2017 ARMM Investment Priorities Planrboi.armm.gov.ph/transparencyseal-files/2017-2019-ARMM-List.pdf · 2017 ARMM Investment Priorities Plan ... Autonomous Region in Muslim Mindanao

2017 ARMM Investment Priorities Plan

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2017-2019 Investment Priorities Plan Autonomous Region in Muslim Mindanao

I. INTRODUCTION

ARMM Economic Performance The Autonomous Region in Muslim Mindanao (ARMM) with a population of 3.7 million (2015 Census) remains the poorest and least developed region in the country. Poverty incidence among households marginally dropped from 48.7% in 2012 to 48.2% in 2015 and the overall figure is still quiet high. This means that almost half of families in ARMM had an income lower than the poverty threshold or the minimum income to meet the basic food and non-food necessities. Table 1. ARMM Poverty Incidence

The role of private sector investments to lift the ARMM from poverty cannot be over emphasized and the fiscal and non-fiscal incentives for investors administered by the Regional Board of Investments (RBOI) will still be needed for the foreseeable future in order to attract massive private investments in the region. Though investments in ARMM have picked up in the past years, jumping from Php 569 Million in 2012 to Php 6.659 Billion in 2015 and Php 2.111 Billion in 2016 because of the government’s improved peace efforts and after instituting governance reforms in the autonomous regional government still, the growth of private sector investments in the region remains fragile and will require much effort and support from the national government and autonomous regional government to sustain them.


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Table 2. CY 2012 to 2016 – Registered Investments and Jobs Generated

YEAR TOTAL INVESTMENTS

(Php’000) JOB GENERATION

2012 569 M 1,016

2013 1.463 B 1,743

2014 3.867 B 3,433

2015 6.579 B 4,894

2016 2.111 B 1,034

TOTAL 14.589B 12,120

The ARMM reported a modest gain of 3.0% in 2013-2014 in the Gross Regional Domestic Product (GRDP) but in 2014-2015, its GRDP sharply dropped to -0.8%. The presence of Abu Sayyaf in Sulu, Maute Group in Lanao del Sur, and Bangsamoro Islamic Freedom Fighters in Maguindanao, spreading acts of terrorism in the region and some parts in Mindanao has dragged down the ARMM score card on its economic growth rate. The conflict that has stricken the region for years is one of the factors why ARMM continues to lag in its development process for decades.

ARMM Economic Development Approach The ARMM mid-term economic goal is that by 2019, the region will have increased in overall investments, employment, and income during the three-year period from 2016-2019 in an inclusive and sustained manner. Its approach is to implement key policies and strategies centered on agriculture and aquatic resources and their processing; continue the 2004-2010 Medium Term Philippine Development Program (MTPDP) strategy envisioning that ARMM to become the Halal Production Center in the country; and to transform ARMM as gateway to BIMP–EAGA since its island provinces are nearest to the borders of our neighboring countries of Indonesia, Malaysia and Brunei. ARMM Investments and RBOI Approach The ARMM has high potential to become the next investment destination in the Philippines. Compared to other regions, ARMM has the following advantages:

• Strategically located in East ASEAN • Close cultural affinity with its Southeast Asian neighbors and Middle East countries • Availability of large pool of skilled and highly trainable manpower and this is proven by

the big diaspora of ARMM residents who are OFWs in the Middle East • Presence of basic utilities such as airports, seaports, and telecommunications • Liberal business laws and simplified investment procedures being an autonomous

government • Untapped and unspoiled natural resources that can be promoted for Tourism or

responsible resource development • Halal industry potential including Islamic banking and finance

In the past Investment Priorities Plan (IPP), which is for the first time a three-year rolling plan from 2014-2016, the biggest investors in ARMM or the majority of investments came from local investors or repeat investors, who are already in the ARMM whose pent-up capital was unleashed as the Mindanao peace process showed a positive trend towards stability.


