Forget Myanmar, Mindanao is the final frontier

by Justin Calderon. Posted on July 21, 2013, Sunday

HEAVILY UNDERSCORED: Photo shows the Philippines' President Benigno Aquino III flanked by security guards after a forum. When the president delivers his mid-term State of the Nation Address on July 22, Mindanao, already a top priority of the administration's agenda, will likely be heavily underscored – both the challenges and the accomplishments. — Reuters photo

Myanmar has hosted so many conferences, forums and summits thus far in 2013 that it's starting to become nauseous from its newfound popularity.

About twelve large-scale events have set stages over the past months, trumpeting the land from rostrums featuring prominent talking heads to outline – and often embellish – the world's 'last frontier market.'

But in the global business community's unbridled fascination with Myanmar, many have overlooked another story rapidly unfolding elsewhere in the region. Its about time Myanmar shares some of the limelight.

The Philippines' second largest island, Mindanao has been more successful at gaining notoriety for its decades-long Islamist insurgencies and the calamitous weather that occasionally crashes upon its shores that as a high-potential frontier market.

However, the island plays a crucial role in not only the Philippine economy, but also the global market; it is the source of eight out of 10 of the Philippines' agri-commodity exports, and the primary producer of coconuts, a pillar of the country's agricultural sector.

In times where food security policies are quickly climbing up the strategic agendas of governments across the world, Mindanao is a market that offers a sumptuous basin for capturing foodstuffs.

The time to gather Mindanao's grain with greater security may also be just on the horizon. The Philippine government and the Moro Islamic Liberation Front, or MILF, from Mindanao announced on July 13 that they have reached what they call a 'wealth-sharing' deal, marking an end to the decades-old conflict more likely. Government officials in the Philippines have backed the agreement, which awards a generous 75 per cent share of earnings from natural resources and metallic minerals for the island's Muslim minority.

The agreement in monumental in itself, but could also unleash a torrent of private investment to spur an economic boom on a island that has been long afflicted by chronic developmental issues more familiar to those of the dark ages. Mindanao is believed to hold beneath its surface a large chunk of the country's estimated US$840 billion in mineral wealth, including gold, copper and other mineral reserves.

In many ways, Mindanao and Myanmar seem to be driving down the same street, in the same car. They are regions that are just beginning to embark on encouraging inroads to address violence within their borders while shoring up better business sentiment.

They are replete with such an untapped chest of natural wealth – fertile land, rushing rivers for hydropower, precious metals – that the political, both local and national, innkeepers are as hungry for investment as foreigners are to ply business cards to meet them. Power is perennially short; access roads from farms to markets are practically non-existent.

But the wave of interest has been slower for Mindanao, which has experienced only a trickle of FDI compared to Myanmar, where inflows ballooned to over US$42 billion in June. The island has been hard-pressed to shake off its stigma as a basket case, too rowdy and too remote for any rational outside involvement. Even for Filipinos, Mindanao is at the end of the map. Very few Manila residents have ventured through Davao, Mindanao's largest city, and still fewer express any intention of going there.

As far as a frontier is concerned, however, Mindanao couldn't be any closer to the definition. One of the largest recent investments into the island was from Malaysia, pushing in US$575 million of investments in industry and agriculture, including car manufacturing and palm oil plantations. While only a drop in the bucket compared to Myanmar, Malaysia's commitments to Mindanao are an indication that intrigue has been sparked in foreign investors.

When President Benigno Aquino III delivers his mid-term State of the Nation Address on July 22, Mindanao, already a top priority of the administration's agenda, will likely be heavily underscored – both the challenges and the accomplishments.

Justin Calderon is a research analyst at www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asian and the Gulf Cooperation Council. The views expressed are his own.

 

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