The green light is the culmination of a lengthy and rocky peace accord with separatists, during which militants linked to Islamic State have expanded their influence, most notably in their devastating occupation of Marawi City last year.
Duterte signed the measure into law after a visit to a southern city, his spokesman, Harry Roque, told reporters.
Ebrahim Murad, chairman of the separatist Moro Islamic Liberation Front (MILF), said he was confident the law would help bring splinter separatist groups back into the political fold and eliminate prospects of any incidents like Marawi.
The Bangsamoro Organic Law, as the measure is known, has broad public backing, making it harder for foreign extremists to form alliances and win support, he told reporters.
“All these splinter groups are a result of the frustration with the peace process. The moment the small groups no longer accept the foreign elements, they can no longer come (to the Philippines).”
The Bangsamoro area includes part of the Philippines’ second-largest island of Mindanao, and a chain of dozens of small islands to the west notorious for piracy and banditry.
An estimated five million Muslims live in the region, which has the predominantly Catholic nation’s lowest levels of employment, income, education and economic development.
The momentum behind the autonomy process was “a long-awaited dream coming true”, said Jesus Dureza, Duterte’s top peace adviser.
The new law gives the new entity, Bangsamoro Autonomous Region in Muslim Mindanao, political and economic powers that successive governments have promised separatists, in order to halt conflict that has killed about 120,000 people, displaced 2 million, and helped radical Islam gain a foothold in the region.
Mindanao remains under martial law until the end of this year, to allow security forces to halt a regrouping by a pro-Islamic State alliance that held Marawi through five months of air and ground assaults, in a battle reminiscent of Raqqa or Mosul in the Middle East.
The MILF has condemned the extremists and its fighters have been helping government troops to disrupt their activities.
Next comes an October referendum, where a positive result would let Duterte appoint an 80-member panel to set up a parliamentary system loosely patterned on Malaysia’s federal government.
MILF leaders have welcomed the Bangsamoro law, even if all their demands were not met.
“We will not stop there, we will continue to engage government until amendments are made in the law later to get what we really wanted,” Mohaqher Iqbal, the MILF chief negotiator, told Reuters after the final text was agreed.
Iqbal said the rebels were expected to decommission 30 percent of their 40,000 weapons after the referendum.
Although many powers will be devolved, the central government will keep control of security.
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