resources, and 6% to social infrastructure.

Of this amount, 18 infrastructure projects have been identified as “flagship projects,” five of them have already been approved by President Rodrigo R. Duterte.

The projects include the P35.26-billion Tagum-Davao-Digos Segment of the Mindanao Railway, the P40.57-billion Davao airport, the P14.62-billion Laguindingan airport, the P4.86-billion Panguil Bay Bridge Project, and the P5.44-billion Malitubog-Maridagao Irrigation Project, Phase II.

Projects in the pipeline are the second and third phases of the Mindanao Railway; the Agus-Pulangi plant rehabilitation; the Davao expressway; the Zamboanga Fish Port Complex rehabilitation; the Balo-i Plains Flood Control Project; Asbang Small Reservoir Irrigation Project; the Ambal Simuay Sub-Basin of the Mindanao River Basin Flood Control and River Protection Project; as well as the Road Network Development Project in Conflict-Affected Areas in Mindanao project.

Ms. Navarro is optimistic the government will deliver the big-ticket projects, given the progress of the revenue-generating tax reform program, as well as project bottleneck-mitigating measures through the inter-agency Project Facilitation, Monitoring and Innovation Task Force.

LGU CAPACITY
Regional lender Asian Development Bank (ADB) said that Mindanao’s development is “very critical” for the Philippines.

“I think with the new administration, they really focused on inclusive growth. They’re quite ambitious,” ADB Philippines Country Director Richard S. Bolt said in an interview.

ADB Principal Country Specialist Joven Z. Balbosa meanwhile said that the outlook for Mindanao remains bright given the reduction of poverty levels in the region.

“There’s movement of [sic] moving poverty out of the poverty level. The prospects are still moving really strong. I think that’s really good. The Philippines is really moving forward,” he said during the same interview.

Still, more work needs to be done especially by local government units.

Helping Mindanao, according to Mr. Balbosa, shouldn’t be all about funneling money for the construction of projects, but instead meant strengthening its institutions.

“The only way to help this area is not to jump in and target a certain place and provide support, and then later on when that support goes out, you step out.”

“You go to the institutions for the government to continue support, which means human resource as well as investments should be coming along together,” he added.

Aside from loans for physical infrastructure, the ADB had been providing support through local government reforms such as public financial management, project management, capacity development, and local revenue collection.

“For that overall policy environment to be effective, we need to increase local government capacity to plan, implement, manage projects and services,” said Mr. Bolt.

“Only so much can be done, the reforms are needed. But at some point the local government needs to be able to do this kind of planning,” he added.

The lender said that its current investment mix for Mindanao is 50% for infrastructure projects and other programs, and another 50% for capacity development.

Mr. Bolt said the ADB is also conducting its “learning by doing” approach by having the municipal and provincial governments involved in the planning and management of ADB projects.

He noted that a similar approach was conducted in Indonesia, and results were seen within 10 years’ time.

“And that takes a real investment in capacity development. We need to invest in capacity development,” said Mr. Bolt. “It takes time and effort.”

“This is not just about building 300 kilometers of roads. It’s also about doing it with line agencies, working with municipalities. And then they’ll learn and they’ll take ownership of the plans’ implementation, and accountability,” said Mr. Bolt.

Local government capacity is more relevant now that the government is planning to shift to a federal structure, which would put more revenue allotments to local units, he said.

“If you gonna push more budget down, you should have capacity for these things,” Mr. Bolt said while noting that some LGUs might struggle in implementing their projects.

He said that cross-municipality or cross-provincial projects are the most underutilized in local government’s allotments.

‘WITH OR WITHOUT FEDERALISM’
The ADB is pushing for municipalities to work together on large-scale projects, instead of having just the national government initiate them.

“Our view, this local government development is needed with or without Federalism, with or without the Bangsamoro Basic Law. This is really needed,” he said.

However, for that strategy to work effectively, continuity is needed. Mr. Bolt cited the LGU’s three-year political cycle as a risk, as a change in leadership may interrupt the implementation of a project.

