Boosting Competitiveness: The Future of Mindanao’s Economy

By: Tony Peralta

Davao City- Mindanao is undergoing a profound economic transformation. However, realizing the island’s full economic potential relies heavily on further enhancing its business competitiveness. Central to this transformation are two critical catalysts: the strategic interventions of Investment Promotion Agencies (IPAs) and the strict implementation of Republic Act No. 11032 or the Ease of Doing Business (EODB) and Efficient Government Service Delivery Act of 2018. Together, these elements are reshaping the Mindanao business landscape, reducing systemic friction, and positioning the region as a premier destination for global and local capital.

The Landscape of Business Competitiveness in Mindanao Peaceprocess updates

Business competitiveness in Mindanao is no longer confined to its traditional strongholds of agriculture and agribusiness. While the region remains the country’s top producer of pineapple, banana, and cacao, urban centers like Davao City, Cagayan de Oro, General Santos, and Zamboanga are emerging as competitive hubs for Information Technology and Business Process Management (IT-BPM), green manufacturing, and renewable energy.

Based on the annual Cities and Municipalities Competitiveness Index (CMCI) compiled by the Department of Trade and Industry (DTI), Mindanao cities consistently rank high in pillars such as Economic Dynamism, Government Efficiency, Infrastructure, Resilience, and Innovation. This competitiveness is fueled by a young, highly trainable workforce, competitive labor costs, and a wealth of natural resources. Furthermore, Mindanao’s strategic geographic location within the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) gives it a unique competitive advantage as a direct gateway to an ASEAN market of over 70 million consumers.

Despite these strengths, challenges persist. Mindanao’s competitive edge has historically been stymied by high power costs, localized security concerns, and logistical bottlenecks arising from fragmented transport infrastructure. To counter these constraints, the region requires a synchronized approach to investment facilitation and regulatory reform.

The powerhouse cities leading the Department of Trade and Industry’s (DTI) Cities and Municipalities Competitiveness Index (CMCI) in Mindanao are Davao City and Cagayan de Oro City. These two hubs consistently rank within the nationwide Top 10 for Highly Urbanized Cities (HUCs), frequently outperforming premier economic centers across the Visayas and Luzon.

The top-performing Mindanao cities are categorized below by their structural classifications and competitive strengths:

Highly Urbanized Cities (HUCs)
These massive regional economies lead Mindanao in infrastructure, raw economic output, and investment volume:

Cagayan de Oro City: The capital of Northern Mindanao holds the highest national standing among Mindanao HUCs, securing the No. 6 Overall Most Competitive Highly Urbanized City spot in the country. It scores exceptionally well in Government Efficiency and serves as the island’s premier logistics gateway.
Davao City: Holding the No. 7 Overall spot nationally among HUCs, Davao City ranks No. 1 in both Economic Dynamism and Infrastructure across the combined Visayas and Mindanao regions. Its localized digital automated business licensing systems have drawn substantial corporate capital. In addition to this, the high level of efficiency and professionalism of the Davao City Investment Promotion Center has made a huge difference in attracting and processing investment applications.
General Santos City & Zamboanga City: Both cities consistently land in the upper tier of the national index. Zamboanga City anchors competitive scores in regional Resiliency, while General Santos dominates agro-industrial economic dynamism in the Soccsksargen region.
Butuan City: Caraga’s administrative center has made significant competitive strides, particularly gaining recognition alongside Davao and Cagayan de Oro for its high Government Efficiency indicators.
2. Component Cities

Among faster-growing, mid-sized provincial capitals, these cities are highly competitive nationwide:

Tagum City (Davao del Norte): Historically a top-three finisher nationwide among component cities, Tagum excels uniformly across Government Efficiency and Infrastructure.
Digos City (Davao del Sur): Routinely scores near the very top of the national component city ladder, especially noted for its Economic Dynamism and business growth acceleration.
Cotabato City: A standout leader in the region, performing exceptionally well in regulatory efficiency and serving as a major economic driver for the Bangsamoro region.
Kidapawan City & Koronadal City: These core Soccsksargen cities are stable fixtures in the CMCI Top 15 list for component cities due to localized ease-of-doing-business reforms.
Ozamiz City (Misamis Occidental): Distinguished as one of the country’s Most Improved Component Cities, leaping ahead significantly in the index due to infrastructure improvements.
The Heavyweights: Cagayan de Oro vs. Davao City Demographics

According to the latest DTI Cities and Municipalities Competitiveness Index (CMCI) data, Cagayan de Oro (CDO) and Davao City are neck-and-neck as Mindanao’s top HUCs, securing the No. 6 and No. 7 spots nationwide.

