Sunday, June 23, 2019

Butuan City's Path Towards Sustainable Growth

Butuan City's Path Towards Sustainable Growth
To ensure the sustainability of Butuan’s growth, the city government must be more aggressive in pushing for economic diversification
The Reawakening of Butuan City
To ensure the sustainability of Butuan’s growth, the city government must be more aggressive in pushing for economic diversification
After years of deep slumber, a giant is once again raring to take the spotlight in Mindanao’s economic arena.

Butuan City, a highly-urbanized city and the regional capital of Caraga Region, had seen in the past few years an upsurge of economic activities — from retail, construction, housing, tourism, logistics, and many more. Although the city had experienced quite a number of booms and busts, its trajectory at present is seen to be for a longer haul — attracting scores of investors who want to take part of its growth story.

Filinvest Butuan is one of the upscale housing developments in the city. Photo taken from

"Early rise and fall of Butuan"

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In Butuan City alone, it is estimated that more than 5,000 works for the logging industry

Unknown to many, Butuan was once a wealthy rajahnate in Mindanao that had active trade relations with other prehistoric civilizations in Southeast Asia. Its modern economy was however founded on the logging industry that flourished during the 1950s, earning it the monicker “Timber City of the South.” But, in the early 1980s, the depletion of Butuan’s forest resources resulted to a substantial decline in economic activities, which was further aggravated by the political turmoil the whole country was facing.

In 1995, the city’s economy was reinvigorated with its designation as the administrative capital of the newly-created Caraga Region. Many government offices opened up in the city resulting to a significant increase in local employment. However, many observers noted that the failure to diversify the local economy, coupled with a restrictive business environment and poor infrastructure, relegated the city to stagnation, which lasted for almost two decades, causing it to be left behind by other urban centers in Mindanao.

The opening of Robinsons Place Butuan lit a brighter retail industry in the city. Several local and international shops that were first in CARAGA are hosted by this mall. Photo Credit to TripAdvisor.

"Booming Butuan"

An improving business environment and a more responsive local government sparked the recent economic reawakening of Butuan City. As testament of such, capitalization of new businesses jumped 1,600% in 2015 from Php 410 million in 2011 to Php 6.97 billion. Remarkable too is the sudden inflow of popular national brands that have just entered the city — most prominent is Robinson’s Place which built its largest mall in Mindanao — while existing ones opened new branches. Taking notice of the city’s growing affluent class, upscale housing developments also sprouted in various locations including that of Filinvest, Camella Homes, and A. Brown. In addition, it can be noted that gross sales of registered firms in the city shot up from Php 12.4 billion in 2011 to Php 20.1 billion in 2015, or registering a growth of 62% during that period.

The Mindanao Logistics Infrastructure Network (MLIN) is a long-term development plan of the road network in Mindanao. It includes planned new construction, and upgrade / improvement to existing national roads and local roads. It was published in 2014, with revisions and updates in early 2015.

Many financial institutions are also taking advantage of Butuan City’s bullish economy as they opened new branches to cater to the growing financial needs of Butuanons. Proof of rising wealth in the city is the 54% growth of bank deposits from Php 13 billion in 2012 to Php 20 billion in 2016. As of 2015, there were 311 financial institutions recorded operating in the city.

The recent boom in Butuan City may also be attributed to the impressive growth of Caraga Region, which posted an average of 8% from 2010 to 2015. This was largely fuelled by the mining industry and the burgeoning tourism industry. As the region’s commercial center, the city benefitted greatly from the Caraganons’ increase in purchasing power. In addition to that, economic expansion in the region also meant the development of more urban centers — such as the cities of Cabadbaran, Tandag, Bayugan, Surigao, Bislig, and Bayugan — which boosted intra-regional commerce and trade.

SM made a press release last 2015 regarding the developer's entry in Butuan City. The PhilStar article above written by Richmond Mercurio announced that SM was eyeing Zamboanga and Butuan.

"Path towards sustainable growth"

The future of Butuan City seems to be bright as more investors are pouring capital into the city. The retail industry is perhaps the most optimistic with many projects now being undertaken — such as the expansion of Gaisano Mall and Robinson’s Place — or are in the pipeline, such as SM City Butuan, City Mall, and a new Puregold branch.

Photo credit to the owner.
However, to ensure the sustainability of Butuan’s growth, the city government must be more aggressive in pushing for economic diversification. First, it must modernize its agricultural sector by promoting agripreneurship and providing adequate support infrastructures and facilities to ensure that development reaches the rural areas, especially those in the southern part of the city. Second, industrialization must be undertaken in order to create high-quality employment in the urban areas. The city may take advantage of the vast natural resources available all over the region that can be processed into high-value products, such as timber, oil palm, abaca, coconut, fishery products, and even mineral ores.

Third, it must strengthen its position as a logistics center in the region. It can be noted that the national government is currently implementing big-ticket road infrastructure projects amounting to more than Php 5 billion pesos in the city alone through the Mindanao Logistics Infrastructure Network. Once these projects are completed, Butuan will be much more connected to key growth centers in Mindanao such as Cagayan de Oro, Malaybalay, and Tandag.

Fourth, the city must capitalize on its cultural and historical assets, most especially the balangay boat, to boost its tourism industry. It may take the lead in the development of the Butuan City-Magallanes-Cabadbaran City Cultural Tourism Circuit, which will provide a new and unique tourism offering for visitors in Caraga Region. The creation of this circuit will ensure the sustainability of and complement the MICE (meetings, incentives, conventions, exhibits/events) industry, which is also booming nowadays with the opening of new hotels and convention facilities.

Fifth, as the region’s educational center, the city could venture into developing its own local business process outsourcing (BPO) industry. It can build on the gains of the small BPO offices that had already setup shop here. However, much is still needed to be done to develop more world-class educational institutions to ensure that there will be a steady pool of talents. As of now, Father Saturnino Urios University and Caraga State University are the reliable producers of quality graduates in the city. It is laudable though that the city government had already forged an agreement to develop the Libertad Sports Complex into an IT Business Park.

Sixth, the city can spearhead the development of Metropolitan Butuan, which will include the municipalities of Nasipit, Buenavista, Magallanes, and Remedios T. Romualdez, and the City of Cabadbaran, as current trend shows that urbanization will happen along this corridor. Manifestations of this include (1) the construction of the Nasipit Port-Masao Port Coastal Road, which is expected to create synergy between the 2 ports; (2) the industrial estate development straddling between Buenavista and Butuan; and (3) the rapid urbanization of Cabadbaran City towards the direction of Butuan. Moreover, the aggregate size of the economy of this area grew impressively by 100% from 2011 to 2015, or from Php 15.4 billion to Php 30.7 billion, translating to a compounded annual growth rate (CAGR) of 20%. If this trend continues, or even if the CAGR is pegged at a conservative 10%, the metropolitan area’s economy may breach the Php 100 billion mark by 2028. The area is also a huge market having 530,331 inhabitants based on the 2015 census.

Opportunities do abound in Butuan City but these can only be maximized if the city government lays down the right policies and strategies that will create an attractive business environment; and also, if it becomes more responsive and creative in addressing perennial problems such as illegal settling, unstable water and power supplies, poor solid waste management, flooding, and unemployment. Much is also expected from Butuanons; to believe in their own city’s growth story by investing locally and/or supporting local products and services; and serving as ambassadors of the city inviting investors and visitors to come.


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