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Hence, there is still a need for ARMM to have the best or most attractive fiscal and non-fiscal incentives to lure local investors and also those from outside the region. Private sector needs to be encouraged to invest in the ARMM to sustain the prevailing relative peace and stability by providing the people with more economic opportunities and quality livelihood. II. The ARMM IPP Process The 2017-2019 ARMM Investment Priorities Plan (IPP) is formulated based on the updated Philippine Development Plan (PDP) 2017-2019 and ARMM Regional Development Plan. Anchored on the present Administration’s zero + 10-point Socio-Economic Agenda and Ambisyon Natin 2040, the 2017-2019 ARMM Investment Priorities Plan (IPP) aspires to promote investments in preferred economic activities and sectors that will have direct and positive impact on the lives of the Filipinos in the ARMM region to attain prosperity for all. As mandated under EO 458, devolving the powers and functions of BOI to the ARMM Regional Government, the Regional Board of Investments (RBOI) is the agency responsible in identifying priority activities to be registered and administered in this IPP for projects locating in the ARMM. The process of the RBOI in the formulation of the 2017-2019 ARMM IPP involves a series of consultation sessions with the public and private sectors and civil society and evaluating the potential contribution of these identified economic activities and industries to create quality jobs, move up the value chain, diversify the region’s agri-fishery base, generate “spillover effects,” and engender a more competitive environment. IPP consultations were organized as early as mid of 2015 starting the review in Lamitan City, Basilan Province followed by multi-sector public consultations in Cotabato City, Parang, and Upi, Maguindanao, Bongao, Tawi-Tawi and Marawi City, Lanao del Sur. A total of six (6) multi-sectoral consultations were conducted regionwide to craft the 2017-2019 ARMM List. All inputs and recommendations during consultations were consolidated, evaluated and processed by the RBOI IPP-Technical Working Group (TWG) and then reviewed by the Management Committee (ManCom). The final draft is presented to the Board of Governors for final review and endorsement to BOI-Manila. The final ARMM List is consolidated with the National IPP that will be given by BOI-Manila to Malacañang, for the promulgation of President Rodrigo Roa Duterte. The economic activities listed in the ARMM List will be entitled to fiscal and non-fiscal incentives under Executive Order No. 226 otherwise known as the Omnibus Investments Code of 1987, as amended, provided they qualify with certain criteria and fulfill the terms and conditions of registration with RBOI. Part II. The ARMM List in the IPP 2017-2019 The ARMM List in the IPP 2017-2019 is set to be more relevant that will jibe with the development goals of the region structured on the following objectives:

1. Generate quality jobs that will offer families with income that can provide for their daily

needs;

2. Help promote and sustain the momentum of peace and development;


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3. Spur more economic activities by creating micro, small and medium enterprises as

spillover effects of these investments projects;

4. Help protect and manage the natural resources;

5. Help promote the cultural heritage of the region; and

6. Contribute to community development where the project is located through promoting

Inclusive Business Models for its investors.

The ARMM List in the IPP 2017-2019 has the following as priority activities: export industry; agriculture and aquaculture; basic industries; infrastructure; industrial service facilities; engineering industries; logistics; BIMP-EAGA related investment enterprises; tourism; health and education services and facilities; Halal industry; bank and non-bank financial institution including Islamic banking and finance; and energy. Half the people in ARMM depend on water resources for livelihood and subsistence as they live adjacent to big bodies of water, such as Sulu Sea, Moro Gulf, Lake Lanao, Lake Buluan, Liguasan Marsh and the Pulangi River or Rio Grande de Mindanao but ARMM remains as a raw material producer (e.g. 70% of raw seaweeds are from ARMM but no carrageenan processing is done in ARMM). Agriculture, Hunting, Forestry and Fishery (AHFF) continue to be a dominant industry in ARMM as its share to the region’s economic output (GRDP) is the largest with 58.5% (PSA 2015). Hence, agriculture, fishery and agricultural products industry and their processing and manufacturing is retained in the ARMM List. The new ARMM List in the IPP 2017-2019 also emphasizes energy as a priority area to be consistent with the investment promotion strategy of RBOI in the next three years to have electrification and to help solve the power shortage in the island provinces of ARMM, namely, Basilan, Sulu and Tawi-Tawi. The fact remains that more energy investments are needed in the ARMM considering that the household electrification rate in the ARMM is the most dismal in the country with only 34% as compared with the national rate of 74% (NEA 2013). To align with the effort of the ARMM government to revitalize its linkage with the Brunei, Indonesia, Malaysia, Philippine East ASEAN Growth Area or BIMP-EAGA, it is essential to retain cross-border trade related enterprises in the ARMM List. ARMM seeks to attract more financing or financial institutions since the region remains to be severely underserviced by banks. Other than conventional banking and finance, the list also included Islamic Banking and Finance. Access to basic financial services in ARMM is practically non-existent. According to the World Bank about 93% of cities and municipalities in ARMM are unbanked – representing the highest percentage of unbanked regions in the country. Only 20 bank offices operate in ARMM. Based on a 2010 representative survey by the World Bank and the World Food Programme, none of the respondents in the ARMM island provinces borrowed from a bank and only 1% did in Maguindanao. Fortunately, the expanded ARMM Organic Act (Republic Act No. 9054) allows ARMM to give incentives to banks and other non-bank financial institutions that are based or have its principal base of business in ARMM. Ports industry that is related to logistics is also included in the IPP considering that the LGUs in ARMM have weak financial capacity to develop and maintain ports and its island provinces in the Sulu archipelago need more ports for their connectivity and economic growth.


