Region 10 Emerging as Mindanao’s Dominant Regional Economy

CAGAYAN DE ORO CITY, Philippines - Since Iligan City and Lanao del Norte were integrated back into Northern Mindanao (Region 10) in 2002, the resulting region has become Mindanao’s biggest economy. Recent years indicate it is now pulling away to attain a position of dominance among the island’s regional economies.

The economic accounts of the island’s Gross Regional Domestic Product (GRDP) show that before the realignment of regions in 2002, Region 10 trailed the Davao Region (Region 11) in GRDP. However, since Iligan and Lanao del Norte rejoined Region 10 and some parts of the Davao region were re-aligned to the SOCCSKARGEN region, Davao has trailed Region 10 in current and adjusted GRDP.

SOCCSKARGEN is an acronym that stands for the region's four provinces and one of its cities - South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City - and its regional center is Koronadal City in South Cotabato.

The gap between the two region’s GRDPs in current prices wavered from P9.8-billion (B) in 2003, dropping to P7.8-B in 2005 before accelerating to P25.1-billion by 2008. However, when the differences are adjusted for 1985 constant prices (to negate the effects of inflation on prices), the figures show that the gap between Regions 10 and 11 has been exponentially increasing from P2.3-B in 2003 to P4.9-B in 2006 and further to 8.7-B in 2008.

Latest available data generated by the Economic and Social Statistics Office of the National Statistical Coordination Board (NSCB) from primary and secondary data sources gathered from various data producers in the country shows Region 10 with a 2008 GRDP of P362.4-billion vs. P337.3-B for Region 11 (based on current prices) or P71.7 billion vs. P62.99 billion based on 1985 constant prices, said Linnito Pascual, officer-in-charge and regional division head of the NSCB-10 office.

The emergence of Region 10 as Mindanao’s largest economy has been further but stressed when it became the fastest growing economy in the country in 2008, outperforming even the National Capital Region and the Philippine economy as a whole, official estimates released by the NSCB show.

Figures presented by NSCB-10 show Region 10 grew faster than the national average of 3.8 percent and outstripped all regions from all over the country in terms of growth, although its growth rate was a deceleration from the 7.7 percent it attained as the country’s third fastest growing regional economy in 2007.

The annual estimates for regional economies showed Region 10 growing by 5.3 percent in 2008, thanks to the robust performance of the agriculture, fisheries and forestry (AFF) sector. From 6.3 percent in 2007, AFF accelerated to 10.7 percent in 2008, making up for the so-so performance of the service and industrial sectors.

“The service sector remains the biggest contributor to the region’s economy at 38.5% despite its growth decelerating to 2.3 percent from 8.1% in 2007,” said Pascual. “The industry sector, which accounted for 30.3 percent of the region’s economy, posted a 4.2% growth in 2008, or 4.4 percentage points short of the 8.6% growth recorded in 2007.”

On top of this, Northern Mindanao also sustained its status as Mindanao’s biggest regional economy, increasing its share of the island’s economy from 27.9 percent in 2007 to 28.3 percent in 2008. It also accounted for the biggest share of the sectoral pies with 30.6 percent of service, 30.3 percent for industry and 24.5 percent for AFF.

Not the least, Region 10 also sustained its growth in per capita GRDP, growing by 3.2 percent in 2008, although this was a slight decrease from its 5.5 percent growth in 2007. It was the only region in Mindanao to record a per capita GRDP rate above the national average, one of only three regional economies to do so in 2008, and ranked third among all regions nationwide.

An analysis of the economic accounts of Mindanao’s two biggest regions reveals similarities as well as contrasts. Although the regional capitals of both regions account for the bulk of the region’s GRDP, there are significant differences in the way the two economies are structured. The bulk of Davao Region’s GRDP comes from the Service Sector based in Davao City and agriculture based both in DC and its surrounding provinces.

On the other hand, Region 10 has a more diversified regional economy with its 2008 GRDP almost evenly distributed among the Service Sector (38.48%), Industry (30.31%) and Agriculture, Fishery and Forestry (31.21%) sectors.

Champions of Region 10 in the private and public sectors have often cited the resiliency of the regional economy made possible by this sectoral profile. Because of the even distribution of its GRDP among three sectors, the regional economy has managed to maintain a steady growth rate despite fluctuations in the national and global economy.

This distribution and diversity carries over to the geographical spread of the various sectors. Region 10’s agriculture is concentrated in Bukidnon (pineapple, sugar cane, banana, corn) and Lanao del Norte (rice, coconut) while its industries are mainly found in Misamis Oriental (Phividec Industrial Estate) and Iligan City.

Services which consist mainly of trade (shopping malls), finance (banks), dwellings and real estate (subdivision and commercial business centers), private (BPOs, hotels, schools) and government services (regional government offices) are found mostly in Cagayan de Oro which remains the region’s administrative and trading capital and center of learning and Camiguin, the region’s top tourism destination.

“This well-defined positioning of the provinces also contributes to the complementation of the economic contribution of the various sectors,” noted Eliza Pabillore, Misamis Oriental provincial director of the Department of Trade and Industry.

However, the geographical distribution of Region 10’s industrial sectors does not necessarily guarantee it immunity from the effects of external influences which may affect one or more of its industrial sectors. That’s because of the way with which these sectors have become vertically and horizontally integrated over the years, leading to varying degrees of interdependence and autonomy.

For instance, when the National Steel Corporation in Iligan City shut down in November 1999, the service sector in Cagayan de Oro also suffered a downturn as machine shops, transport firms, banks, and other downstream industries serving the giant steel firm were forced to cut down or close shop.

Similarly, many agricultural products produced in Bukidnon are processed in Cagayan de Oro or the Phividec Industrial Estate in Misamis Oriental before they are shipped out abroad or to markets in the Luzon or the Visayas. Changes which adversely affect a specific link in this supply chain would inevitably have repercussions downstream and upstream of the affected portion.

Nevertheless, despite the slowing down of the national and global economies during the past few years, Region 10 continues its steady growth and emergence as Mindanao’s dominant regional economy. (Contributed by Mike Banos)