Blots on the landscape

The government’s economic managers have downplayed the potential impact of fighting between government troops and a faction of the Moro National Liberation Front (MILF), which caused the closure of Zamboanga’s busy sea and air ports as well as many businesses. 

While the government’s economic managers claim the conflict had minimal or no impact on the economy, it has definitely set back efforts to draw investors to resource-rich Mindanao. It highlighted the difficulty of bringing progress to the island, mainly because of peace-and-order issues. Henry Schumacher, vice president for external affairs of the European Chamber of Commerce of the Philippines, called it correctly last week: While Mindanao has so much to offer, events like “the stupid fighting in Zamboanga is just throwing everything back,” Schumacher said. “Selling Mindanao to investors is so difficult now.”

Security concerns have long discouraged new investments in Mindanao, where one in every three people lives in poverty. A framework agreement signed last year between the Aquino administration and MILF was touted as a breakthrough to end decades of conflict in Mindanao, until a faction of the MNLF stormed Zamboanga early last month.

The scandal involving legislators’ pork barrel, the Priority Development Assistance Fund, is another issue blotting the performance of the economy.

Business leaders are keeping a keen eye on the latest government initiative against corruption – a major deterrent to the inflow of local and foreign investments. While implementing the rule of law can improve investor confidence, businesses have warned that government efforts to prosecute the accused should not lose steam. All this will come to naught unless the administration gets a quick and convincing guilty verdict on those who deserve to pay for their dastardly deeds.

But a quick resolution seems out of the question now. Ombudsman Conchita Carpio Morales has admitted that it may take some time before formal cases can be filed at the anti-graft court against those suspected of involvement in the scam.

Still, the bigger picture remains positive. Inflation and interest rates are low, foreign exchange inflows from overseas Filipino workers and investments in the business process outsourcing sector continue to protect the peso, government infrastructure spending is growing fast, and private investments, particularly in the property sector, are rising.

The critical issue for Mindanao remains the inflow of investments, particularly in much-needed infrastructure like power plants, factories and roads and bridges. “We all know that so much more investment has to flow into Mindanao in order to have inclusive growth,” Schumacher pointed out. “If you don’t have inclusive growth, then these people who are fighting today have nothing to lose and will just continue.”

For the rest of the country, all eyes will be on how the government deals with the ever-widening pork barrel scandal. Will the action be decisive or painstakingly slow?