Mindanao Business Conference (2002)
BANKING ON MINDANAO AS AN AGRICULTURE AND FISHERIES ZONE
By Gary B. Teves
President and CEO
Land Bank of the Philippines
11th Mindanao Business Conference
30 August 2002
Surigao del Norte governor Lyndon Barbers, Surigao City mayor Alfonso Casurra, other distinguished guests, delegates, ladies and gentlemen, a pleasant good morning.
Allow me to start my presentation by sharing with you some excerpts of the editorial in the Mindanao Times which came out early this week. The opening paragraph reads: there might be news of war somewhere in the island or some kidnapping in the nearby shores but this never stops the sun from rising in Mindanao every morning of the year.
I took particular interest in this editorial since my presentation this afternoon will also focus on the side of Mindanao which we don't normally find in the news. While we all know that troubled peace and order does not constitute the general scenario in the region, downbeat news on the issue have marred Mindanao's overall image in the past several months. Still, there is definitely more to Mindanao than what we read in the papers or hear in the radio nowadays.
I will start by giving a brief situationer on Mindanao then move on to focus on its prospects as a primary agriculture and fisheries area. I shall then highlight the Bank's support to Mindanao and present our suggested development strategy.
A look at Mindanao
Mindanao for so long has faced hurdles in its struggle for long-term peace as well as in its dream of attaining lasting and sustained progress.
The poor continue to dominate the population in the island region, with the poverty incidence rate reaching 56.7 percent in 2000. Sixteen of the twenty four poorest provinces in the country are in Mindanao. Such is the irony of Mindanao which happens to be wealthy in terms of natural resources.
If one will look beyond these statistics though, one would discover that Mindanao still shows much promise and has even displayed resilience in recent years. Among the country's 16 regions, only five managed to grow positively in 2001. And two of these regions - Region 10 and ARMM - are in Mindanao. The region has also shown great capability in expanding key sectors of its economy, including services, industry and forestry.
Still, what stands out is Mindanao's inherent potential to play a key role in the country's goal of attaining agricultural productivity and food security.
Prospects as an agriculture and fisheries zone
Mindanao's huge agricultural production potential can be considered as a jump-off point for outlining a sustainable development plan in the region.
For one, it has a favorable location especially for growing high value crops. This is mainly because of its fertile soil which is the best in the country, year-round but evenly-spaced rainfall and lesser number of typhoons.
Mindanao is also abundant in marine and aquatic resources. Reports indicate that Mindanao contributed 35 percent to the country's crop production and 42 percent to the fisheries sector during the last three years.
All these point to the region's great potential to someday become the country's main agriculture and fisheries zone - given ample financial support and development assistance.
LBP Support to Mindanao
LANDBANK fully supports the attainment of this vision for Mindanao as we have always been bullish about its overall growth prospects despite its present challenges. This is proven by our sustained financial assistance which reinforces our position as a net lender in the region. As of June 2002, our total loans in the region reached P17.2 billion as against our total investible deposits of P14.7 billion.
This means that we are channeling more resources to Mindanao than what we are actually getting from the region. As proof, LANDBANK's loans to deposit ratio stood at 117% as of June 2002. Thus, for every peso in deposits that LANDBANK generates, we give back more in loans to finance various economic projects across Mindanao.
Our development efforts and wide credit outreach are made possible with our total network of 68 branches and 9 lending centers spread all over the 24 provinces in Mindanao. LANDBANK's presence is dominant in far-flung areas and islands in Mindanao, notably in Bongao, Tawi-Tawi; Jolo, Basilan, and even in Mambajao, Camiguin.
Consistent with our overall strategic thrust, LANDBANK has been providing credit assistance to our priority sectors - the small farmers and fisherfolk, SMEs and micro-enterprises, agribusiness, agri-infrastructure and agri-related projects. Our target is to increase the share of these priority sectors in our loan portfolio from 38 percent in December 2001 to 65 percent by the end of 2004. As of June 30, 2002, our total agri-agra loans of P40 billion represent almost 40 percent of our total loan portfolio. Mindanao cornered P11.6 billion or almost 30% of LANDBANK's total agri-agra loans.
Loan releases to small farmers and fisherfolk cooperatives in Mindanao have been on a sustained growth trend for the past four to five years. As of the first semester this year however, our loan releases to Mindanao cooperatives decelerated to P1.61 billion or only 1% higher than the P1.59 billion released for the same period last year. This was mainly due to our lower loan releases to farmers cooperatives in the ARMM.
One cooperative which we have assisted is the Integrated People's Livelihood Multi-Purpose Cooperative in Valencia City, Bukidnon. We recently granted the co-op a loan of P24 million for various projects such as production loan for palay including certified corn and palay seeds, working capital for palay trading as well as rehabilitation of the co-op?s post harvest facilities.
To help farmers cooperatives cope with financial difficulties, we are also implementing a flexible debt restructuring program which provides a more flexible payment scheme. Fresh working capital is also granted if necessary. We are currently restructuring a P42 million sugar production loan for a sugar cooperative in Davao with 6,000 farmer-members.
We also maintain strong partnerships with local government units nationwide. At present, LANDBANK is the largest provider of development financing to LGUs. Our loans to LGUs in Mindanao have been steadily increasing for the past three years. As of June 2002, loans to Mindanao provinces, cities and municipalities reached P2.51 billion or 7% higher than the P2.43 billion granted for the same period last year.
A model LGU project is that of the City of Cagayan de Oro which we granted with a P350 million loan for the construction of an integrated bus and jeepney terminal and a public market. After its inauguration last March, the modern westbound terminal now services three major bus companies and a number of individual jeepney operators. This project will help ease overcrowding and traffic in the four markets in Cagayan de Oro and develop a new growth area.
Closer to home, the Surigao City government was recently granted a P10 million loan by LANDBANK along with a P2.5 million grant from the National Meat Inspection Commission for the completion of the new city slaughterhouse in Poctoy, Surigao City. This will replace the outmoded slaughter house and provide more sanitary meat products to city residents.
Aside from funding LGU projects with high multiplier effect, LANDBANK also helps improve their capability to deliver basic services. LANDBANK packaged the Mindanao Basic Urban Services Sector or the MBUSS Project with the Asian Development Bank through a US$30 Million loan program. This aims to enhance the quality of life of people in urban Mindanao by providing, upgrading and rehabilitating basic local government infrastructure and services, as well as improving access to basic local government services.
LGU projects such as public markets, bus terminals, local roads and br