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The 2017-2019 ARMM List in the IPP contains the following priority investment areas: A. EXPORT ACTIVITIES 1. Export Trader and Service Exporters 2. Support Activities for Exporters B. AGRICULTURE, AGRIBUSINESS, AQUACULTURE and FISHERY B.1. Agriculture and Agribusiness This covers all types of agricultural production, farming, plantation, processing or manufacturing, as long as, the land or the agricultural production, plantation, processing or manufacturing is based in ARMM. It includes value-chain, value-adding, logistical and supply chain agribusiness activities based in or involving ARMM agricultural products or the farmers of the region, such as silo storage and drying facilities. B. 2.Aquaculture and Fishery This covers the aquamarine industry; inland water resources; seaweeds; fishing; fish pond including other marine, inland and brackish water farming, such as abalone farms, shrimp farming or crab fattening; the establishment of hatcheries or breeding of fingerlings and processing of such marine and inland water resources. C. BASIC INDUSTRIES This covers the production of pharmaceuticals such as antibiotics; traditional or herbal medicines and related activities such as bio-prospecting; textile or garments; water supply and treatment; ice plant or refrigeration; traditional craft like boat building; production of inorganic and organic fertilizer; all types of heavy industries, such as the steel industry, petrochemical industry, ship-building, ship breaking, ship repair and servicing; dredging for industrial purposes and landfill; cement production and concrete aggregates. D. INFRASTRUCTURE AND SERVICES This covers strategic infrastructure projects such as railways, bridges, tollways, flood control and support industries like sand and gravel, batching plant and pre-mixing of cements; air, land and water transportation; telecommunications to include the construction and operation of international gateway facilities both satellite-linked or linked by terrestrial and submarine cables for internet connectivity, so long as these are based in ARMM and are holding ARMM franchise, or servicing ARMM areas including to and from ARMM in order to increase inter-connectivity and support regional or national integration.


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E. INDUSTRIAL SERVICE FACILITIES This covers industrial centers or industrial estates to include testing and quality control laboratories; manpower training and demonstration centers; vocational and technical skills services and facilities; call centers and Information Technology related enterprises such as business process outsourcing; tool and dye shops and similar facilities; metal casting and metal working; furniture and fixtures; ceramics and tile-making; petrochemical complex and industrial gases. F. ENGINEERING INDUSTRIES This covers engineering products; electronics and telecommunication products; and fabrication of construction materials including pre-fabricated construction materials using new technologies (e.g. 3D printing) or indigenously sourced materials. G. LOGISTICS This covers the logistics, supply chain and logistics network industry; shipping, hauling and trucking; cargo shippers and forwarders; bulk carrier; warehousing and depots; storage; and other logistics facilities principally based in ARMM including transshipment hubs and services using ARMM ports, airports or located near its special economic zones. This also contemplates the ports industry and allied industry in the ARMM and ancillary services, such as arrastre and stevedoring, because the ARMM needs to attract more port industry players. H.BIMP – EAGA RELATED INVESTMENT ENTERPRISES.

This covers enterprises using the BIMP-EAGA framework on trade and investments and who are located or have their base of operations in the BIMP-EAGA namely, Brunei; Sabah and Sarawak in Malaysia; Maluku, Sulawesi, Kalimantan and Irian Jaya in Indonesia; and Mindanao and Palawan in the Philippines, who shall invest and engage in economic activity in the ARMM including traditional cross-border trade and the age-old barter trading to encourage the formalization of peripheral shadow economies. I. TOURISM This covers the establishment of tourism-related facilities and attractions; tourism-related services; hotel and restaurants catering to ARMM tourists; Halal-based tourism; tourist accommodation facilities; tourist transport facilities and development of retirement villages, which shall include health or medical facilities and other amenities. J. HEALTH AND EDUCATION SERVICES AND FACILITIES The ARMM has some of the lowest indicators in the country regarding health and education as reflected in the Human Development Index. For this purpose, there is a need for incentives to be given to investors in the health and educational sectors such as putting-up of private hospitals, medical clinics, wellness centers, primary education, secondary education, tertiary education (colleges, universities and vocational-technical schools) and ancillary or support services such as teacher training centers.


