By JOHN TRIA
With the Mindanao economy expected to continue growing at 7.2% in 2020, it is time to think about how to capitalize on this growth and make it even more inclusive.
The figure quoted in statements made by Mindanao Development Authority Assistant Secretary Romeo Montenegro last week are higher than last year’s, and encourage us to further evaluate opportunities.
Other reforms and events support this growth further into 2021.
With the Bangsamoro picking up, lower corporate income taxes through the CITIRA Law and various infrastructure projects lined up in the 2020 budget kicking in, we expect greater opportunities and accelerated growth into 2021 and 2022.
Moreover, new flight connectivity with the Visayas and the launch of new flights from Davao to Manado, Indonesia, and Zamboanga to Kota Kinabalu, via Philippine Airlines, higher integration with nearby ASEAN economies is upon us. In particular, the Davao, Manado route is served by two airlines with a total frequency of 5 flights a week.
2020 looks really interesting for Mindanao. With these reforms, companies will now need to take a deeper look at the Mindanao economy. Readers and analysts can do the math further to evaluate the numbers on a regional basis and how they are growing to give an indication of the kind of investments that are needed, what types of products and services will see a higher demand.
The bottom line: Mindanao growing fast, and faster than the country and other ASEAN countries. The time to look at this growing subnational economy is now.
Personal Property Security ACT is revolutionary
The newly minted Republic Act No. 11057, the Personal Property Security Act (PPSA), is an interesting, if not revolutionary development whose time has come.
This law allows businesses to register their movable assets such as inventory with the Land Registration Authority (LRA) and use those assets as collateral for financing purposes. We can now include in the LRA electronic registry movable assets such as account receivables, inventory, negotiable instruments, electronic securities, crops, livestock, consumer goods, machinery, equipment, as well as intellectual property rights as collateral in accessing bank credit.
This is a step forward from the time when banks would only accept residential and commercial properties as collateral, and those not blessed (majority of farmers, including agrarian reform beneficiaries) with these assets are forced to offer their inventory to lending companies and loan sharks at much higher interest. This “forced to good” situation is what has kept many of our farmers in debt at usurious rates, eventually forcing many of them to sell the land.
In a statement, the Department of Finance through Secretary Carlos Dominguez elucidates on its impact on Micro Small and Medium Enterprises that constitute the bulk of our economy. “This is among the reforms we are pursuing to further improve our business climate and empower small entrepreneurs,” he said.
With this new law, and other new reform initiatives, the capacity of many Mindanao businesses to access credit and expand their horizons will expand.
A robust agriculture sector, in particular, is hoped for, as many farmers will now be able to get better credit to finance their expansion activities. This ties in neatly with Agriculture Secretary William Dar’s announcement to expand palay buying activities and set the minimum price at above market rates, and comes as copra prices are recovering from last years lows.
We will be monitoring the implementation of these reform initiatives.
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