AT the end of 2020, the Philippines posted an economic growth of -9.5 percent. Hence, it is no surprise that the economy of Mindanao has also contracted amid the Covid-19 pandemic.
However, during the virtual Wednesdays Media Forum on July 7, Mindanao Development Authority Assistant Secretary Romeo M. Montenegro said Mindanao’s economy as a whole ended on a better note compared to national numbers.
Data from the Philippine Statistics Authority showed that while the Philippine economy suffered a decline of 9.5 percent, Mindanao posted a decline of 5.5 percent. However, this is still the lowest gross regional domestic product (GRDP) of Mindanao since 2010.
Davao Region posted a GRDP of -7.6 percent making it the hardest-hit region in Mindanao, economically.
“Due to the fact that majority of Davao’s economic makeup is in the services sector. That definitely takes into account physical interaction and mobility of people, which have been affected by the pandemic,” Montenegro said.
In Davao City alone, one can observably see the closure of several businesses in the services sector, especially restaurants and hotels. Notably, major hotels in the city also closed, namely Marco Polo Davao Hotel, Apo View, and Grand Regal Hotel.
However, he said data shows that other regions posted lower contractions “but nonetheless mirror the overall economic situation of Mindanao.” Just behind Davao Region is Caraga which posted a GRDP of -7.2 percent. It is followed by Zamboanga Peninsula and Northern Mindanao, which both posted -5.2 percent. Soccsksargen posted a GRDP of -4.3 percent and the Bangsamoro Autonomous Region of Muslim Mindanao (Barmm) posted a -1.9 growth.
In terms of sectors, the industries sector in Mindanao posted growth of -7.2 percent while the services sector posted a growth of -7.6 percent.
Davao Region posted the highest contraction in the industry sector in Mindanao at 14.9 percent, followed by Caraga (-13.8 percent), Barmm (-3.9 percent), Zamboanga Peninsula (-2.1 percent), Northern Mindanao (-1.9 percent), and Soccsksargen (-1.3 percent).
For the services sector, Northern Mindanao posted the highest contraction at 9 percent. It is followed by Soccsksargen (-8.9 percent), Zamboanga Peninsula (-8.4 percent), Davao Region (-6.7 percent), Caraga (-5.4 percent), and Barmm (-4.6 percent).
Despite the contraction in the services and industry sector, the agriculture sector in Mindanao recorded a positive growth of 1.5 percent in 2020.
"Agriculture had provided us a glimmer of hope in terms of our economic performance in Mindanao. All the rest of the regions in Mindanao has posted a positive growth in terms of GVA (gross value added) in the agriculture sector," Montenegro said.
Caraga posted the highest growth at 3.9 percent. It is followed by Barmm (2.7 percent), Soccsksargen (1.5 percent), Northern Mindanao (1.5 percent) and Davao Region (1.2 percent).
Montenegro said amind the pandemic, the agriculture sector continued to produce to meet the needs of both the foreign and domestic markets.
"Mindanao is a major producer of agricultural products that are not just domestically oriented but also export bound. At the height of lockdown last year, Mindanao continued to produce needed commodities for export destinations like Europe, Middle East, and China," Montenegro said.
He said despite the lockdowns, people will continue to buy food, like bananas, pineapples, tuna, and sardines, among others.
"They still need to eat and consume commodities of Mindanao," Montenegro said.
2020 power situation
Towards the end of 2020, Montenegro said power demand in Mindanao has begun to return to pre-pandemic levels.
Prior to the pandemic, Mindanao's daily power demand was averaging around 1,700 to 1800 megawatts (MW).
That demand dropped to an average of 1,300 MW to 1,400 MW when strict quarantine measures were implemented at the start of the pandemic from March to July 2020.
"Heavy load users cutting down in operations resulted in a cutback in terms of demand for power. That entire period has resulted in a reduction of up to 20 percent of energy demand," Montenegro said.
But when more businesses were allowed to operate following the easing of movement restrictions, energy demand also slowly returned to pre-pandemic levels.
"When you have an uptick in demand in industries, [it] indicates something along the areas of economic activities because everything that is being produced is using electricity," Montenegro said, adding that the steady growth in demand for energy towards the end of the year was an indication of the "resurgence of economic activities."
Montenegro noted that amid the pandemic, Mindanao's energy demand has also increased.
He said on July 5, 2021, the energy demand of Mindanao peaked at 1,866 MW, which is an increase of 153 MW from 1,713 MW on July 6, 2020.
He said this validates Minda and DOE's projection that every year, Mindanao’s demand for electricity is increasing by around 150 MW to 200 MW.
"Today we are talking about 800 MW to 1000 MW excess, that was true two years ago. By next year it may reduce to 600 MW to 650 MW because of demand that is kicking in every year," Montenegro said.