Their side-by-side performance across the index’s core pillars highlights different regional strategic strengths:

Competitiveness Pillar Cagayan de Oro City (No. 6 Nationwide) Davao City (No. 7 Nationwide)
Economic Dynamism Secondary Economic Engine: Capitalizes heavily on real estate expansion, retail, and maritime trade through the Macabalan Port. Powerhouse Leader: Consistently ranks No. 1 in Mindanao. Driven by massive agribusiness exports, BPO hubs, and financial institutions.
Government Efficiency Top-Tier Bureaucracy: Consistently scores at the very top for transparency, revenue generation, and fully digitized local permitting. Streamlined Automation: Operates highly robust localized electronic Business One-Stop Shops (e-BOSS) that minimize processing times.
Infrastructure Logistics Gateway: Serves as the primary logistics and transit corridor for Northern Mindanao’s supply chains. Infrastructure Giant: Dominates raw infrastructure metrics on the island, buoyed by major expansions in transport and mass transit.
Resiliency Climate Adaptation: Focuses heavily on disaster preparedness infrastructure along major river systems. Disaster Command: Ranks exceptionally high nationwide due to world-class localized emergency response networks (Central 911).
Innovation Tech Hub Emergence: Rapidly expanding its support for tech startups and digital transformation projects. Creative Economy Leader: Commands high metrics in intellectual property registrations and digital literacy.
Top Municipalities (Towns) in Mindanao

Mindanao’s business competitiveness extends beyond major urban areas. The island hosts several top-performing towns that lead the national rankings for 1st to 2nd Class Municipalities:

Polomolok (South Cotabato): Anchored by massive agro-industrial complexes (including Dole Philippines), it consistently ranks near the top nationwide for raw economic output and local employment generation.
Manolo Fortich (Bukidnon): Known as Northern Mindanao’s agricultural golden goose, it ranks among the absolute best for Infrastructure and Tourism Advancement.
Claver (Surigao del Norte): A dominant force in the Caraga region, placing Top 3 nationwide for 1st-2nd class municipalities due to high revenues from large-scale mining operations and localized economic dynamism.
Mambajao (Camiguin): A stunning success story in the 3rd to 4th Class Municipalities bracket, frequently capturing the No. 2 spot nationwide due to superb tourism management, local resiliency, and government efficiency.
Numeric Standing: The Battle for the Top
While exact decimal scores fluctuate yearly based on changing metrics, Cagayan de Oro City and Davao City maintain a fierce lock on their Top 10 national positions. Demographics

Cagayan de Oro City (No. 6 Nationwide): Consistently leads Mindanao in the Government Efficiency pillar. Its score is bolstered by high efficiency ratings from the Anti-Red Tape Authority (ARTA), rapid digital transition of business permits, and strong capacity to generate local revenue.
Davao City (No. 7 Nationwide): Commands the Economic Dynamism and Infrastructure pillars across Mindanao. Its score reflects unmatched local employment generation, raw financial deepening (banking presence), and massive overall local GDP output.
2. The BARMM Phenomenon: From Conflict to Competitiveness

The Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) has historically lagged in the CMCI rankings due to decades of conflict and underinvestment. However, the region is now experiencing a historic structural turnaround.

Rapid Economic Growth
The BARMM economy grew by 5%, making it the 6th fastest-growing region in the Philippines. This momentum is directly reflected in its local governance scores.

Core Pillars Driving the Rise
Insurgency-Free Status: A widespread declaration of municipalities and provinces as “insurgency-free” has completely reassessed BARMM’s performance in the Resiliency and Peace & Order indicators.
Cotabato City & Marawi City Leadership: Cotabato City has anchored the region’s presence in the upper tiers of component cities. Meanwhile, Marawi City’s comprehensive infrastructure rehabilitation and public service recovery continues to improve and restoring local governance confidence.
Social & Institutional Reforms: Structural reforms implemented by the Bangsamoro Planning and Development Authority (BPDA) have drastically improved target-driven government efficiency. The fastest-growing sub-sectors are now health, social services, and education, creating a highly resilient foundation for future investment.
3. The Game Changers: Mega Infrastructure Projects

The underlying scores in the Infrastructure Pillar—which dictates how effectively goods, services, and workers move—are being redefined by several multi-billion peso projects under the national Build Better More program:

Central Mindanao High Standard Highway (₱145.56 Billion): This long-term project acts as a direct economic bridge between Cagayan de Oro and Malaybalay, Bukidnon. Once complete, it will cut transit time from 6.5 hours down to 3.5 hours. This drastically lowers transport costs, directly boosting the Economic Dynamism score of Northern Mindanao’s hubs.
Laguindingan Airport Modernization (₱12.75 Billion): Officially handed over to private sector operations (Aboitiz InfraCapital), this public-private partnership is actively expanding the terminal capacity of Northern Mindanao’s primary logistics gateway. This expansion heavily elevates CDO’s indicators for Distance to Ports and Accommodation Capacity.
The Bukidnon Airport Development Project: Nearing completion, this new airport acts as a massive auxiliary support system for both agro-industrial trade and tourism across central Mindanao, expanding the infrastructure scores of neighboring component cities.
Road Network Development Project in Conflict-Affected Areas (RNDP-CAAM): Administered by the DPWH, this fast-tracked infrastructure push is laying down extensive concrete networks directly through mainland BARMM. Connecting previously isolated agricultural zones to major ports has unlocked immediate local market competitiveness.
The Catalyst: Investment Promotion Agencies (IPAs)

