Newsletter No. 390
News-Analysis
September 26, 2006

 

The following newsletter has been contributed by Sandra R. Leavitt (Shingetsu Member No. 55). Leavitt is based at Georgetown University.

JAPAN-PHILIPPINES ECONOMIC PARTNERSHIP AGREEMENT SIGNED; ECONOMIC DEVELOPMENT FOR MINDANAO IS A FOCUS

Agricultural trade between Japan and the Philippines is expected to increase after the recent signing of the Japan-Philippines Economic Partnership Agreement (JPEPA). While the agreement must still be endorsed by the Philippine Senate, both Japanese and Philippine officials were optimistic about the potential shared benefits, especially to the Mindanao region where the majority of Muslims live in the Philippines.

According to reports, the Philippines' high value marine and agricultural products will now have wider access to the lucrative Japanese market. Currently, most fisheries exports from the Philippines to Japan have been limited to tuna products. The JPEPA will expand trade to other marine products, as well as increase trade in plant materials such as mangos and sugar. The agreement is one of several that Japan is signing with developing countries throughout the world that will open Japan’s markets to foreign products.

Mindanao in particular is expected to benefit from the JPEPA, according to Department of Trade and Industry (DTI) Undersecretary Thomas G. Aquino. Critical to Mindanao’s success in capitalizing on the JPEPA will be the Davao Region’s National Economic Research and Business Assistance Center (Nerbac), which was also launched last week. This initiative is designed to cut the bureaucratic barriers to trade, thus increasing efficiency and lowering transaction costs of doing business.

A 2006 World Bank/International Finance Corporation study ranked the Philippines 113th out of 155 countries for the ease of doing business, a ranking that must be improved upon if the Philippines is to successfully combat its chronic poverty and economic inequality.

Mindanao is particularly rich in natural resources, a characteristic that has made it historically attractive to colonial powers, Japanese traders, and the Philippine government. Yet, despite the region’s natural wealth and potential, it remains one of the poorest in the Philippine archipelago due to external exploitation, internal unrest, communal divides, and low investment in human capital and infrastructure.

One of the government’s primary objectives is to use economic development as a means to generate lasting peace in Mindanao. Over 120,000 have died in the past three decades of violent conflict between the Philippine government and Mindanao-based insurgents.

Outside investment is critical to recovery. However, past investment has seen the vast majority of returns going not to local Muslims, but to foreign investors and Filipinos from other regions, particularly Luzon. Another challenge for the government and states such as Japan that provide foreign aid is to balance modernization and development with traditional cultures. Resolving these historical economic grievances is central to the prospects for success of JPAPA and Nerpac in alleviating poverty in Mindanao.