Brunei firm invests P1.3B to boost BIMP-EAGA

Manila Bulletin  | 26 August 2013
Medium_sl-agritech
Filipino firm SL Agritech Corp. and Brunei firm Four Bays Iman Sdn Bhd (FISB) have tied up for a 20,000 ha hybrid rice plantation in Mindanao.

Brunei firm invests P1.3B to boost BIMP-EAGA

By Melody M. Aguiba

Filipino firm SL Agritech Corp. and Brunei firm Four Bays Iman Sdn Bhd (FISB) have tied up for a hybrid rice plantation in Mindanao in an effort to stimulate businesses and bring economic progress in the Brunei-Indonesia-Malaysia-Philippines-East Asia Growth Area (BIMP-EAGA), an ASEAN sub-regional grouping.

FISB Director Jocelyn Bidaure Lebanan said the company will put initial investments of P1.3 billion in the first year of the program. The first year investment will include working capital (leased area, contract growing area, and operational expenses) P688 million; mechanization, warehousing, trucks, and drying facilities, P427 million; and milling facilities, P185 million.

“This is just an initial investment, more will be invested in this five-year program,” said Lebanan in an interview. Lebanan also said they have already resolved some issues in the local banking process after meeting with Maybank.

According to Lebanan, the company will step up investments to P1.905 billion on the second year; P2.43 billion on the third year year; P2.87 billion the fourth and P3.235 billion on the fifth year for total investments of P11.740 billion over the five-year program.

“It is really an ambitious plan that aims to identify a total of 20,000 hectares by the fifth year of operation that should bring about livelihood opportunities to Muslims in Mindanao,” Lebanan said.

FISB is partnering with SLAC in supporting a previous venture of Tinghua Foundation that Lebanan headed. Tinghua has been engaged in agricultural contract growing among Muslims planting high-value crops like asparagus in South Cotabato.

FISB signed a memorandum of agreement early this week with SLAC Chairman Henry Lim Bon Liong and Dr. Frisco M. Malabanan, SLAC hybrid rice specialist.

Under the partnership, SLAC will provide the hybrid rice technology, seeds, agricultural chemicals, and marketing work to the JV. The FISB will put in the investment in irrigation, farm to market roads, land to be subjected for contract farming or lease, drying equipment, transport, post harvest and other processing facilities.

The JV aims to follow the successful joint venture model of La Frutera Inc (LFI) and Paglas Corp. (PC), a company founded by the late Ibrahim “Toto” Paglas. The PC-LFI JV manages agricultural lands including the banana plantation originating in Datu Paglas, Maguindnao that is now one of Philippines’ largest banana exporters.

While SLAC has long had hybrid rice seed production area in Banay Banay Davao Oriental, Lim said its JV with FISB should further put money in areas that need the most help in poverty reduction. Hybrid rice can raise Mindanaoan’s rice yield from 3.5 to 7.5 per hectare and farmers’ net income from P50,000 to P100,000.

“There are many existing irrigated lands in the Autonomous Region in Muslim Mindanao. In the Ampatuan town alone, there are 6,000 hectares of fully irrigated land. We won’t just give (inputs or money) for free to people. It will be ‘balik tangkilik’ program. Farmers have to pay (for their dues) in the form of rice, and they can have for their own any excess (in production),” said Lebanan.

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Business World | August 23, 2013
 
SOUTH COTABATO province will soon host a 2,000-hectare rice plantation joint venture between a local and Brunei company this year, hoping to address peace and order by spurring economic activity in the area, a company official said Friday.
"We are actually targeting the whole Mindanao and Palawan but we are starting it in South Cotabato," Dr. Frisco M. Malabanan, hybrid rice specialist of SL Agritech Corp. (SLAC), said in a phone interview, referring to the joint venture with Four Bays Iman Sdn Bhd (FBISB).
 
Based on the memorandum of agreement signed by SLAC President Henry Lim Bon Liong and FBISB Director Jocelyn Bidaure Lebanan earlier this week, according to a statement from SLAC, the business in five years is expected to produce 754,000 metric tons (MT) with a total value of 22.165 billion.
 
"For the first year, 2014, production volume is projected to reach 52,000 metric tons; 104,000 MT for 2015; 156,000 MT for 2016; 208,000 MT for 2017; and 234,000 MT for 2018," Mr. Malabanan said.
 
Corresponding to the expected output, he said, projected sales are P1.43 billion in 2014; P2.86 billion in 2015; P4.29 billion in 2016; P5.72 billion in 2017; and P7.865 billion in 2018.
 
SL Agritech and Four Bays are hoping to follow the success of the banana plantation partnership between Paglas Corp. and La Frutera, Inc. in Datu Paglas town, Maguindanao province.
 
"Banana brought peace in Paglas. How much more can a rice plantation help bring peace to Mindanao?" Ms. Lebanan was quoted in the statement.
 
Under the deal, SLAC will provide hybrid rice technology, seeds, agricultural chemicals, and the marketing aspect, while FBISB will be in charge of irrigation, provision of farm-to-market roads, land, drying equipment, transport, and post-harvest and other processing facilities.
 
According to the companies’ estimate, the joint venture will need an investment of P1.3 billion for the first year, consisting of P688 million for working capital, P427 million for mechanization, warehousing, trucks, and drying facilities, and P185 million for milling facilities. -- J. D. Guillermo
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