Untapped Economic Potential of the Muslim-Autonomous Region in the Philippines

Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) is an autonomous region in southern Philippines established in 2019. It includes the provinces of Basilan, Lanao del Sur, Maguindanao del Norte, Maguindanao del Sur, Sulu and Tawi-Tawi. After decades of war, the BARMM offers this majority Muslim region a hopeful and peaceful future. Only eight percent of the total population of the Philippines are Muslims.

Like many conflicts in the region, the Mindanao conflict is a mixture of unresolved issues dating back to colonial times coupled with demands for an independent Muslim state in the modern Philippines. Decades of war between the government and Muslim rebels has made the BARMM (which was previously the Autonomous Region in Muslim Mindanao (ARMM)) one of the poorest regions in the country, with a poverty rate and one of the highest rates of infant and maternal mortality and one of the lowest life expectancies.

Decades of war between the government and Muslim rebels has made the BARMM (formerly the Autonomous Region in Muslim Mindanao (ARMM)) one of the poorest regions in the country – with high poverty rates, high infant and maternal mortality rates, and one of the lowest life expectancies .

In addition, the Sulu Archipelago is a hub for the illicit trade in people, weapons, drugs and militancy.

After around two dozen years of talks, a plebiscite was held in 2019 to ratify the Bangsamoro Organic Law (BOL), which became the backbone for the abolition of the ARMM and the creation of the BARMM. A transitional authority, the Bangsamoro Transition Authority (BTA), has been set up to govern the new region ahead of elections expected to be held in 2025.

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In addition, Indonesia, Malaysia and the Philippines signed a Trilateral Cooperation Agreement (TCA) in 2016 aimed at coordinated patrols in the Sulu and Celebes Seas and airspace, including coastguard cooperation.

As such, the BARMM has untapped economic potential, particularly through increased maritime trade with neighbors Indonesia and Malaysia, which the BARMM’s coastline borders, as well as through the exchange of their Malay-inspired cultures.

Economic growth in the BARMM region: High potential, but investments take time

The BARMM’s fragility still hampers investment and the ability to strengthen economic ties with neighbors such as Indonesia, Malaysia and Brunei. Although violence has decreased compared to decades ago, civil unrest of varying degrees still persists in the region. Therefore, it will likely take some time for the investment climate to stabilize (the region saw only PHP 2.8 billion (US$48.6 million) in investment in 2021) and will benefit from the future of BARMM’s security environment depend.

The BARMM recorded economic growth of 7.5 percent in 2021, becoming the second fastest growing region among the 17 regions of the Philippines. The top industries with the greatest growth were:

  • health and social care (22 percent);
  • mining and quarrying (20 percent);
  • accommodation and catering services (17.9 percent);
  • construction (12.2 percent); and
  • Finance and insurance activities (10.6 percent).
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The government’s innovative approaches to facilitating sub-regional trade, such as improving inter-island connectivity and establishing exchange ports, will benefit BARMM. Bartering had been banned by the government as officials believed it would increase the illegal trade in goods and people. The Sultanate of Sulu and the Sultanate of Maguindanao had barter partners with companies in Borneo and China when their maritime economies were booming.

Potential of the Halal Industry in the Philippines

BARMM has the potential to become a halal center in the Philippines as it has the largest concentration of Muslims in the country and its strategic location in the southern part of the Philippines, close to the large Muslim market of Indonesia and Malaysia, the latter of which already has a well-developed halal industry supply chain.

The Philippine Economic Zones Authority aims to develop a Special Economic Zone in Mindanao that will target halal food producers and investors and will increase the country’s share in the global halal industry, which is estimated to be worth US$3 trillion. The country recorded Halal food exports worth over US$500 million in 2018.

In addition, the Ministry of Trade and Industry encourages more small and medium-sized enterprises to explore the global halal market. In 2016, the government enacted the Halal Export Development and Promotion Act 2016 as a guide for companies wishing to manufacture and promote their Halal goods. Through the law, the government has provided training modules that have benefited more than 400 MSMEs and contributed to the development of more than 10 halal certification bodies.

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Improving connectivity in BARMM can boost trading

After five decades of struggle, BARMM is beginning to see important investments in its infrastructure. In June 2022, Philippines Airlines became the first airline to operate regular flights within the BARMM through a direct flight between Cotabato City in Maguindanao Province and Bongao in Tawi-Tawi Province. Previously, travelers had to first travel to Manila or to an airport outside of the BARMM, which often involved an overnight stay. The waters around Tawi-Tawi are rich in marine diversity and improving connectivity can unlock their tourism potential.

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