Summary

Local markets in the Southern Philippines are highly dependent on informal maritime trade between Sabah, Malaysia, and the Sulu archipelago. Beginning in March 2020, governments across the region introduced movement restrictions aimed at limiting the spread of COVID-19. While health measures were implemented with the intention of protecting citizens, they have impacted local markets which are dependent on informal cross-border trade.

In 2020, The Asia Foundation conducted a rapid assessment of the impact of COVID-19 movement and health protocols on informal cross-border trade (locally known as barter trade) in the Sulu archipelago. The research, part of the X-Border Local Research Network project, interviewed 18 respondents representing different stakeholders engaged in the local barter economy across the Sulu archipelago such as traders, wholesalers, truckers, and laborers. Findings and anecdotes from this research have been consolidated into this briefing paper.

Key Findings

• Despite restrictions barring barter trade and cross border movement, traders’ movement between the Sulu archipelago and Sabah, Malaysia continued mostly uninterrupted. Traders coordinated with their networks in Sabah to avoid detection from authorities and, if necessary, shifted to alternative ports, or loaded cargo offshore by using smaller crafts to ferry goods. Traders faced no restrictions when re-entering the Philippines.

• Conversely, barter trade was most severely impacted once goods landed in the Philippines. Restrictions limiting movement between barangays and municipalities disrupted the flow of goods from ports to warehouses and markets. The informal nature of barter trade meant many were unable to acquire the necessary Authorized Person Outside Residence (APOR) certification to continue their business, while the uneven implementation of regulations across local governments further complicated transport. Day laborers were also impacted, leading to labor shortages for unloading and hauling goods.

• Despite directives of a price freeze on goods, the prices of staples such as noodles and rice increased during the early stages of the pandemic. This can be attributed to multiple factors; one such factor is an initial stockpiling of rice by local government units (LGUs) and others in an effort to ensure supply to their constituents. Second, the price of bribes, “standard operating procedures” and other rents increased for barter traders.

• Consumer habits have changed during the COVID-19 lockdowns. The sale of illegally imported cigarettes from Indonesia and Malaysia has ballooned, while discretionary spending on clothing and other non-food items has reduced dramatically. Interestingly, despite weak telecommunications infrastructure across the region, the research found anecdotal evidence of an increase in the use of online marketplaces such as Facebook.

• The pandemic and associated COVID-19 restrictions do not appear to have had a notable impact on local conflict. Some respondents, however, raised concerns about the significant presence of security personnel manning quarantine checkpoints