A roller coaster ride for the business sector

THE Chinese zodiac calendar described 2014 as the Year of the Horse, an apt description for what the business sector experienced as a peace agreement and a struggle in the power industry were among the major events that took place during the year in Mindanao.

Just about two months after the New Year, Mindanao was literally engulfed in total darkness at night when its main power system collapsed. But immediately a month later, a major investment boost took place when the government signed a peace agreement with the Moro Islamic Liberation Front.

Mindanao-wide blackout

Even before the closing of 2013, the lack of power was still a major problem for Mindanao as no major power project came online. This was aggravated by the taking place of the power blackout on Feb. 27 which was triggered by the conking out of one of the plants of Steag State Power Inc. whose gap was not immediately filled by the National Grid Power Corp.

Steag denied that the incident stemmed from its plant. The company explained in a statement that “based on the sequence of events few minutes prior to the collapse of the Mindanao grid, SPI’s power generation output gradually reduced.”

“While the gradual reduction will affect the electric supply condition, it is not expected however to cause a cascading failure and tripping of other power plants and the collapse of the entire grid,” the company added.

The power supply was stabilized in June when the second unit of Steag went back in operation.

The blackout, however, resulted in economic losses. In Davao City, for instance, the Davao City Investment Promotion Center (DCIPC) estimated that there was an economic loss of about P48 million-P56 million.

Peace agreement

The signing of the peace agreement has encouraged more investors to venture in Mindanao especially in the proposed Bangsamoro.

The government has expected positive transformation of Mindanao as it is seen to have further growth and development.

Some Malaysian companies, for instance, have started assessing the potentials of investing in oil palm and rubber plantations in areas which will become part of the new Bangsamoro juridical entity, the body that will replace the Autonomous Region in Muslim Mindanao.

“Indeed with the dawning of peace and development in an area that is the nexus of our bloodlines and heritage, we can all look forward to further strengthening convergence initiatives through existing growth corridors within the sub-region, to promote sub-regional cooperation in trade, investment, and the tourism sector, with a view of contributing to the region’s goal of realizing the 2015 Asean Economic Community,” said President Benigno Simeon C. Aquino III.

Boost in assistance

The improvement on the peace process has also prompted the World Bank Group (WBG) to augment its assistance by allocating about P14 billion for rural development and job creation in the island under the group’s Country Partnership Strategy.

“The WBG is scaling up support for rural development and job creation in the region by providing critical infrastructure and promoting private investment in agribusiness,” said World Bank operations officer Lilanie Magdamo.

Assistance will be poured for the implementation of the National Community-Driven Development Project (NCDDP) and the Philippine Rural Development Project (PRDP).

For instance, on NCDDP, the WBG will allocate P8.74 billion. It would fund the proposed projects of the communities like water systems, school buildings, roads and bridges and day care centers and health stations.

“We are encouraged by the recent completion of the BDP and the efforts of the government, the MILF and other sectors of society to promote stability and lay the foundations for lasting peace and development in Mindanao, including the Bangsamoro,” said International Finance Corporation resident representative Jesse Ang.

Mindanao Inclusive Agribusiness Program launched

On Sept. 8, the Mindanao Development Authority (Minda) and Philippine Business for Social Progress (PBSP) launched the Mindanao Inclusive Agribusiness Program which intends to boost employment and livelihood opportunities.

Paul G. Dominguez, vice chair of the board of trustees and chair of the Mindanao regional committee of PBSP, said the program is aimed to “aggressively encourage big corporations” to pool in investments in the island, help in jobs generation and link with the small stakeholders.

“This inclusive agribusiness program, which provides opportunities, demonstrates innovative agribusiness models,” Dominguez said, as the corporations, especially the corporate members of PBSP, shall “provide tangible access to jobs and access to markets to small stakeholders in Mindanao.”

Both Minda and PBSP signed a memorandum of understanding with the presence of President Aquino.

MinDA chair Luwalhati Antonino said there has to be inclusive growth in the island even if it already sustained to have a good economic growth as the island’s economic performance should also reflect “parallel growth in employment.”

“Therefore, the need to focus on inclusive growth is underpinned by this seeming disconnect between the structures of economic growth and employment, and to make sure that the larger of society are able to maximize the benefits brought about by sustained socioeconomic development,” she said.

International gab staged

Another milestone of the city this year was its hosting of the second Brunei Darussalam-Indonesia-Malaysia-Philippines-East Asean Growth Area (Bimp-Eaga) and Indonesia-Malaysia-Thailand-Growth Triangle (IMT-GT) Trade Fair and Business Leader’s Conference on Oct. 22-26 at SMX Davao Convention Center with a theme “Realizing the Opportunities of Asean Integration.”

“Of late, Mindanao has been taking a bashing from foreign sources. This conference-cum-trade proves that the fears that precipitated the issuance of these travel advisories lack sufficient factual basis,” said Mayor Rodrigo R. Duterte.

Duterte was referring on the travel advisories banning the residents from Australia and United Kingdom to travel in the city.

At the end of the event, the international gab raked about $196 million worth of investments and booked sales. The event gathered around 1,500 participants from Brunei Darussalam, Indonesia, Malaysia, Philippines and Thailand.

There were also participants from Canada, Japan, Mexico, Netherlands, Singapore, South Korea, Taiwan, United Kingdom and United States. Overall, the event attracted about 25,000 local and international visitors.

