Economic gains from ending martial law in ARMM to take time

MANILA, Philippines — While ending military rule in Mindanao will have an immediate effect on economic growth in the region, it will take a longer time for its effects on overall national growth to be realized,” said London-based Capital Economics over the weekend. 

In a research brief titled “Trade war disruption, peace hopes grow in Mindanao,” the macroeconomy research firm said this is because the contribution of the Autonomous Region in Muslim Mindanao (ARMM) to the country’s gross domestic product (GDP) remains paltry. 

“Improved security in Mindanao, the second biggest island in the Philippines by area, could lead to big economic gains for the region itself but will not have much impact on overall growth in the country,” said Capital Economics. 

“Economic impact for the Philippines as a whole would be small. The ARMM accounts for just 0.75 percent of the country’s GDP and has grown by an average of less than three percent per year over the past decade,” it added. 

The firm noted that even if growth in the ARMM were to average at 10 percent over the next 10 years, it will only boost Philippine GDP growth by less than 0.1 percentage points a year. 

ARMM, where much of the fighting was centered, is the poorest region in the country where the per capita GDP is just 20 percent of the national average. 

Decades of armed conflict in the region has scared away investors and tourists, weighing on economic growth. 

Over the past decade, ARMM has been the second slowest-growing region in the Philippines in part because of its strong dependence on agriculture that gives lower returns compared with other economic subsectors. 

Capital Economics noted that nine in 10 jobs in the region are currently in the agriculture sector. 

“A lasting peace should provide a big economic boost. A safer environment could lead to the emergence of a manufacturing sector and a viable tourism industry, providing higher-paying jobs,” said the firm. 

“There is also the benefit of reduced security costs. This could allow funds to be diverted to more productive uses, such as infrastructure,” it added. 

Defense Secretary Delfin Lorenzana last week recommended to President Duterte the lifting of martial law in Mindanao which has been in place since 2017 to subdue the Maute terrorists.  

He expressed confidence that lifting military rule in the region will ensure the return of foreign investors.