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The World Bank recommended the creation of a free trade zone in the Basilan, Sulu, and Tawi-Tawi (Basulta) area, which can pave the way for prosperity there. This was among the recommendations in the bank’s “Mindanao Jobs Report,” a nearly 100-page study completed in June 2017, and released to the media last Friday, April 6.
The document re-echoed previous suggestions by other multilateral institutions: that accelerating inclusive growth addresses Mindanao’s underperforming agriculture and services sector. But what’s interesting in the study is it also laid out specific recommendations for Basulta, the chain of islands in the Sulu Sea east of Sabah.
“With zero tariff and few non-tariff barriers, Basulta could return to a version of the barter trade that made it prosperous in the past,” the World Bank said in its report.
The bank describes Basulta as a region with a distinct feature for its dual economy: the traditional rural economy and the shadow economy. The latter, according to the international lender, refers to unregistered economic activities such as smuggling of commodities. Residents in this part of the country have long established trading ties with its neighbor, being once part of a ruling sultanate. (READ: Tawi-Tawi misses the old Sabah)
The bank said a free trade zone, where goods are not subjected to usual customs duties, “could improve welfare because basic commodities are cheaper in Sabah.”
Another positive impact of the free trade zone, the bank said, could be “the reallocation of scarce government resources to combating illicit shadow economy activities rather than regulating the ‘coping’ smuggling that Basultans resort to for survival.”
Mindanao’s economic planning agency, the Mindanao Development Authority (MinDA), has been proposing a free trade zone in Basalt. MinDA Chairman Datu Abul Khayr Alonto said this would be part of the Tawi-Tawi Special Economic and Freeport Zone, a long-term government project estimated to cost some P20 billion.
This would be implemented by the Autonomous Region in Muslim Mindanao (ARMM) Regional Economic Zone Authority and is part of the Mindanao Development Corridor.
Also crucial to Basulta’s development, according to the World Bank, is a regularized consular service for Filipinos in Sabah. It said this is important “to help them get better jobs, access social services, and in the process increase remittances to help Basulta stabilize and grow.” Remittances sent from Sabah to the Philippines is estimated to reach at least $190 million a year, according to the bank.
Agencies, it recommended, could form a task force to make monthly visits to areas in Sabah where there are sizable numbers of Filipinos. The Philippines does not have a permanent consulate in the Malaysian Borneo due to its claim on the territory.
The recommendation has been taken up last year by Alonto, when he said the Department of Foreign Affairs (DFA) plans to set up a consular officein Sabah’s capital, Kota Kinabalu. But the plan has yet to move forward. The DFA has announced it would be conducting monthly mobile consular services in Sabah, Sarawak, and Labuan between March and December, though it said the schedules are subject to change without prior notice.