Breaking the Mindanao economy’s glass ceiling

In recent trips to Japan and other Asian countries I joined as part of the Davao City Chamber of Commerce trade missions, one thing struck me very deeply: the high interest of big and small companies in the Mindanao economy.

They often ask about the numbers we present and often reflect on the potentials as it continues to grow. Why not?

After all, an average 7% growth over the last three years, beating their own, and the Philippines’ own growth rates, and the fact that the President hails from this island leads them to be naturally curious about its potentials.

This new curiosity challenges their own perceptions of Mindanao as a promising but dangerous place.

Truthfully, apart from perception, poor infrastructure has hampered connectivity and created a disincentive to produce more for other markets such as Luzon and the Visayas. Time was when air connections to Manila and Cebu were few, and long distance telephone calls were expensive and difficult. Likewise, wonderful tourist destinations have been largely undiscovered except in recent years.

This has hobbled its potential, and allowed the knowledgeable yet unscrupulous to capitalize on its benefits while leaving it with a pittance.

In the last two decades, economic growth has largely been concentrated in Luzon, particularly the areas surrounding Metro Manila. This accounts for 60% of our total GDP. Yet the fertile question often asked is: How much was made from Mindanao’s labor and resources, yet merely transacted and receipted in Metro Manila? If these transactions were consummated bdirectly, would the numbers be different? That’s for another column.

Thus, Mindanao’s economy has become a poor cousin of its northern relative. It historically constitutes only about 20% of our country’s GDP, and almost half of its residents are considered poor. Yet it supplies 40% of our country’s food requirements, and can produce more (and employ more to lift more out of poverty) if only logistics costs to northern neighbors were lower.

This is a big part of what “untapped potential” means.

This perception and poor infrastructure and connectivity has been the Mindanao economy’s glass ceiling, preventing it from achieving its potential and promise.

Nonetheless, the hope for this glass ceiling to break comes with several developments.

The international business community is taking notice, what with Asian and European business delegations arriving in Mindanao this week to meet with local counterparts.

This is perhaps spurred by by improved infrastructure and connectivity over the last three years has seen Mindanao fuse more strongly with the Visayas via additional flights to new cities, and the world, with direct flights now to Davao from several major cities like Manado, Hong Kong, Singapore,

Jinjiang, Doha, and possibly, Taiwan and Japan.

Moving forward, as government ramps up infrastructure spending and sees the implementation of several “Build, Build, Build” projects, it will now be on us to take advantage of these opportunities.

A key enabler to unlock this potential further is a more robust Information Communications and Technology sector in Mindanao, that will help the rest of the economy harness the opportunities for Innovation in Industry 4.0. As they gather in Davao for the annual Liveilhood exchange (Livex), it is hoped that they can create important strategies that build synergies with other industries, creating markets for their services, while allowing their clients to engage technology and expand as well.

Infrastructure and technology based innovation are what our industries need to thrive in a complex and competitive global environment.

As entrepreneurs and business organizations, our response is to take advantage of these opportunities and prepare for the entry of investment. Only when partnerships are engaged will the full benefit of the infrastructure and technology create inclusive growth.

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