Korean firm Daesang Philippines Corp. is investing P756.24 million to expand its cassava/tapioca starch production utilizing modern manufacturing technology.
TheBoard of Investments (BOI) said it has already approved the project application granting the project tax and fiscal incentives.
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.
In approving the registration of the Korean project, the BOI noted of the large raw material requirement at 500 metric tons of fresh cassava daily to be supplied by the cassava starch processing plants in Mindanao.
The BOI still sees the need for additional new fresh cassava suppliers so as not to disrupt the raw material supply chain of existing industries.
According to the BOI, Daesang will employ 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.
“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 $2.57 billion last year from $2.85 billion in 2020, while imports from Korea significantly increased by 35.5 percent to $9.35 billion in 2021 from $6.9 billion year-on-year.