Peace dividends: Rich in marine resources and aquaculture, Mindanao is also developing its economic free zone offerings

Due to almost half a century of armed conflict between the national government and separatist Muslim groups, peace and order have remained a key roadblock for Mindanao’s development. Being the second-largest and southern-most major island in the Philippine archipelago, Mindanao has always offered great promise as the agricultural basket of the country. Ever since its founding in 1969, the Moro National Liberation Front (MNLF) has been the principal Islamic separatist group engaging in armed hostilities with the government through the early 1970s.

Enduring Conflict

In 1976 the MNLF and the Philippine government signed an agreement in Tripoli, Libya, which allowed for the eventual creation of the Autonomous Region of Muslim Mindanao (ARMM) in 1989, however, some hostilities continued with splinter groups. In 1996 strong political will from former President Fidel Ramos led to a Final Peace Agreement with the MNLF to end the Moro armed struggle in Mindanao. However, it was not until 2012 when peace talks between these violent splinter factions and the administration of President Benino Aquino III led to the final peace agreement. Signing and drafting of the Bangsamoro Basic Law (BBL) in 2014 created new autonomous region with enhanced autonomy and fiscal authority to replace the ARMM. The BBL faces slim chances of being enacted in Congress before the end of the current administration, while the Mamasapano clash between the Islamic militant groups and the Philippine National Army in early 2015 further eroded support for the peace process. As Cagayan de Oro City Mayor, Oscar Moreno, told OBG, “Peace is key for Mindanao’s development and poverty eradication efforts. Without peace, investment will not materialise in the island and even regions that are not part of the Bangsamoro will benefit from improved security while the stigma of Mindanao would be reversed.”

Since the 1996 peace agreement, the MNLF has launched two attacks on the national government. The latest attack took place on September 9, 2013 in Zamboanga City and resulted in a siege against the national government, which resulted in 120,000 displaced citizens, 23 casualties from the government, nine dead civilians and around 100 MNLF fighters killed. Despite the negative impact of the 21-day siege for Zamboanga’s peace and order, the event highlighted the strategic location of the peninsula as the Department of Trade and Industry reported that P50bn ($1.11bn) stopped circulating during the siege and shortages of supplies were felt across the region.


The city of Zamboanga is located in the southernmost tip of the Zamboanga peninsula, being bounded on the north by Zamboanga del Norte and Zamboanga del Sur; on the west by the Sulu Sea, on the east by the Moro Gulf and on the south by the Basilan Strait and Celebes Sea. The territorial jurisdiction of the city includes the Great and Little Santa Cruz Islands, Tictabon, Sacol, Manalipa and the Seven and Eleven Islands. Given its geographic position, the city has an even distribution of rainfall and lies outside of the typhoon belt, without any proximity to major fault lines or active volcanoes. Given its position as an education and commercial centre for the region and openness to Muslim communities, Zamboanga City has twice rejected inclusion in the ARRM and the city has instead become a destination for migrants from the neighbouring islands of Jolo and Basilan. The city is part of Region IX or the Zamboanga Peninsula, along with Zamboanga del Norte, Zamboanga del Sur, Zamboanga Sibugay and Isabela City in Basilan.

Zamboanga City is the Philippines’ third-largest city by land area, and the Zamboanga International Airport has direct connections to Manila, Cebu, Davao and Tawi Tawi via the country’s two major airlines, Cebu Pacific and Philippine Airlines. In addition to convenient air access, the city’s Integrated Bus Terminals cater to six bus lines and also host a large fleet of utility vans serving all points of Mindanao, and extending transport services as far as Visayas and Luzon through a roll-on roll-off system.

Whereas connectivity to Zamboanga is well equipped, the priority of the city government has been focused on strengthening security, with P500m ($11.1m) spent since 2013 to provide assets to police and law enforcement and establish of a world-class command centre that would serve as an emergency response hub, synchronising response from different agencies to natural or man-made calamities. There is also a strong army presence on the peninsula.


Whereas neighbouring General Santos City is known as the tuna capital of the Philippines, Zamboanga City is the undisputed sardine capital. The country’s largest concentration of sardines is found in the Zamboanga Peninsula, Sulu Sea and Basilan Strait and based on data of the Philippine Status; the Zamboanga peninsula produced 19.6m metric tonnes in fisheries production in 2013, according tor the Bureau of Agricultural Statistics (BAS).

Prior to 2011, the catch of sardines had been severely affected by overfishing and destructive fishing practices. Since 2011 the Industrial Group of Zamboanga City Incorporated and Sardines Canning Industries established a closed season for sardines for the period of December to March every year, coinciding with the spawning period of sardines. The results of the closed season was positive, as the BAS data show that sardine catch for both commercial and municipal fisheries in Zamboanga increased by 6.34% in 2012 to 156,143 metric tonnes compared with 146,836 metric tonnes in 2011. Given that 11 of the country’s 12 sardine canning plants are located in Zamboanga City concerns have been raised over the close to 35,000 fishing and cannery workers temporarily laid off during closed season, which has led fishing companies to shift to other species.

While the tuna is predominantly for export markets, sardines are largely for local consumption, therefore, there have been ongoing discussions to review the fishing practices framework for municipal fishing, as it creates stiff penalties for small fisher folk. Nevertheless, the sardines market is beginning to generate export volume, with many companies investing heavily in equipment and technology to adhere to international quality standards. The export potential is maximised by the fact Zamboanga is a natural docking point for vessels in its rich fishing grounds, having at least 19 seaports and wharves –over half of which are privately owned and managed.

In addition to sardines, Zamboanga peninsula is responsible for 70% of national seaweed production, with the eventual goal of developing a scientific method on how to improve the segment and attract value-added industries currently located in Cebu and Cavite. As Zamboanga City Mayor Beng Climaco told OBG, “Taking out the middle man would have a big impact in livelihoods of seaweed farmers, as they are currently subject to those that can aggregate their production and then export it to Cebu or Cavite for processing. If seaweed farmers were able to sell directly to processing factories, their income would improve significantly.” As a result, the city is engaged in trying to attract processing plants that would complete the entire value chain for seaweed.


The Zamboanga Ecozone is the only free-port in the Visayas and Mindanao, enabling it to operate as a separate Customs territory and providing significant tax and non-tax incentives for prospective locators. All other of the six existing freeport zones in the country are located in Luzon. In December 2013 the 16,000-ha zone had 15 locators with P13.76bn ($305.5m) of committed investment whereas as of January 2016, the number has jumped to 29 locators and P23.6bn ($523.9m) in investment pledges.

As Christopher Lawrence Arnuco, chairman administrator of the ZamboEcozone, told OBG, “Zamboanga continues to attract investors because it enjoys the lowest labour rate in the country and low cost of living. Unemployment is less than 3% in the Zamboanga peninsula while in Zamboanga city it is close to zero because the majority of workers are coming from the provinces, benefitting from investment generation in the city.” Given Mindanao’s position as a fruit basket for the country and the fisheries potential of the Zamboanga peninsula, the major locators are making use of these advantages. As of 2012, the Zamboanga Peninsula accounted for 52% of rubber, 37% of mango and 24% of coconut out of Mindanaos’ total production. Approximately 500m cans of sardines are produced within Zamboanga City per year, having a significant affect on the growth of allied industries.