A Muslim woman enjoys shopping at a newly-opened department store in Cotabato City in Mindanao.
COTABATO, Philippines -- After decades as a hotbed of violent conflict, the island of Mindanao in the southern Philippines has recently emerged as a magnet for foreign investments amid the ongoing peace process between local Muslims and the government in Manila.
With a wealth of natural resources, including vast petroleum and gas deposits, foreign companies are seeking to tap into potentially huge infrastructure and consumer demands on the island.
Further improvements in the island's safety situation can accelerate the pace of development. In turn, local business leaders hope that greater investment and the jobs it creates will have a reciprocal effect on the peace process.
Up until a few years ago, the city of Cotabato in western Mindanao regularly fell victim to terrorist bomb attacks. The city of roughly 300,000 inhabitants became an easy target related to its close proximity to the headquarters of the Moro Islamic Liberation Front armed militia group.
Other retailers, including major supermarket chain operator Puregold Price Club, are set to open their shops in the near future. Puregold is involved in a business partnership with Japanese convenience store operator Lawson.
Muslims, having inhabited the island for centuries, started rebelling against an influx of Christian settlers in the 1970s. Conflicts ensuing over the 40 years since have reportedly claimed more than 60,000 lives.
In 2012, however, the government and the MILF laid down their arms after signing a framework agreement on the peace process. One of the key clauses in the agreement is the abolition of the Autonomous Region in Muslim Mindanao and its replacement in 2016 with an autonomous government with greater authority for the proposed Bangsamoro Autonomous Region.
Centro Department Store opened its first Davao outlet in Cotabato in September.
For a long time, vast swathes of the ARMM and surrounding areas had been rife with conflict, ensuring few people considered them investment targets. But with the peace process in place and the improved safety situation, foreign companies are eyeing growth opportunity and the potential for development in the resource-rich area.
Earlier this year, the Regional Board of Investments in the ARMM approved an investment worth 3.7 billion pesos ($80.3 million) by Unifrutti, fruit multinational well-known for Chiquita bananas.
Investments in the region will likely total 7 billion pesos this year, a near 300% increase on the level before the peace deal was struck.
In the neighboring province of Bukidnon, Malaysia-based Felda Global Ventures Holdings Berhad, the world's largest palm oil producer, is intent on operating a palm oil plantation. Now is the time for investment, said Danda Juanday, President of Metro Cotabato Chamber of Commerce and Industry Foundation. New investment will create jobs and help cement peace, he added.
As such, the local business organization is seeking to lure foreign investments. It is currently negotiating with a Malaysian investor over several business deals, including the production of Islamic Halal food, he said.
After decades of strife, Mindanao is finally seeing a flow of investment and development projects. This trend is likely to gather further momentum if the government and the MILF can coordinate the transition to peace seamlessly and the autonomous regional government is formed as planned.
Chinese companies are also seeking to make investments in natural resources and power projects on the island, said Ishak Mastura, chairman of the Regional Board of Investments in the ARMM.
Meanwhile, only a small number Japanese companies have begun making inroads into Mindanao, as decisions over such investments remain complicated. "Japan can offer assistance in the form of road construction, if such activities can benefit local communities through job creation," said Naoyuki Ochiai, the head of Japan International Cooperation Agency's office in Cotabato, a long-time supporter of the peace process.
Nevertheless, deliberations in Manila on the Bangsamoro Basic Law have been slow and drawn-out. The law stipulates the conditions for the establishment of the autonomous government. Any drastic changes to the law will lead to fears of a return to armed conflict.
It now becomes imperative for the Philippines to make a success of this conflict-to-economic growth model and add fuel to Mindanao's economic momentum. By emerging from decades of conflict to become a hotbed of foreign investment, Mindanao could act as an example to neighboring countries struggling with internal conflicts.
http://asia.nikkei.com/Politics-Economy/Economy/From-conflict-zone-to-growth-market
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