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K. HALAL INDUSTRY The 2004-2010 MTPDP envisioned that ARMM shall be the production and processing center for the Halal industry. ARMM being the only Muslim region in the country has a comparative advantage in the Halal industry since majority of Halal consumers are in the region. Any Halal related business enterprises that obtain the necessary Halal certification or is operating under Islamic (Shariah) law principles shall be covered. Halal refers to the permissible products and services under Islamic Law. L. BANKING, NON-BANK FINANCIAL INSTITUTIONS AND FACILITIES

Aside from conventional banking and finance, microfinance and cooperative financing, this includes Islamic banking and finance; and Islamic microfinance and pawnshop operations, since the ARMM is the most unbanked region in the country and there is a need for financial inclusivity in accordance with the provisions of the Organic Act (Sec. 7, Art. IX, R.A. No. 9054). This also includes remittance centers to cater to remittances of Overseas Filipino Workers. Guidelines for this purpose may be issued by the RBOI after consultation with the relevant stakeholders and institutions engaged in financial access and financial inclusivity programs and activities. M. ENERGY More energy investments are needed in the ARMM considering that the household electrification rate in the ARMM is the most dismal in the country with only 34% as compared with the national rate of 74%. This covers energy investments in upstream and downstream industries such as power generation, transmission and distribution. Off-grid and Small Power Utilities Group or SPUG areas shall be prioritized for investments and giving of incentives considering that these are stranded markets for electricity. It covers not only energy but also ancillary services and in the context of ARMM, this means the construction of substations and transmission and distribution towers considering that there are also frequent power outages due to disruption of such facilities from man-made and natural disaster causes.


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III.ARMM IPP Documentations

Documentary Pictures

Investments Priorities Plan (IPP) Consultation and Roadshow August 27, 2015, Cowley’s Place, Lamitan City, Basilan Province

RBOI Chairman/Manging Head Atty. Ishak V. Mastura with DTI-ARMM Secretary Sakiran A. Hajan, RBOI Board of Governors, Muctar Muarip, SalipAloy and Sukarno Baraguir and Lamitan City Vice Mayor Fredick Furigay posed for a souvenir photo

before the IPP consultation started

Lamitan City Vice Mayor Frederick Furigay signing in the attendance sheet. Looking on is RBOI Board of Governor, Muctar Muarip of Basilan Province


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Mr. LarzonG. Santos, Chief of Special Support and Research Division presented on the 2014-2016 ARMM Investments Priorities Plan (IPP).


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ARMM- Investment Priorities Plan (IPP) Consultation on March 14, 2016 at Al Nor Convention Hall, Cotabato City

(From left). RBOI Director Moner K. Dumama, RPDO Executive Director, Engr.

Baintan Ampatuan, RBOI Chairman, Atty. Ishak V. Mastura and RBOI Board

Member, Sucarno Baraguir. Below photo is Research Chief, Larzon Santos

explaining on the 2016 IPP and asking for recommendations from participants to be

included in the 2017 ARMM IPP.


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Investments Priorities Plan (IPP) Consultation and Roadshow April 6, 2016, Municipality of Parang, Maguindanao

The Regional Board of Investments-ARMM met stakeholders from

different sectors to review and update the 2016 ARMM Investment

Priorities Plan (IPP) and gather inputs to be included in the 2017

IPP. The consultation conducted on April 6, 2016 was held for the

first time in the Municipality of Parang, Province of Maguindanao.


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Investments Priorities Plan (IPP) Consultation and Roadshow

April 27, 2016, Municipality of Upi, Maguindanao

The Regional Board of Investments (RBOI- ARMM) conducted on

April 27, 2016 the 3rd leg of its 2016 region wide ARMM

Investments Priorities Plan (IPP) Consultation and Roadshow, this

time in the Municipality of Upi, Province of Maguindanao in

preparation for drafting of the 2017 ARMM IPP.


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Investments Priorities Plan (IPP) Consultation and Roadshow

November 26, 2016, Beachside Inn, Bongao, Tawi-Tawi

.

The 4th leg of the 2017 IPP Consultation was held in Bongao, Tawi-Tawi on November 26, 2016. This is to give chance to those in the island provinces to participate in identifying investment priorities in their respective areas/provinces.


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Investments Priorities Plan (IPP) Consultation and Roadshow December 6, 2016, Ayala Resort Hotel, Marawi City

The last leg of the ARMM- IPP consultation for the crafting of the 2017 ARMM IPP was held at the Ayala Resort Hotel, Marawi City on December 6, 2016 . The consultation was attended by City Mayor, Atty. Majul U. Gandamra and members of the multi sector groups in the city.

Documents

2017 ARMM Investment Priorities Planrboi.armm.gov.ph/transparencyseal-files/2017-2019-ARMM-List.pdf · 2017 ARMM Investment Priorities Plan ... Autonomous Region in Muslim Mindanao