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Treading tricky terrain
Publication Date : 10-06-2014
Muslim Mindanao in the Philippines, now known as Bangsamoro, had been an undiscovered gem in the rough through the years. It is endowed with key ingredients for a prime investment area, with superior agro-climatic conditions, abundant primary resources, large tracts of idle lands, and wage rates lower than elsewhere in the country.
It also possesses vast scope for economic growth and diversification owing to its geographic and cultural connection to the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-Eaga). Yet this is a region where average incomes are among the lowest in the country, and where poverty incidence rose the fastest in the past decade.
The reasons for this contradiction are well-known. Persistent violent conflict had impeded economic activity and deterred investment from both within and outside the region. Infrastructure is poor and inadequate. Land access and security of tenure can be problematic with uncertain instruments of land ownership. The labor force is largely unskilled and unstable. Weak governance and institutions, marked by weak capacities and a checkered history of graft and corruption, further undermine the business environment.
The result has been a vicious cycle of low investment and persistent poverty that the region must simply find a way to break out of.
Can the peace agreement turn the preceding sentences into the past tense? The clear need is to raise the level of investments in the region, both from within and outside. But even wealthy individuals from within the region itself, the most logical first investors therein, had preferred to bring their own wealth outside—to Davao, Cagayan de Oro, Metro Manila or overseas.
This made it even harder to convince outsiders to overcome their reluctance to put their stakes there. But even the leaders of the Moro Islamic Liberation Front must know that attracting greater investment in Bangsamoro by both locals and outsiders is the only way out of its poverty trap.
The fact is, a good number of firms, both large and small, have already shown that investing in the region need not be a bad business proposition, especially now that violent political conflict is expected to be behind us.
Their experiences point to certain enabling factors, useful lessons and “secrets” that allowed them to thrive under the otherwise difficult investment environment in the area. In case studies I did on six such firms (see braintrustinc.org/wp-content/uploads/2012/12/Booklet.Braving-It-and-Making-It.pdf), three key elements emerge for treading Bangsamoro’s tricky investment terrain successfully:
First, partner with an influential and enlightened local leader. For an outside investor, finding and working with such a partner in a mutually beneficial business relationship is key. For the thriving La Frutera banana export enterprise in Maguindanao, it was the late Datu Toto Paglas. Beyond the benefit of working with one who “knows the terrain,” such partner can be essential in gaining secure access to needed large areas of land (for an agribusiness enterprise). He can also relieve the outside investor of having to worry about work force management. The respect that a datu or a person of traditional authority commands over locally hired workers is the most effective basis for asserting management authority and enforcing discipline in the workforce.
Second, invest time and effort in building trust and confidence with local partners, leaders and common folk. In Agumil’s palm oil enterprise in Buluan, Maguindanao, Malaysian founder C.K. Chang worked, ate and slept side by side with his workers; plant manager Phil Roy Malana did the same when he first set up the oil mill. A key part of such trust-building is bridging religious differences. Apart from personal gestures in this regard, La Frutera’s John Perrine, Senen Bacani and Ed Bullecer fostered religious understanding in the workplace by requiring their Christian and Muslim workers to spend time studying each other’s faiths. The Spencer family that established the long-standing Matling cassava processing firm in Malabang, Lanao del Sur, earned the trust and esteem of the local community through their sincere gestures of kindness and charity long before conflict arose in the area.
Third, respect and work within local cultural norms and practices, and turn them into positive enablers for the enterprise. To expect workers and the locals to adjust and adapt to the external investor’s enterprise culture is to court instability and failure. Matling was keenly sensitive to the sense of maratabat (honor) among the local populace, and harnessed this in providing effective security for their supervisors.
Agumil actively involves local leaders (including datus and the local mayor) in settling conflicts in the workplace, in respect of the authority vested by cultural and historical tradition. La Frutera institutionalized the common practice of sumpat (sharing jobs with family members) by its workers, adjusted working hours during Ramadan, and used social hierarchies to advantage in defining the management structures for workers. BJ Coconut Oil in Sulu similarly ensured that those in supervisory positions inherently command the respect of their subordinates by virtue of social status vested by historical/cultural tradition or royalty.
Recent data indicate that investment interest in Bangsamoro is picking up. With the right enabling governance environment, and investors doing the homework to equip themselves to tread the tricky terrain, Bangsamoro could well be the key driver for inclusive economic growth that it has every potential to be.