During the business matching sessions, some of the big ticket investments that were sealed included the coffee plantation in Sultan Kudarat, oil palm plantation in North Cotabato, oil depot in Autonomous Region in Muslim Mindanao and corn processing facility in South Cotabato.

The potential investments could provide about 117,000 possible employment in Mindanao.

Steel Asia operates new facility

The Steel Asia Manufacturing Corp. also started to operate its P3-billion steel mill plant in the 11-hectare lot in Bunawan District.

Benjamin O. Yao, president of the company, said it can help the local market save P35,000 per 25-ton truckload in shipping costs when purchasing rebars. “By locating a mill in Davao, Steel Asia will eliminate expensive shipping costs and help boost Mindanao’s infrastructure and construction activities,” he said.

The company’s plant in Bunawan, the largest and most modern in the country, could produce 500,000 metric tons of rebars a year. This is the sixth plant of the company and the second in Mindanao next to its facility in Cagayan de Oro.

“The Davao mill is a legacy of its founders and represents the investment of Steel Asia in Mindanao’s future and its  confidence in the growth prospects of Davao and the rest of Mindanao. The Davao mill also represents the fulfillment of Steel Asia’s mission of providing quality steel products at the same standard price anywhere in the archipelago,” Yao said.

ADB assists tourism sector

The tourism sector also gained a boost this year as the Asian Development Bank (ADB) and Canadian government rolled out grants up to $100,000 for tourism industry players in Davao City and Davao del Norte to serve as funds for skills training of their employees.

The grantees can have $10,000-$100,000 as funding assistance that could help upgrade the skills of the employees of the tourism industry players. This is part of $7.1 million assistance to the Department of Tourism (DOT) funded by Canadian government and administered by ADB.

Davao City and Davao del Norte are among the pilot areas for the implementation of the skills training support scheme along with Palawan, Bohol and Cebu.

In a handbook provided by DOT, “the tourism industry skills training support scheme provides funding for eligible staff training activities by tourism enterprises, civil society organizations and local government units.”

“The scheme is one component of a broader DOT, ADB and Government of Canada project. The project aims to increase the number of international tourists, increase employment in the tourism sector and provide improved income opportunities for those involved in the tourism sector,” it added.

Web portal for RE investors created

To fast track the applications of the renewable energy (RE) investors, the Mindanao Development Authority (Minda) and Department of Energy  (DOE) through the Mindanao Power Monitoring Committee have launched the One-Stop Facilitation and Monitoring Web Portal.

“This is aimed to cut the processing time by half or at least three years or less (from five to seven years),”said Romeo M. Montenegro, director for investment promotion and public affairs of Minda

He said the web portal features national government agencies like DOE, Department of Environment and Natural Resources, National Commission on Indigenous Peoples and National Water Resources Board. The approval from these national government agencies are among the requirements before an investor could set up a project.

The establishment of the one stop shop facilitation center for RE applications arose after President Benigno Simeon C. Aquino III ordered to create it during the Mindanao Energy Summit in April 2012.

No APEC in DC

Despite its readiness to host big international events, the city was excluded from the list of choices to stage any of 2015 Asia-Pacific Economic Cooperation (APEC) high level meetings following the alleged terror threats.

In the memorandum issued by Executive Secretary Paquito N. Ochoa on July 22, among those areas that were approved to host APEC meetings include Metro Manila; Bagac, Bataan and Clark, Pampanga in Central Luzon; Tagaytay City and Cavite; Legazpi City and Albay; Boracay, Aklan and Ilo-Ilo City and Cebu.

Although the city was dropped from the list, Duterte said he was not disappointed with the announcement from the organizers. “If they consider looking for another city, I am fine with it,” he said.

The city was earlier listed as among the bets to host APEC meetings. It was considered to serve as back-up venue in case other areas could not handle any of the events.

The organizers of APEC started looking at the city in 2012. The organizers have been scouting on different areas in the country to identify where it is viable to stage any of the high level meetings for APEC.

The senior official meetings of APEC, for instance, require huge convention centers as it could draw 800-1,300 delegates including 21 senior officials and other government representatives.

BoC Davao chief sacked

Lastly, the Bureau of Customs (BoC)- Port of Davao faced controversies this year which prompted the Department of Finance (DoF) to formally issue termination order to the port’s chief Ernesto R. Aradanas.

The controversies like the issues on the illegal shipment of petroleum products and releasing of shipments that contained oranges from Ebola-stricken South Africa made the head office of DoF, the mother department of BoC, to issue the “expiration of term service” order.

In a letter of Finance Secretary Cesar V. Purisima to Aradanas on Oct. 1, the order was in reference to the appointment of the latter as project manager III in the Office of Revenue Agency Modernization (ORAM) and subsequent detail to the BoC as district collector in the Port of Davao.

“We note that the status of your appointment in ORAM is coterminous with the appointing authority, which is characterized by the fact that your entrance and continuity in service in said position is based on trust and confidence of the appointing authority or that which is subject to his pleasure, or coexistent with his tenure,” the letter added.

But Aradanas said in a statement that he did not allow the illegal entry of 260,000 liters of smuggled gasoline at the Sub-Port of General Santos. This was among the reasons cited in the previous reports of the national dailies that pushed the head office to terminate him.

“I am saddened by the arbitrary decision of the Commissioner (John P. Sevilla) for my termination, who may be fed himself inaccurate information. When objective consideration of facts and when due process is junked, arrogance and abuse of authority follow, then ‘reforms’ is doomed,” said Aradanas.

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