Mr. Balbosa on the other hand said that it is a “problem that can be mitigated.”

This is because close focus on government institutions meant working with the planners and project officers who, at the end of the day, are relied on by the chief executives.

Moreover, the ADB said it would let Mindanao itself find out its development opportunities to boost inbound investments, instead of the other way around.

“What’s important is to lay the framework for investments to come in. It’s how you build that enabling investment to come in. We don’t want to say, that place is poultry, that place is fish. Let the players and entrepreneurs decide that. But what they would like to know is if I go to that area, what are the rules for my engagement,” said Mr. Balbosa.

However, the Manila-based bank said that it remains focused on assisting in the establishment of road networks, as a lack of infrastructure still is a constraint in attracting investments into Mindanao.

Building roads creates a ripple effect, he said.

“When we build roads, one thing that usually comes next is power,” Mr. Bolt said.

The ADB has lined up seven projects specifically for Mindanao that form part of the 25 projects identified in its 2018-2020 Philippines: Country Operations Business Plan.

For 2018, these include the $110-million Davao Public Transport Modernization Project; $100-million Regional Development Project, Phase 1 — South Central Mindanao; the Empowering Bangsamoro Communities through Adult Literacy and Productivity Enhancement Programs co-financed at $3 million; and, the Marawi Recovery and Reconstruction Assistance co-financed at $5 million.

For 2020, the plan involves the $300-million Improving Growth Corridors in Mindanao Road Sector Project, Phase 2; the $160-million Mindanao River Basin Flood Control Project; and, the $200-million Regional Development Project, Phase 2 — Northern Mindanao.

SKILL DEFICIT
However, the World Bank said that even if regional connectivity in Mindanao were established that would open up opportunities for the region’s industries, it would still need to address its skills gap.

“The really critical thing for developing other industries is really skills. There’s an enormous skill deficit in Mindanao because the education system it is not achieving the same outcome as the national education system,” said Ms. Warwick.

She said that bridging the gap calls for improving education systems in Mindanao, as the region has the highest dropout rate in the country due to a lack of quality teachers as well as financial and physical access to schools.

According to its website, the World Bank has five active projects specifically for Mindanao. These include the three Multi-donor Facility – PH Mindanao Reconstruction & Development cumulatively worth $19.31 million, the $663.9-million Philippines National Community Driven Development Program, and the $664.59-million Philippine Rural Development Project.

Moreover, given Mindanao’s development opportunities, the ADB, in a Country Partnership Strategy Validation report, recommended that it establish a local presence in the region to deepen its interaction with local authorities there.

“The reason for that recommendation is to be there, to work with them, and the response should be real time,” said Mr. Balbosa.

“The devil is really in the details,” he added.

ADB officials said that close interaction with local governments — which they said are usually ran by rivaling clans — should contribute to the peace process in Mindanao.

“So the more we can build up effective government services, effective delivery services, facilitate the growth, I think that makes a huge contribution to the peace side of things,” said Mr. Bolt.

The World Bank said that it has seen this community-driven development approach to be “extremely successful and very popular” based on its Mindanao Trust Fund (MTF).

The MTF brings local institutions to work with the Bangsamoro Development Agency (BDA), the development arm of the Moro Islamic Liberation Front, to deliver their own programs.

“This kind of process itself helps a community build peace, working together for the benefit of the community as a whole. These are the kind of communities we see that contribute very much to peacebuilding, making those decisions themselves, working together,” said World Bank’s Ms. Warwick.

As of September 2016, half a million people in 225 villages have benefited from 379 completed sub-projects under the MTF, World Bank data show.

Still, those efforts should be parallel with the government’s push for the peace process.

“This is very critical. Without peace, it will be extremely difficult, if not impossible for Mindanao to reach its potential. So we not only encourage the government, but also the Congress to really focus on passing the Bangsamoro Basic Law, and moving the process forward and then providing support in the peace agreements to really settle many of those issues to start the normalization process,” said Ms. Warwick.