The Philippine Board of Investments (BOI) has recently given the green light to Daesang Philippines Corporation, a South Korean firm, as a new producer of tapioca starch utilizing the same modern manufacturing technology being used in their starch plants in South Korea, Vietnam and Indonesia. For the first time, the firm will introduce its wastewater-to-biogas technology, contributing to the circular economy and energy efficiency aspirations of the country.
With an annual capacity of 33,000 tons of tapioca starch and 4,446 tons of tapioca residue as by-product, the project is targeted to start commercial operation in January 2023 in Tagoloan, Misamis Oriental.
“We are making strides in modernizing our country’s agriculture sector. This is a breakthrough project for it reflects the strengthened economic partnership between the Philippines and South Korea, as we are on the path to finally finalizing the Free Trade Agreement. We in the Board Investments, therefore, invite more Korean firms to invest here in the Philippines,” Trade Secretary Ramon Lopez said.
Tapioca is a starch extracted from the cassava root, while tapioca residue is a by-product of processing cassava starch. Tapioca starch and modified starch are used as basic raw materials for the food and beverage industries and an emerging material for various industrial applications such as Polylactic acid (PLA). Meanwhile, tapioca residues have been widely used for a variety of animal feed such as poultry, pig, and cattle feed.
Daesang’s project will increase the cassava starch production capacity of the Philippines by nine percent (9%) from 370,000 metric tons to 403,000 metric tons. The required cassava roots to meet this year’s requirement for cassava processing is around 1 to 1.2 million metric tons based on the estimate from the Philippine Cassava Industry Roadmap and according to the US Department of Agriculture (USDA) – Foreign Agricultural Service (FAS).
The Northern Mindanao Region, the site of the project, is the second-largest cassava producing region, representing 27.05 percent of the total cassava production in 2020. With the region’s abundance of cassava, it now hosts four of the five existing cassava starch manufacturers, namely: Phil. Agro Industrial Corp. (Cagayan de Oro), Bio-Green Processing Inc. (Bukidnon), Triangle Industrial Corp. (Bukidnon) and Matling Industrial and Commercial Corp. (Lanao).
The project is seen as the start of emboldened economic relations between South Korea and the Philippines, as the Free Trade Agreement (FTA) of both countries is expected to be signed soon. Once enforced, the said FTA will pave the way for enhanced trade flows, generating more investment and employment opportunities.
Based on the data released by the Philippine Statistics Authority (PSA), the Philippine exports to Korea fell by 9.9 percent to US$2.57 billion last year from US$2.85 billion in 2020, while imports from Korea significantly increased by 35.5 percent to US$9.35 billion in 2021 from US$6.9 billion year-on-year.
The entry of Daesang Philippines Corporation is a result of close collaboration of the BOI’s Resource-Based Industries Service (RBIS) led by Director Raquel B. Echague and the BOI-Extension Office in Cagayan de Oro (BEO-CDO) led by its Chief, Ms. Lourdes Ellen Kionisala.
Notably, nothing could have been accomplished without the people who had been persistently working behind the scene even amid the lingering pandemic, to assist the company in registering the project with the BOI for incentives purposes.
Even during the pandemic, many physical and online meetings between the BOI head office, BEO-CDO and farmer groups, and ocular inspections of farms were made starting in March 2019. For the most part, Ms. Kionisala recounted, the BOI team assisted in introducing the company to their raw material sources (fresh cassava), as the implementation of the project relied on the adequacy of raw materials in the particular area. Throughout the process, RBIS and BEO-CDO coordinated with other national government agencies such as the Department of Trade and Industry (DTI), Department of Agriculture (DA), Department of Agrarian Reform (DAR), and Cooperative Development Authority (CDA) as well as various local government units (LGUs), she added.
Their team also faced some issues such as the relatively large raw material requirement of the project (500 metric tons of fresh cassava per day), the presence of operating cassava starch processing plants in the region, and many feed mills in the area, “which are competing users of fresh cassava and dried cassava chips respectively.”
BOI needed to find new fresh cassava suppliers so as not to disrupt the raw material supply chain of existing industries.
On the significance of BOI orchestrating the cooperation between the farmers and various government agencies, Ms. Kionisala pointed out: the BOI was able to convince the company to implement the project through the convergence of efforts of the farmers and different government agencies. Each independently playing a role, either as supplier or consolidator of raw material, provider of technical or financial assistance but united in the objective of ushering in an investment that will add value to our agricultural product.”
“Investor servicing continues. It did not stop with the signing of the supply contracts. We see challenges on the horizon. But we fearlessly move forward hand in hand with our investors, farmers, and partners in investment promotion,” Ms. Kionisala stressed, as there is a need to upgrade cassava farmer knowledge and skills to increase productivity through good farming practices and mechanization of farm practices, especially on harvesting.
On the economic aspect, the potential direct employment to be generated by the firm is around 492 workers.END