Peace helps Mindanao attract investors
The recently approved framework for peace between the Philippine government and the Moro Islamic Liberation Front [MILF] has opened up a rare opportunity for peace in Mindanao in southern Philippines.
Signs of new investments from local and foreign sources are accelerating following the signing of the historic framework agreement in Bangsamoro. The accord is expected to end 40 years of conflict in the impoverished Mindanao.
Malaysia’s Felda Global Ventures, the world’s largest crude palm oil producer, is the first foreign investor to show interest in Mindanao after the government agreed on the historic peace deal. The deal may potentially open tracts of farm land. Mindanao has the most suitable land in the Philippines for oil palms, Sabri Ahmad, chief executive of cash-rich Felda Global said in an interview with Reuters news agency. Felda Global had a $3.1 billion listing earlier this year and had said it planned to use the funds to expand in Southeast Asia and Africa.
“We will go there for oil palms,” Ahmad told Reuters. “There is ample area for oil palms to meet strong local demand,” he added.
Japan, a vital partner during the draft process of the peace agreement, is offering assistance and investment offers to Mindanao.
Philippine President Benigno Aquino III said groups have already shown interest in investing and offering assistance to Mindanao with Japan at the front of the pack in terms of interested parties. Philippines Foreign Affairs Secretary Albert del Rosario also confirmed that Japan has agreed to back the development of the future Bangsamoro territory.
“[There is] their commitment to assisting with regards to really fleshing out the agreement and carrying out the steps necessary to achieving peace within what is now ARMM [Autonomous Region in Muslim Mindanao],” he said.
“They are also very committed to helping in terms of the development programs there,’’ del Rosario told reporters in Malacañang.
Japan’s role in the drafting of the framework agreement included hosting an unprecedented secret meeting between MILF Chairman Al Haj Murad Ebrahim and Aquino to expedite peace talks between the two groups. The framework agreement was quickly drafted and signed after their meeting.
Japan was also the only country that was part of both the International Monitoring Team and the International Contact Group, two key factions involved in the peace process. Del Rosario said Japan was “committed in a big way” to the talks between the government and secessionist group.
The Japan meeting was a critical point in the negotiations with the MILF, according to Aquino.
“I felt that was the turning point, where there was a direct meeting and levelling of expectations,” he told reporters.
He said Japan wants to continue participating in the International Contact Group and to help bring about peace in the region.
Ripple effects of peace accord
The prospect of peace in Mindanao also has increased confidence in the Philippines as a whole, evidenced by additional assistance to Metro Manila.
In addition to Mindanao development, del Rosario said the Japanese government would be assisting the Philippines build additional infrastructure, particularly light rail transit in the Metro Manila area and an airport in the island province of Bohol.
“A new Philippines is being presented and the Japanese are very much interested in upping their investment activities in the Philippines. And one area of possible investors, which we are pursuing with in an aggressive fashion are the SMEs [small and medium enterprises] – the Japanese SMEs,” del Rosario said.
“We also discussed official development assistance [ODA]. We discussed the political approaches to the strategic partnership — the strategic bilateral dialogue that will take place. In the area of ODA, we discussed certain projects such as those projects of infrastructure that would be supported by the Japanese government.’’
Other Japanese-related projects include an agribusiness program for Mindanao initiated by Japan and the Asian Development Bank [ADB].
The project aims to support thousands of small-scale land owners in the Mindanao region in order to develop agribusiness as a viable business option, thus promoting stability in the area with economic development.
“Despite having enormous potential for increasing household income from bananas, palm oil, coffee, rubber, fish and livestock, this region has the highest proportion of poor families in the Philippines,” said Neeraj Jain, ADB’s country director for the Philippines. “The Framework Agreement on Bangsamoro between the Government of the Philippines and the Moro Islamic Liberation Front is expected to usher in new opportunities for socioeconomic development in Mindanao.”
Many small-scale landowners lack the education and financial means needed to build sustainable agriculture related businesses. This scenario leads many to lease their land to private interest groups or move away.
The project is expected to help about 2,000 families and assist local governments with crucial rural infrastructure.
The project grants $2 million [USD] from the Japan Fund for Poverty Reduction, administered by ADB.
The fund is part of a larger $8.8 million [USD] project that includes assistance of $2 million [USD] from the Development Bank of the Philippines and Al-Amanah Islamic Investment Bank of the Philippines; $2 million [USD] from private enterprises; $1.8 million [USD] from the World Food Program; and $1 million [USD] from small-scale landholders in the form of equity and labor. The project will run for about three years, with expected completion in the first quarter of 2016.
Managing investments in Mindanao
Aquino said the inflow of investments and offers need to be managed in order to ensure that the incoming developments would not displace or otherwise negatively affect the people that the deal was intended to assist.
“There’s already a call, for instance, to come up with what they call an investment coordinator by several quarters at home and from foreign [parties],” he said. “There must be guidance for the investment flows to minimize disruptions that are negative to the society that you’re trying to assist.”
“There’s a potential that there will be many scrambling to develop whatever area. It would be too much like the Wild West. For instance, an area will be declared ready since it already has power and water. Everybody would try to get a piece of that property, and its value would rise. … Those whom they want to help might be displaced,” he said.
Other countries also have come up as interested parties to invest in the proposed Bangsamoro autonomous region, according to Aquino.
Norway, Switzerland and the European Union are apparently looking into increased investments in Mindanao, said Herminio Colom, secretary of the Presidential Communications Operations Office.
“The impression that we get from all sources is a lot of these countries will be assisting us not just to the same degree that they did before but after the signing, maybe this would be in an accelerated and increased level,” Aquino said.