The Philippines establishes the Bangsamoro Autonomous Region in Muslim Mindanao in order to create prosperity

The Autonomous Region in Muslim Mindanao (ARMM) has long been associated with insurrection, conflict and extremism. Although much of Mindanao has been integrated into the mainstream Philippine economy and political system, the ARMM maintains uneasy relations and resistance to central government authority, which has led to economic isolation and underdevelopment. According to the Philippines Statistics Authority, the region accounted for 0.7% of GDP in 2018. After ongoing negotiations between the government and rebel groups led by the Moro Islamic Liberation Front (MILF), President Rodrigo Duterte signed the Bangsamoro Organic Law (BOL) in July 2018, which effectively abolished the ARMM and replaced it with the Bangsamoro ARMM (BARMM). Ratified on January 25, 2019, the law seeks to address the demands of Muslim groups in the region, ensuring better representation, fiscal autonomy and greater control of natural resources.

From ARMM to BARMM

The ratification of the law followed a successful two-part local plebiscite held on January 21 and February 6, 2019. This resulted in a majority vote against the inclusion of all six municipalities of Lanao del Norte in the BARMM, while a majority voted for the inclusion of 63 barangays (wards) of North Cotabato. The BARMM also covers the provinces of Basilan (excluding Isabela City), Lanao del Sur, Sulu, Tawi-Tawi and Maguindanao, as well as Cotabato City. The Bangsamoro Transition Authority, an interim government, will stay in power for three years until the presidential elections scheduled for 2022.

Structure 

The new democratic government will be led by a regional leader – the chief minister – and two deputy chief ministers. The chief minister will preside over an 80-member Parliament made up of party (50%), district (40%) and sectoral representatives (10%), in addition to two reserved seats for “non-Moro indigenous peoples and settler communities”.

The BOL also gives sharia courts jurisdiction over cases exclusively involving Muslims in the region. The central government will, however, retain power over the military and the police, while the MILF troops are ordered to lay down their weapons.

The BARMM will receive an annual budget allocation of P60bn ($1.1bn) to P70bn ($1.3bn) from the central government, which will give the region greater autonomy. The BOL provides a range of opportunities for the BARMM to increase its budget, which is expected to help spur more infrastructure projects in the region.

Investment Opportunities

The newly created Regional Board of Investments approved its first project in February 2019: a P1.4bn ($26m) sand and gravel development led by Maguindanao-based JMI Sand and Gravel and Trucking Services Corporation.

The government is also looking to help fund the reconstruction of the war-torn city of Marawi by introducing Marawi bonds. Finance Secretary Carlos Dominguez III told international media in June 2019 that the bonds will be issued once the Bangon Marawi Comprehensive Rehabilitation and Recovery Programme moves to the next phase, which involves large-scale infrastructure development. In November 2018 the Philippines had received a total of P35.1bn ($652.9m) in pledges from a range of international sources to assist the reconstruction of Marawi, which was attacked by ISIS-affiliated combatants in 2017.

Foreign Investment 

The BARMM has already attracted attention from Saudi Arabia’s Jeddah Chamber of Commerce and Industry, which expressed a keen interest in investing in agriculture and other halal-related businesses in the Philippines including coffee, fish and carrageenan seaweed.

The Asian Development Bank (ADB) has also stepped up its assistance to Mindanao. Following a $380m loan in 2017 to the ARMM to improve 280 km of national road networks, the ADB is now working on strategies to help Mindanao develop infrastructure, capacity building for local governments, education and skills training, youth employment and disaster risk management.

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The Report: Philippines 2019

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