ECONOMIC managers said Mindanao’s government-funded projects are selected based on technical and economic criteria, while Davao business leaders pressed the government on whether its large infrastructure allocations are translating into lower logistics and operating costs for businesses and consumers.
The contrasting concerns surfaced during the Philippine Economic Briefing (PEB) 2026 Strategic Investment Priority Plan (SIPP) Roadshow – Mindanao Leg: “Make Future Industries Happen,” held Monday, August 24, at Dusit Thani Davao in Lanang, Davao City.
Department of Budget and Management Secretary Kim Robert C. de Leon said the allocation and release of government funds for Mindanao projects are based on feasibility, implementation readiness, documentation, and alignment with development priorities, rather than political considerations.
“It’s not about playing politics because these projects are actually products of extensive feasibility studies,” de Leon said.
He said DBM releases are based on the documentation and representations submitted by implementing agencies.
“As far as we are concerned, everything has been made available,” de Leon said, while noting that the actual implementation of projects is the responsibility of the respective agencies.
De Leon also said Mindanao recorded the highest growth in budget allocation outside the National Capital Region when compared with the rest of Luzon and the Visayas.
He said project evaluation considers implementation readiness, the need for the project, and its alignment with the government’s development agenda.
Business sector questions cost impact
While the government defended the basis for allocating funds, John Y. Gaisano Jr., chief executive officer of JHG Trading Inc. and JS Gaisano Inc., raised concerns over the cost pressures faced by businesses in Davao.
Gaisano, a prominent business leader in the country, questioned why Davao continues to record high inflation despite what he described as lower base costs for some commodities compared with Metro Manila.
He also pointed to logistics and supply-chain costs as factors that businesses continue to contend with.
“Why in the world would the inflation rate in Davao Region be higher?” Gaisano said, questioning whether the regional inflation measurement accurately reflects the cost structure experienced by local consumers and businesses.
He also raised the issue of transportation costs, noting that goods shipped from China to Davao could, in some cases, cost less to transport than goods shipped from Manila to Davao.
His remarks shifted the discussion from the size of government allocations to the cost of moving goods and operating businesses in Mindanao.
Gaisano also questioned the use of regional inflation figures in wage-setting discussions, noting that higher inflation can affect businesses’ labor costs, particularly micro and small enterprises.
He said businesses need government support as they deal with rising operating expenses.
Inflation measurement explained
Department of Economy, Planning and Development Undersecretary Rosemarie G. Edillon explained that the Consumer Price Index (CPI) is based on a basket of goods and services specific to each region and also accounts for urban and rural areas.
She said inflation measures the year-on-year change in prices rather than the absolute price level.
“So when we say it’s 8 to 9%, it’s really with respect to the period, the same period last year,” Edillon said.
Edillon acknowledged that some items included in the CPI basket may not be relevant to every household.
She cited personal transport, including fuel, as one of the major drivers of inflation, along with tobacco and alcoholic beverages.
She said the regional CPI basket is designed to capture the consumption patterns used in measuring inflation, even though individual consumers may have different spending patterns.
Wage-setting not based solely on inflation
Edillon also addressed concerns over the impact of inflation on wages.
She said inflation is only one of several factors considered in wage-setting and emphasized the role of the tripartite system involving government, labor and employers.
“Inflation is just one of them, but it’s one of 10,” Edillon said.
She urged business groups to participate in public consultations, public hearings and discussions through their respective Regional Development Councils and regional Tripartite Industrial Peace Councils.
Edillon also identified productivity as another consideration in wage-setting.
She said higher productivity can allow businesses to absorb higher wages without creating additional inflationary pressure.
According to Edillon, some productivity improvements can come from individual businesses, while others require government investment in infrastructure and public systems.
She cited the modernization of ports and airports and improvements in transportation as examples of government interventions that can improve productivity and affect business costs.
“Modernizing the port, the airport, improving the transport ... has a positive impact on the bottom line of the business sector,” Edillon said.
Infrastructure and development funds
The discussion also covered the government’s broader infrastructure commitments in Mindanao.
Mindanao has been allocated more than ₱1.029 trillion under the 2026 National Expenditure Program, while the island has 76 infrastructure flagship projects with a combined target investment of about ₱2.4 trillion.
The infrastructure pipeline includes projects intended to improve transportation and connectivity across the island, including the Mindanao Railway Project, the Davao Public Transport Modernization Project and the Samal Island-Davao City Connector Bridge.
The government has said these projects are part of its broader effort to improve connectivity, transportation and economic activity across Mindanao.
During the briefing, however, de Leon distinguished between the release of funds and the actual implementation of projects.
He said DBM can provide information on the funds it has processed, while the implementing agencies are responsible for project execution.
“What I cannot answer at this point is in terms of implementation because that varies,” de Leon said. “That will have to be answered by the respective agencies because we can only provide details on what we have processed.”
Development financing
The Department of Finance also discussed its role in projects financed through development partners, including multilateral and bilateral institutions.
A finance official said the government continues to conduct oversight of projects funded through development partners and holds coordination meetings with financing institutions and implementing agencies.
These meetings are used to monitor project updates, identify bottlenecks and determine issues that need to be addressed during implementation.
The official said the Department of Finance does not determine project financing based on the region or locality where the project is located.
The agency instead evaluates proposals based on their projected economic benefits and gains.
“As long as the proposing agency has been able to present the economic benefits and economic gains towards this project for this financing, we actually do process it,” the official said.
Fuel subsidies continue
De Leon also said the government continues to implement targeted fuel subsidies amid elevated oil prices.
He said President Ferdinand Marcos Jr., through the Cabinet Committee, had decided to continue the subsidies, including assistance for households and groups that consume significant amounts of fuel.
“We’re still continuing implementing fuel discounts,” de Leon said.
The measure forms part of the government’s response to higher fuel costs and their potential effects on transportation and other operating expenses.
Business cost remains a key measure
The discussion in Davao placed two aspects of Mindanao’s economic development alongside each other: the government’s allocation and financing of large infrastructure projects, and the private sector’s current operating costs.
For economic managers, the basis for government spending remains project feasibility, economic benefits, implementation readiness and alignment with development priorities.
For businesses, the immediate impact is reflected in expenses for transportation, fuel, power, food, wages and other inputs.
The government’s infrastructure program is expected to address some of these structural costs through improved ports, airports, roads and transportation systems. However, de Leon said the implementation of individual projects remains with the agencies responsible for carrying them out.
The PEB in Davao brought together national economic managers and the Mindanao business community as the government promotes the region under its 2026 Strategic Investment Priority Plan.
The discussion highlighted the scale of public investment being directed toward Mindanao while also putting the region’s existing cost structure at the center of the business sector’s concerns.
Davao Region maintains trillion-peso economy
The Davao Region’s economy grew 5.1% in 202, surpassing the Philippines’ 4.4% GDP growth, as its Gross Regional Domestic Product (GRDP) reached ₱1.14 trillion for the third consecutive year above the trillion-peso mark. Davao City also expanded 7.9% in 2024, with its economy rising to ₱574.72 billion from ₱532.52 billion in 2023, according to the Philippine Statistics Authority. Meanwhile, nationwide investment approvals reached ₱1.917 trillion in 2025, while goods exports rose 15.2% to a record $84.5 billion. The Philippines also recorded a 63.2% national government debt-to-GDP ratio and was recently classified by the World Bank as an upper-middle-income economy. DEF