He warned that Mindanao could see another power crisis in 2027 when "the demand and supply in Mindanao will meet again."
"This is the right signal for the power sector, particularly those that are into the power generation business, to look at when is the best time to start applying for power projects," Montenegro said.
2021 prospects
Mindanao's primary growth drivers are wholesale and retail, information technology-business process management, agribusiness, construction, transport and logistics, and manufacturing. However, of all these, Montenegro said they are banking on agriculture to truly help drive the economy of Mindanao.
"Our agriculture continues to be our rallying point in terms of demonstrating positive growth," Montenegro said.
He added that Minda has lined up several programs to help boost the agricultural sector on the island.
"Many activities of Minda generally relate to agriculture, particularly moving our products up the value chain and looking at the viability of supporting value-adding and processing so that it can penetrate bigger market destinations," Montenegro said.
He said the agency is also keen on consolidating and integrating the agricultural supply chain in Mindanao since it is quite "fragmented."
"We would be able to achieve economies of scale and a rate of output and volume of production that would warrant the investment of major post-harvest facilities and other infrastructure to make agriculture productivity competitive," Montenegro said.
One of the activities they are doing is the consolidation of vegetable productions in the vegetable-growing municipalities of Bukidnon. Minda has also been working with the Department of Agriculture on a project to use drones to map and geotag vegetable-producing areas in Bukidnon.
They are also encouraging agribusiness to invest in the development of hybrid rice, organic rice and organic bananas.
"Organic banana is something that has not yet been pursued by banana producers in Mindanao. Mindanao bananas are losing against bananas from Ecuador because they have organic bananas being made available. Mindanao being a major player in banana production must take this into account," Montenegro said.
With the expansion of food production in Mindanao, Montenegro said food manufacturers will see the viability of putting up plants here.
Montenegro said the resumption of construction activities, especially in the real estate sector, is also seen to help drive Mindanao's economy in 2021.
He pointed out that they have observed the aggressive promotion of real estate projects on social media with the easing of quarantine rules.
"The resumption of construction is a better outlook in terms of economic recovery. This is the sector that would be able to create jobs. We are seeing more construction works happening again. We note this in real estate projects that were halted last year that have resumed," Montenegro said.
2021 factors
However, the economic growth of Mindanao is still heavily affected by the Covid-19 pandemic, especially with the implementation of quarantine restrictions.
“We need to consider that strict quarantines previously imposed entailed huge income losses and hardships, especially among the poor. The IATF Resolution No. 104 allows key businesses and services to operate, instead of imposing a blanket and prolonged community quarantine which could cost some P2.1 billion in wages daily,” Socioeconomic Planning Secretary Karl Kendrick Chua said in March 2021.
Montenegro said there is a need for the national government to recalibrate its strategy to strike a balance between economy and health.
Recently, the national government made a move to shift to implementing granular lockdowns instead of a community quarantine.
“We recognize the risks associated with the recent spike in Covid-19 (coronavirus disease 2019) cases but reverting back to a stricter and blanket community quarantine is no longer an option knowing how much it has cost the Filipino people in the past year. That is why a careful and calibrated approach is needed to address the sources of highest risks through localized quarantines and additional restrictions so that jobs or livelihoods will not be affected,” Chua said.
Montenegro said the vaccination roll-out against Covid-19 will also play a key role in the economic revival of Mindanao. He said more persons vaccinated will allow more consumers to go out safely and purchase essential goods they need.
"We are situated in a situation that is a lot better than we were last year especially with the vaccination roll-out," he said.
He added, "It is only through that we would be able to move with confidence in terms of going back to the normal and embracing the opening up of our economy."
As of August 8, 2021, based on the vaccination regional tracker of ABS-CBN News, which consolidated data from the Department of Health and National Task Force Against Covid-19, around 3.72 million doses of anti-Covid-19 vaccines have been administered in Mindanao. Of this number, around 1.87 million have been administered for the first dose, and while 1.85 million have been been given for the second dose.
Montenegro said another factor that could affect the growth of Mindanao is government spending. Under the P4.5 trillion budget of the national government, Mindanao will also have its fair share of infrastructure projects. These projects are seen to provide jobs for Mindanawons.
Being the start of the election year, Montenegro also expects an uptick in the local economy with the increased spending of local politicians running in the 2022 national and local elections.
"Overall the market sentiments and the economic opportunities to look at remains volatile in terms of whether or not there is going to be viability for any endeavors, given the limitation and constraints put forward or that have shifted up as a result of the pandemic," Montenegro said.
He added, "Our economic life in Mindanao is something that is a realization that we have to draw our strengths and revisit our strategies moving ahead in facing this situation as we set our sights to economic rebound.”