When the Asian financial crisis struck in 1997, the fledgling sub-regional economic cooperation between Brunei, Indonesia, Malaysia and the Philippines (BIMP) started to falter.
It had been barely three years since talks aimed at accelerating the growth of the four countries’ least developed areas were initiated.
Under the East Asian Growth Area (Eaga) concept, the provinces of Sulawesi, Kalimantan, Malacca Islands, West Papua in Indonesia, Mindanao and Palawan in the Philippines, Sabah, Sarawak and Labuan in Malaysia and Brunei Darussalam, would foster closer trade and investment relationships.
Former Philippine President Fidel V. Ramos, whose administration vigorously pushed the idea of closer ties with the four Southeast Asian neighbors, had projected that the Eaga concept would result in economic growth for Mindanao.
For Ramos, economic growth in Mindanao would also become an effective tool against the Muslim insurgency that has been dogging the Manila government for more than three decades.
Then the currency crisis hit and BIMP Eaga was placed on the back burner.
“Nagkanya kanya muna (They went their separate ways),†was how Efren Abu, the current Philippine special envoy to the BIMP-Eaga, described how members of the sub-regional cooperation behaved at the onset of the financial crisis.
Abu says by that time, nobody was talking anymore about BIMP-Eaga, once hailed as the answer to the woes of the least developed areas of Southeast Asia. “During the time of President Joseph Estrada, it was totally forgotten,†he said.
When Philippine President Macapagal-Arroyo came to power in 2001, the idea of revitalizing the Eaga concept surfaced.
The Mindanao Economic Development Council (Medco) based in Davao City started to pick up the pieces of what was left of the Eaga concept.
Networking with authorities in the three other members of the growth polygon, Medco started to organize trade missions. By this time, businessmen from General Santos City, who have previously started talks with their counterparts in Indonesia, were making a bold decision.
Mini successes
One group, led by fishing tycoon Doming Teng, trained its sights on Bitung, an hour and a half trip by car. Bitung, strategically located in the rich fishing grounds of Indonesia, looked the most promising place for a tuna cannery plant. “We exchanged visits several times with our Indonesian partners, practically the output of what we have been doing before in the Eaga,†Teng says.
Three years ago, the partnership materialized and PT Sinar Pure Foods International was born.
With $7.7 million in capital, Teng’s Signal Marine Ventures and its Indonesian partners took over the ailing Pure Foods facilities inside a 4.5-hectare area in Raya Madidir.
Infusing more that $1 million in additional capital to revive the former Pure Foods business, SMV and its Indonesian partners bought additional machinery and improved existing ones, such as a fishmeal factory, an ice plant and a cold storage facility.
PT Sinar’s throughput capacity was raised to 140 metric tons a day although production was only currently at 35-40 MT a day.
“We still have problems with fish supply but we are trying to address that,†Teng says.
PT Sinar markets its canned tuna products to Europe (55 percent), the United States (43 percent) and Japan (2 percent).
Last year, PT Sinar’s revenues were $20 million, making it the second biggest tuna exporting company in Indonesia. “We are currently developing our Middle East market,†he says. Teng says his group’s vision was not only to provide world-class products to consumers but also to generate livelihood and employment under the Eaga concept.
On the Indonesian side, PT Sinar’s business has generated 1,000 jobs at the factory alone. There is also the effect of its activities on other industries such as empty cans producers. “For local fishermen, we also help them by buying their catch,†he says.
But what about the Philippine side?
Teng says about 80 percent of PT Sinar’s raw materials come from General Santos City.
“Filipino fishermen contribute to the majority of our fish supply. When the financial crisis hit Asia in 1997, the fishing industry in General Santos City was heavily affected. Even in the following years, it hardly recovered,†Teng says.
Marfin Tan of the General Santos fishing industry association said PT Sinar’s business in Bitung has assured the security and continuity of the fishing sector.
Teng says PT Sinar also imports some of its packaging supplies from Mindanao. “We still lack supplies for packaging materials and spare parts and this causes cost-leaks because they are sourced elsewhere,†he says. Teng says it would be better if investments in these areas would be made, not only to help PT Sinar lower the cost, but also to help generate livelihood.
A few meters away from PT Sinar, tuna canning company PT Samudra Sentosa stands on a 3.3-hectare area.
Like PT Sinar, the Filipino owners of PT Samudra came to Bitung about three years ago under the BIMP-Eaga concept.
Taking over the existing facilities of a company producing canned vegetables such as asparagus, the General Santos-based Damalerio Group of Companies infused more capital to establish a tuna canning plant. “We are 100 percent Filipino-owned,†Gary Damalerio, PT Samudra’s operations officer, says.
Like PT Sinar, Damalerio’s company exports its produce to the United States. “We are also trying to source more fish because we cannot maximize our capacity because of under supply,†he says.
Currently, PT Samudra gets half of its supply from General Santos City. “We want to see an increase in the future. Our fishermen do not have the capability right now because of lack of fishing boats,†he explains.
Reviving talks
The apparent success of the two companies under the Eaga concept has encouraged government officials to revive talks on economic cooperation.
Abu says upcoming talks—including the one scheduled at the sidelines of the Asean summit in Cebu this year—between Eaga players would center on “doable†things such as trading linkages. “This is a good start,†he comments.
Sarangani Gov. Miguel Dominguez says he wanted the success of the big businesses replicated, but he wants small and medium enterprise (SMEs) in his province to get into the game. “The backbone of every economy is the SME sector. We want to tap their potential to improve our local economy,†he says.
Dominguez accompanied the largest delegation of Mindanao businessmen to Indonesia last Sept. 21.