During the pandemic, Mindanao traders were still able to secure rice from Malaysia, Thailand, and Vietnam. Photo credit: Asian Development Bank
Barter trade in Mindanao proved resilient to the coronavirus disease (COVID-19) pandemic in 2020, highlighting that traders could adapt to global and regional shocks, according to a paper from non-profit development organization Asia Foundation and UK-funded research consortium X-Border Local Research Network.
The paper, Cross-Border Trade in the Southern Philippines amidst COVID-19, examined how lockdowns imposed last year by local governments affected barter trade in the Southern Philippines. The paper is based on interviews with traders, wholesalers, truckers, and laborers engaged in the barter economy across the Sulu archipelago, the chain of islands consisting of the provinces of Basilan, Sulu, and Tawi-Tawi in Mindanao.
Even with government-mandated movement restrictions to curb the spread of COVID-19 in 2020, barter traders were able to ply their goods, the paper noted. “The pandemic highlights how barter trade players are uniquely positioned to adapt to significant global and regional shocks. The informality of barter trade, and the porous nature of the Sulu and Celebes seas, allows traders to circumvent restrictions and other barriers imposed by governments.”
Basilan, Sulu, and Tawi-Tawi are highly dependent on the informal shipment of goods from Sabah, Malaysia, the paper said. Malaysian goods, including noodles, instant coffee, and black-market cigarettes, in fact, can be found across Mindanao. Traders use a fleet of unregistered sea-faring vessels to ferry the goods to public and private ports across the archipelago.
Rice trade
Both registered and unregistered traders noted rice shipments continued even during the strictest movement restrictions. Traders were able to secure rice from Malaysia, Thailand, and Vietnam.
Still, respondents said there was a supply gap following governments’ movement restrictions, with barter traders encountering bottlenecks in the wholesale and distribution of rice. This resulted in higher rice prices.
The increase in kotong, or “special arrangement” fees paid to some state agents to facilitate the transport of goods, also contributed to higher rice prices, with traders passing the added cost to consumers.
Stockpiling of rice by local government units for their food aid programs also contributed to the rise in prices. At the height of the lockdown, a sack of rice bought in Sabah for 700 pesos ($14.05) would sell for 1,500 pesos. As of late 2020, prices fell to 1,100 pesos per sack versus the pre-pandemic rates of 750–800 pesos per sack.
Varying impact
The pandemic had varying impact on members of the barter trade economy. Some members of the barter trade economy were adversely affected, with laborers being the hardest hit due to the transient nature of their employment and compensation.
Laborers and truckers could not travel from their homes to their workplace because of limited public transport. As a result, they had no income in the days and even weeks when movement restrictions were in place.
While some traders were able to grow market share during the pandemic, some saw their income fall between 15% and 50%. Without laborers, traders also had difficulty making sure goods were offloaded and delivered to wholesalers. Some traders had to personally pack and re-pack goods, along with other manual labor tasks to be able to move goods.
Digital platforms
Pandemic-related restrictions has led to the emergence of online marketplaces, via social media platforms such as Facebook. These online marketplaces mushroomed despite poor internet connectivity in Mindanao.
Online sellers also resold hand sanitizers, rubbing alcohol, and masks to meet demand and in response to restrictions posed by the government on the operating hours of retail stores.
The move to digital platforms just underscores the adaptability of members of the barter trade economy, the report said.
There have been calls to revive barter trade in BIMP-EAGA, which covers the entire sultanate of Brunei Darussalam; the provinces of Kalimantan, Sulawesi, Maluku and Papua in Indonesia; the states of Sabah and Sarawak and the federal territory of Labuan in Malaysia; and the entire island of Mindanao and the island province of Palawan in the Philippines. These areas were linked by a centuries-old tradition of trade and economic relations, with barter as a major form of trade until just a few decades ago.