PHILIPPINES: A landmark peace agreement ending decades of conflict in southern Philippines raises expectations of economic development in the resource-rich region

Record ID: 349606

  • Title: PHILIPPINES: A landmark peace agreement ending decades of conflict in southern Philippines raises expectations of economic development in the resource-rich region
  • Date: 14th October 2012
  • Summary: COTABATO CITY, PHILIPPINES (OCTOBER 11, 2012) (REUTERS) TRAFFIC ON MAIN ROAD BANNER THAT READS "WE SUPPORT THE GPH (GOV'T OF THE PHILIPPINES)-MILF FRAMEWORK AGREEMENT" HANGING ON WALL PEDESTRIANS AND TRAFFIC TRICYCLE PASSING IN FRONT OF SUPERMARKET PEDESTRIANS ON ROAD COTABATO CITY, PHILIPPINES (OCTOBER 11, 2012) (REUTERS) VARIOUS OF PROPERTY DEVELOPER ABDULKAHAR N
  • Embargoed: 29th October 2012 12:00
  • Keywords:
  • Location: Philippines
  • Country: Philippines
  • Topics: Crime,Conflict,Politics
  • Reuters ID: LVA5RTXUJVIGRSJ45SMNE7RKL42F
  • Story Text: The Philippines' strife-plagued southern Mindanao region may finally see peace following a historic deal agreed with insurgents this week.
    But prosperity for the the rugged, resource-rich southern region where a 40-year conflict that killed more than 120,000 people, may not follow easily.
    For businessmen in Cotabato City, a commercial hub in Mindanao that has suffered the brunt of fighting nearby, the peace agreement raises exciting prospects for the local economy.
    Abdul Kahar Nul is building an upscale hotel and a mall that will offer the first modern cinema in the city, on a one-hectare property just off the main highway.
    He already operates one hotel which was fully booked the past week, with diplomats and aid workers travelling to Mindanao for development projects.
    Nul says he can only see his clientele grow and his property projects boom, pending the success of the peace agreement.
    "We've been waiting for this opportunity for a long time. This is a big deal for us, that this agreement is signed, especially for me. I have a lot of plans to expand my business," Nul said.
    President Benigno Aquino plans to transform the Muslim-majority areas on Mindanao, the country's third-biggest island, into a self-governing political entity known as Bangsamoro by the end of his term in 2016, replacing the existing Autonomous Region of Muslim Mindanao (ARMM) in the impoverished region.
    Mindanao has plenty of potential. Its estimated $312 billion in mineral reserves account for about two-fifths of total in the Philippines, and includes gold, copper, nickel, iron, chromite and manganese.
    Companies with operations in other parts of Mindanao such as Del Monte Pacific Limited, Perth-based miner RED 5 Ltd and Canada's TVI Pacific Inc say they are considering expanding after the peace deal. The world's largest crude palm oil producer, Malaysia's Felda Global has expressed interest in investing.
    The Asian Development Bank's country director for the Philippines, Neeraj Jain, said the peace agreement is a game-changer, and could further boost investor confidence in the Philippines, at a time when it is already expecting an investment rating upgrade.
    "So the expectation that that area of Mindanao, a very large and resource-rich area of Mindanao, will finally see peace and political stability -- by itself will generate expectations, will generate optimism, and will generate investor interest," Jain said.
    In the short term, Jain said, stability in Mindanao could pave the way for infrastructure projects and financial institutions like micro-credit lending that would stimulate economic activity.
    Development lenders and donors are likely to be the first to put money into the area, funding upgrade of roads, bridges, schools and health services.
    Mindanao is also well placed for agricultural trade with Muslim countries in the region-- Malaysia, Indonesia and Brunei -- increasing prospects for economic integration within the Association of Southeast Asian Nation (ASEAN), he said.
    Farmers who have been caught in crossfire are anxious for their share of the peace dividends.
    Rice mill owners Ali Abdul Razak and Rakma Andal Saway, have been moving from one village to another, fleeing periodic fighting.
    Their mill, the fourth one they've built in recent years, still bears shell marks from heavy fighting last August, when soldiers repulsed attacks from a breakaway group of the MILF, the Bangsamoro Islamic Freedom Movement.
    The radical faction could stir trouble and capitalise on parties who would feel threatened by a peace deal, to acquire ammunition and money to boost their capacity for launching attacks, the International Crisis Group said.
    Both the government and the MILF are hoping to complete the finer points of the peace agreement by December and work on a new law that will set up a new political entity before President Benigno Aquino steps down from power in June 2016.
    Details on fiscal independence, local taxation and the laying down of arms of the MILF's guerrilla army have to be agreed.
    Analysts say investors would be looking at details of the new law before pumping in funds into Mindanao.
    "If there is an ambiguity in any policy or ambiguity in implementation arrangements -- that scares the investors. So they'll be looking for clarity in arrangements between the central government and the new political entity in collection powers, sharing of taxes, sharing of revenues," Jain said.
    The peace pact coincides with the Philippines' biggest investment boom since the 1997-98 Asian financial crisis, though experts caution that large investments could remain some years off as companies asses the potential for renewed violence, noting a failed 2008 agreement that was thrown out by the Supreme Court and resulting in rebel attacks and a military offensive that displaced 750,000 people.
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