Moodys says MILF peace deal is credit positive, will entice more investors to Mindanao By: Maricel E. Burgonio, InterAksyon March 31, 2014 1:26 PM InterAksyon means BUSINESS MANILA - The Comprehensive Agreement on the Bangsamoro, which marked the end of several decades of rebellion by the Moro Islamic Liberation Front (MILF), is credit positive and would attract more investors to develop mining and agribusiness in Mindanao, Moody’s Investors Service said. “Not all Muslim separatist groups are happy with the arrangement, but the greater stability that it will bring will likely encourage investment in the region and provide scope for the development of more profitable industries, such as mining and agribusiness,” Christian de Guzman, Moodys vice president and senior analyst, said in a report. Moody’s last year assigned an investment grade status for Philippines with a positive outlook. The credit rating firm sees the countrys gross domestic product (GDP) getting support from the peace deal. Moody’s forecast growth of 6.5 percent for this year, at the lower end of the government’s target of up to 7.5 percent this year. “The peace deal supports the robust economic outlook for the Philippines, which already has one of the fastest growth rates in the Asia-Pacific region,” the debt watcher said. The Autonomous Region in Muslim Mindanao (ARMM) and Mindanao more broadly, are rich in natural resources. Mindanao’s mineral deposits – which include lead, zinc, iron, copper and gold – are valued by the government at $312 billion, providing plenty of scope for a pickup in economic activity. The island already supplies 35 percent of the country’s food output, but its rich arable lands and fishing grounds mean there’s potential to increase that further. Greater stability would also allow tourism to develop. In addition, Moody’s said the truce should facilitate greater investor interest across the several provinces in Mindanao. Currently, several foreign governments, including Canada, the UK and the US, have outstanding warnings and advisories restricting travel to Mindanao, and especially to the ARMM and surrounding areas, in light of the threat from “terrorist and insurgent activities.” The Comprehensive Agreement on the Bangsamoro will establish a self-governed entity on the southern island of Mindanao that would replace the existing Autonomous Region in Muslim Mindanao (ARMM). The pact also promises to boost growth and investment in what is one of the poorest – although resource-rich – parts of the country. The pact with the MILF covers security, revenue sharing, implementation of governmental powers and includes a road map for a smooth transition to the new arrangements. It aims to establish the Autonomous Government of Bangsamoro, a new political entity to govern the region, by the next general election in 2016. “Although many peace deals with Muslim separatists have fallen through over past decades, the latest agreement has a better chance of success owing to the more favorable terms it affords the Bangsamoro, including greater fiscal autonomy,” Moody’s said. The ARMM has fallen behind other regions in terms of human and economic development, and has not benefited from the Philippines’ robust growth of the past few years. Based on the latest report, the ARMM’s regional GDP grew 1.2 percent in real terms in 2012, versus 8.2 percent for Mindanao and 6.8 percent for the country as a whole. GDP per capita in the ARMM totaled only P27,800, or roughly $620, a fraction of the P68,700 or $1,530, recorded for Mindanao, or the P110,300 or $2,460, recorded for the country as a whole. National government spending in the ARMM is disproportionate to its contribution to the economy. Although the ARMM comprised only 0.9 percent of the country’s total output in 2012, it accounted for 2.1 percent of the national government’s budgeted expenses that year.
Posted on: Tue, 01 Apr 2014 10:58:13 +0000
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