Halal Industry

Mindanao eyes halal zone growth, must first improve security and infrastructure

| 28 February, 2016
 Paul Bischoff

Mindanao, the Philippines’ second largest island, is attempting to become a hub for trade in halal goods as it further develops Zamboanga City Special Economic Zone and Freeport but its success will depend largely on how well it improves and maintains its security and infrastructure.

In 1995, the Philippine government established Zamboecozone, short for the Zamboanga City Special Economic Zone and Freeport. Within this 16,000-hectare piece of real estate, tasked with encouraging trade and investment in the southern Philippines, lies a 100-hectare area of land known as the “halal zone.” The halal zone was recently set aside specifically for halal processing and manufacturing: food and beverage companies in particular, but also halal cosmetics, pharmaceuticals, and travel services.

Companies that set up shop in Zamboecozone receive several economic benefits, including a multitude of tax breaks, 100 percent foreign ownership, and residency visas for skilled foreign staff. Thanks to Zamboanga City’s coastal location, it serves as a gateway to and from neighboring Muslim-majority countries such as Brunei, Indonesia, and Malaysia.

Zamboecozone aspires to be the halal processing and manufacturing hub of the Philippines. But despite the perks and potential market, attracting companies and investors to Zamboanga City is no easy task.

In the recent past, the city has suffered from frequent power shortages, water supply issues, and, perhaps of most concern, violence.

POWER, WATER, AND SAFETY

In 2013, a local Muslim separatist group led an armed incursion into Zamboanga City, taking hostages and engaging in urban warfare that lasted several days. The incident left a poor impression seared onto the memories of would-be investors. To put their fears at ease, Zamboecozone has beefed up security since the crisis.

“We have signed an [...] agreement with the Philippine National Police Special Action Force (PNP-SAF) last year to establish the 5th Special Action Battalion Headquarters in the Zamboecozone, and permanently station a squadron of PNP-SAF in the zone," Alfonso Basilio A. Marquez, head of corporate relations at Zamboecozone told Salaam Gateway. “We also have our own 64-man Special Citizen Armed Forces Geographical Unit Active Auxiliaries (SCAAs) and augmented by an 8-man security force.”

 

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As for power outages, some of Zamboecozone’s early investors have already begun constructing a 300-megawatt solar farm, a 100-megawatt coal-fired power plant, and a few smaller power plants and farms that utilize renewable energy sources.

Marquez says the water supply is adequate for the current set of projects. “When our two power producing locators go online, and the bulk water distributing locator starts its normal operations this year, power and water will be substantially addressed in the zone,” he said.

As of December 2015, Zamboecozone had 30 registered projects coming from various industries, but Marquez says none of the pledged 23.6 billion pesos ($496 million) comes from halal companies.

The aforementioned power-producing projects make up the largest slice of investment, although agriculture is expected to be the primary sector in the years to come. That means realizing Zamboecozone’s dream of being a hub for halal products is still a distant one, but it’s not without precedent.

THE MALAYSIA MODEL

“Zamboecozone halal zone plans to pattern with that of Malaysia’s thriving halal zones,” Marquez said. Malaysia is recognized worldwide as an international halal hub, which propels the country’s export-driven economy.

In 2014, 4,500 companies in Malaysia carried halal certifications, a 35.5 percent increase on the previous year. The country boasts 21 halal parks similar to Zamboecozone’s halal zone.

Mindanao is home to the largest concentration of Muslims in the Philippines, and Zamboecozone is the first and only free port in either of the Philippines’ two southern provinces.

© Copyright SalaamGateway.com 2016

 

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