VZCZCXRO1590
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #4126/01 2700913
ZNR UUUUU ZZH
O 270913Z SEP 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3178
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE

UNCLAS SECTION 01 OF 02 MANILA 004126 
 
SIPDIS 
 
SIPDIS 
 
FOR PEACE CORPS, USAID 
FOR ECA, EAP 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PREL EAID RP JA
SUBJECT:  AMBASSADOR HIGHLIGHTS STABILITY AND ECONOMIC SUCCESSES IN 
GENERAL SANTOS CITY, MINDANAO 
 
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SUMMARY 
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¶1.  During a visit on September 22, Ambassador gained a firsthand 
look at the economic successes in General Santos City and the 
surrounding area.  USG investment in the region's infrastructure has 
transformed the economy.  Investments have dramatically increased, 
particularly in the tuna and agriculture sectors.  The tuna industry 
seeks to expand market share through upcoming trade agreements.  The 
RP armed forces in the area have reorganized and are working with 
local communities to maintain regional stability.  The Ambassador 
was well-received, and there was positive local and national press 
coverage throughout the visit.  End summary. 
 
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USAID-Funded Improvements Strengthen Economy 
-------------------------------------------- 
 
¶2.  USAID involvement in Mindanao intensified during the 1980s in an 
effort to bolster the Aquino administration by helping to strengthen 
the national economy.  USAID implemented the "Mindanao Development 
Project," an infrastructure development program, from 1992 to 1996 
in General Santos City, South Cotabato and Sarangani provinces. 
USAID funded a new international airport in General Santos City ($52 
million), a major expansion and upgrade of Makar Port, the principal 
seaport ($22 million), and the construction of 180 kilometers of 
road in the region ($35 million).  USAID also introduced an 
investment promotion program advocating investment in the newly 
developed General Santos region.  These development projects were 
successful, and the region now accounts for 20% of Mindanao's total 
economic output. 
 
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Armed Forces Reorganize to Enhance Regional Stability 
--------------------------------------------- -------- 
 
¶3.  Ambassador and Emboffs met the Commanders of the 1002nd Infantry 
Brigade and Task Force General Santos, as well as Mayor Pedro 
Acharon.  1002nd Colonel Porto stated that the greatest threat in 
the region is the New People's Army (NPA), though he estimated the 
number of local NPA members at less than five hundred. 
 
¶4.  Mayor Acharon said the AFP is working with the local government 
to increase security in the area.  AFP has provided basic training 
to village residents so they can protect their communities.  The 
Philippine National Police has also worked with local communities to 
ensure that they are not forced to pay taxes to the NPA.  Both the 
Mayor and the AFP officials lamented that the AFP forces are 
inadequate for the region, with a ratio of 1 soldier to 1500 
residents.  Consequently, the Mayor has used city funds to hire 
fifty reservists to be trained and used in the city environs. 
 
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Internet Enhances Learning at a Rural High School 
--------------------------------------------- ---- 
 
¶5.  The Ambassador reinforced U.S. support for education during a 
kick-off ceremony for the USAID-funded Computer Literacy and 
Internet Connection (CLIC) program at a rural high school in South 
Cotabato Province.  This school is one of eleven schools in the 
province receiving assistance through the CLIC program.  The program 
is providing seven computers, peripherals, and one year of internet 
service.  The school parent-teacher community association will 
assume responsibility for subsequent years of internet service and 
computer maintenance. 
 
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Tuna and Agriculture Dominant in General Santos City 
--------------------------------------------- ------- 
 
¶6.  In a lunch with local business and political leaders, the 
Ambassador discussed General Santos City's successful economy. 
Formerly focused solely on agriculture, the economy of the region 
has been transformed by the USAID-financed infrastructure.  People 
are migrating to General Santos City from other provinces, as the 
region boasts of one of the lowest unemployment rates in the country 
at 5.4%.  Infrastructure improvements have encouraged international 
investment.  Several American companies, including Cargill, Phillips 
Seafood, Marsman-Drysdale and Dole have established operations in 
the area.  Ambassador discussed the importance of supporting English 
language education in order to attract call centers and other 
investors to the region.  Participants noted that the influx of 
people has increased the need for additional schools. 
 
¶7.  According to business leaders, the tuna industry provides 
100,000 jobs and has a combined canning capacity of 570 metric tons 
per day.  The United States is the biggest market for canned tuna 
 
MANILA 00004126  002 OF 002 
 
 
and Japan is currently the largest market for fresh sashimi-grade 
tuna.  Tuna industry representatives do not anticipate long-term 
benefits from the recently signed Japanese-Philippines Economic 
Partnership Agreement, for while the agreement lowers tariffs, 
export quotas remain low.  Tuna industry leaders expressed concern 
about the Philippines' small market share for pouched tuna, 
emphasizing that Ecuadorian tuna is benefiting from lower tariff 
rates through the Andean Trade Preference and Drug Eradication Act. 
 
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Dole Provides Boost to Local Economy 
------------------------------------ 
 
¶8.  The Ambassador paid a visit to Dole Philippines, which has 
extensive operations in the General Santos City area, with a 
plantation and cannery in the surrounding countryside and a 
privately owned wharf.  The company employs approximately 20,000 
workers and growers.  According to Dole managers, one of the factors 
leading to Dole's selection of this location was the highly 
developed USAID-funded road network.  Dole is currently embroiled in 
a four-month labor dispute with its unionized employees.  The 
company is considering downsizing operations due to chronic labor 
problems and concerns over oversupply in 2006.  Embassy Manila is 
closely following the current situation and working with Dole on 
solutions. 
 
KENNEY