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The Southern Mindanao economy is surging




John Tria

John Tria

GENERAL SANTOS CITY — Recent data released by the Philippine Statistics authority show that two Mindanao regions have shown successive annual growth that is higher than the national average. Both the South Cotabato Sarangani General Santos (Socsargen) and Davao regions reported growth figures higher than the nation’s GDP at 6.9% and 8.6%, respectively.

Being well above the nation’s 6% growth over a three year period already shows a potential that has investors interested. The other numbers are equally impressive: a combined population of almost 10 million, with unemployment at about 3.9% for Socsargen and 4% for Davao, lower than the country’s 5.3%.

Historical data will show that these two regions have sustained higher growth than the country’s. If this trend continues, its future growth may no longer depend on what takes place in the nation’s capital. Even admitting a drop in growth from 2017, they performed better than Metro Manila’s, that shrunk to 4.9%. This indicates a robust growing economy that has weathered the political noise.

The sense of growth is palpable. General Santos and Davao airports have seen increased flight frequencies since 2015, indicating a high level of tourists visiting the two regions. New hotels and eating establishments have continued to sprout to meet this demand, and their festivals now occupy a place in the country’s cultural calendar.

Observers note that both their anchor cities are led by relatively young mayors in the persons of Ronnel Rivera of General Santos and Sara Duterte of Davao. Their youth and experience have enabled them to harness talent and maximize opportunities.

Once forgotten as backwaters, these two regions now represent a growth corridor that provide opportunities for residents and migrants.

Three things can sustain this growth further: connectivity and logistics improvements allowing their products to be cheaply shipped out, infrastructure and higher agriculture growth that can keep food prices and the cost of living low and consumption high.

The Davao International Airport has taken in more direct international flights from China, Hong Kong, and recently Qatar. With the announcement of a Manado-Davao-Manila flight possibly taking place, the potentials of this two regions may be boosted by this new connectivity.

New and wider road networks between Davao-Tagum and General Santos will allow more to bring their goods to market, and ships from all over the world  converge in various ports in these two regions.

Yet a vital sector that did not grow as fast and as large as it should was agriculture and forestry. While some economists argue that this is due to the shift of many workers to the growing construction industry, creating a robust agriculture sector is vital to sustaining inclusive growth, keeping the cost of living low and labor costs competitive, and achieving the gains of peace efforts.

With agriculture performing below target in recent years at around 1%, the long-term goal of 3-4% growth for the next five years will be necessary to sustain affordable food supply and stable farmer incomes will need more effort from the agriculture bureaucracy, and cooperation, on our part. Strong agriculture is the bedrock of inclusive growth. We hope that recent reforms will be implemented fully to achieve this.

A bigger threat looms on the horizon. Based on economic reports for the first half of 2019, some of our ASEAN neighbors are already reporting lower growth, and cutting growth forecasts resulting from the slowdowns emanating from the US-China trade war that are forcing many Chinese companies to reconsider their growth options. This is a headwind that will force Asian economies to be a bit more conservative.

This global economic slowdown will affect all regions. We hope that with a strong base of consumers, there will be enough domestic demand to keep our industries humming,  unemployment low, and investment options in these two regions attractive to overcome these challenges.

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