Investment Promotion Agencies serve as the primary architects of Mindanao’s investment ecosystem. Key agencies operating on the island include the Board of Investments (BOI), the Philippine Economic Zone Authority (PEZA), and regional bodies like the Mindanao Development Authority (MinDA) and the Regional Board of Investments of the Bangsamoro Autonomous Region in Muslim Mindanao (RBOI-BARMM). The role of these IPAs extends far beyond marketing the region to investors; they act as vital facilitators throughout the business lifecycle. The cities are also supported by their own investment promotion agencies such as the Davao City Investment Promotion Center which has strengthened investment promotion efforts to increase investor interest and eventually locate their Demographics

Fiscal and Non-Fiscal Incentives: IPAs administer competitive incentive packages under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, offering income tax holidays, duty-free importation of capital equipment, and enhanced deductions for targeted industries.
Ecozone Development: PEZA has been instrumental in establishing Special Economic Zones (SEZs), IT parks, and agro-industrial estates across Mindanao. These ecozones offer insulated environments with world-class infrastructure, reliable power, and streamlined customs procedures.
Strategic Matchmaking: Agencies like MinDA play a pivotal role in linking foreign investors with local micro, small, and medium enterprises (MSMEs), integrating local supply chains into global value networks.
Advocacy and Infrastructure Alignment: IPAs continually advocate for the resolution of structural bottlenecks, successfully lobbying for major infrastructure projects like the Mindanao Railway Project, seaport expansions, and renewable energy grids to support industrial growth.
Streamlining the System: The Ease of Doing Business (EODB) Act

Even the most attractive investment incentives can be undermined by bureaucratic red tape. The passage of the EODB Act in 2018 marked a legislative turning point, mandating a sweeping overhaul of how government agencies interact with businesses. Overseen by the Anti-Red Tape Authority (ARTA), the law enforces zero-tolerance policy against bureaucratic delays through several key mechanisms:

The 3-7-20 Rule: The law mandates strict processing timelines for government transactions: three working days for simple transactions, seven days for complex ones, and twenty days for highly technical applications. Failure to act within these periods results in automatic approval.
Unified Business Permitting: Local Government Units (LGUs) are required to implement the Business One-Stop Shop (BOSS), integrating municipal clearing, zoning, and fire safety clearances into a single physical or digital location.
Digitalization Mandates: The law pushed for the creation of the Central Business Portal (CBP), a single online platform for business registration, reducing the need for physical appearances and eliminating redundant paperwork.
Tangible Impact on Mindanao Businesses

The synergy between IPA investment facilitation and EODB implementation has yielded profound, measurable benefits for the Mindanao business community. Peaceprocess updates

Reduction in Transaction Costs and Time

For decades, setting up a business in Mindanao required navigating a labyrinth of local and national permits. Today, major Mindanao LGUs have fully digitalized their business registration and renewal systems. Entrepreneurs can now secure permits in hours rather than weeks, dramatically reducing compliance costs and eliminating the informal “fixer” economy.

The delays encountered by business entities when securing their permits can often be traced to the lack of documentary requirements required by government offices not to mention the lack of urgency of filing these on time. Some business owners wait to the very last day before they file their requirements hence causing long lines at the city hall.

Surging Investor Confidence and FDI

The institutionalization of regulatory predictability has mitigated the perceived risks of investing in Mindanao. Investors value consistency and speed over mere fiscal incentives. The assurance that permits will be processed transparently within a legally mandated timeframe has triggered a surge in Foreign Direct Investment (FDI) and domestic capital inflows into high-value sectors, notably utility-scale solar and hydro-energy projects, cold-chain logistics, and export-oriented manufacturing.

Formalization and Growth of MSMEs

MSMEs comprise over 90% of businesses in Mindanao. Historically, many preferred to operate in the informal economy to avoid oppressive registration hurdles. The streamlined, low-cost registration pathways introduced by the EODB Act have incentivized thousands of informal traders to formalize their operations. Formalization grants these businesses access to formal credit facilities, government training programs, and larger corporate supply chains.

Moving Forward

The economic narrative of Mindanao is being fundamentally rewritten. Business competitiveness is no longer an abstract goal but a tangible reality achieved through the deliberate reduction of regulatory friction and aggressive investment promotion. By transforming government from a bureaucratic hurdle into an economic enabler, the Ease of Doing Business Act, paired with the strategic vision of Mindanao’s IPAs, has unlocked the true potential of the region. As digitalization deepens and infrastructure networks expand, Mindanao stands resilient and ready, firmly established as a competitive, dynamic, and indispensable growth engine for the entire Asia-Pacific region. Peaceprocess updates

(Antonio “Tony” S. Peralta is a business and civic leader who serves as the Honorary Consul of Finland in Mindanao and Chairman of the European Chamber of Commerce of the Philippines–Southern Mindanao Business Council, as well as Corporate Secretary of the Japanese Chamber of Commerce of Mindanao. His background is in banking, finance, and regional development, and he is involved in promoting foreign investment, sustainable growth, and educational links between Europe and Mindanao. He also serves as Vice Chairman of the Davao City Media Citizens Council, participates in development initiatives through ECCP SMBC, and supports projects related to rural development, media engagement, business cooperation, and international partnerships in the region.)