Economic impact of Zamboanga issue ‘minimal’, says central bank exec

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03:40 PM September 10th, 2013

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By: Paolo G. Montecillo, September 10th, 2013 03:40 PM

BSP Deputy Governor Diwa Guinigundo. INQUIRER FILE PHOTO

MANILA, Philippines—The direct economic impact of fresh clashes in Zamboanga City will likely be minimal given the historically turbulent area’s relatively small contribution to the country’s gross domestic product, a senior government official said Tuesday.

However, the current conflict in Zamboanga may lead to a deterioration in confidence in the Philippines, with investors likely taking a second look at the country due to renewed peace-and-order issues.

“If this is just a short-term, fleeting event, then there won’t be any impact, especially since it’s happening down south. Zamboanga is not a major trading port,” Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo said.

“But it will always be a sore thumb, especially if it lasts long,” he added. “Imagine if we didn’t have these issues in Mindanao. That’s a very rich area.”

He said despite Mindanao’s riches, owing to the resources it has to offer that could benefit the agriculture and mining sectors, the area’s potential has never been maximized due to its troubled history.

For instance, the Tampakan copper-gold mine south of General Santos in Mindanao is considered one of the largest undeveloped mines of its kind in Southeast Asia.

Zamboanga, in particular, used to be a major port for the entry of imported second-hand goods, Guinigundo pointed out.

At the end of last year, the whole of Mindanao contributed just 15 – 16 percent to the gross domestic product. This contrasts with Metro Manila’s 36-percent contribution to gross domestic product, based on latest government data.

Another issue that could undermine the international community’s confidence in the Philippine economy was the corruption involving the Priority Development Assistance Fund (PDAF) or “pork barrel”

“The issue is about governance,” Guinigundo said, adding that this had the potential to erode the market’s confidence in the economy and the Aquino administration, which ran on a platform to clean up the government.

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