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Tuna Transshipment: A New Business Opportunity For Davao

Transshipment is a relatively new phenomenon and Davao is the only place in the country where a fishery product may pass through without paying taxes on its way to auction destinations in Japan, Canada and the United States.

It started in 1995 when a Taiwanese group came to visit the Davao Fish Port Complex (DFPC) and found that it was near enough to international tuna fishing grounds.

At that time, transshipment was not allowed in order to protect local fishermen and the tuna industry. Anticipating transshipment to be a new business opportunity, the government in 1998 enacted the Philippine Fisheries Code that allowed the use of land, sea and air facilities for transshipment. The DFPC so far is the country’s only designated transshipment port.

Today, six companies representing foreign vessels handle the transshipment activities.

“Technically, tuna caught in international waters cannot be sold in the local market without paying customs duty,” says Mario Malinao, DFPC manager. “Otherwise, it’s illegal.”

The DFPC is managed by the Department of Agriculture’s Philippine Fisheries Development Authority (PFDA).

At the outset, Davao demanded for tangible benefits such as having tuna on their dining tables. Upon the request of the local government, the Agriculture department issued a Certificate of Necessity to Import allowing non-sashimi grade tuna for local sale.

Duty is paid for by processing plants, wet market traders and “institutional buyers,” such as hotels and restaurants. The Bureau of Customs slaps a low duty—usually 7 percent of the prevailing market price—that doesn’t affect local prices.
Because of the transshipment, up to P300 million trickles down to airlines, fuel suppliers, packing materials, rest and recreation, hotels and restaurants and other industries.

In 2008, transshipment contributed considerable amount of money to the local economy. Food procurements by foreign fishing vessels was worth P20 million. The vessels that made 504 port calls that year spent an average of P40,000 for food each time they dock.

In addition, an estimated P15.1 million was infused to the rest and recreation sector by the crew of the foreign vessels that called port during the year. An average of three crew-members per vessel (who are allowed to go for rest and recreation) spend about P30,000 for an average stay of two and a half days at port.

The foreign fishing vessels procured and loaded 4,978,375 pieces of live bangus baits worth P32.4 million and 14,377 kilograms of frozen galunggong baits worth P11.5 million.

Small-scale food chandlers deliver miscellaneous foodstuffs, from young coconuts, dressed native chickens, goat meat and dressed duck, vegetables, fruits and sea foods worth a conservative P2 million.

Diesel fuel procurement by both local and foreign vessels is estimated at P18.3 million (2008 prices). Local dealers sold P21.7-million worth of packaging materials.

The domestic airline industry benefited: at least P88.7 million from the 1.5 million kilograms of tuna cargoes transshipped to Japan and other auction markets. This excludes the cost of freight for the volume of processed and vacuum-packed tuna loins shipped out or exported by processors.

As a whole, transshipment and its tremendous interplay with assorted business activities generated P183.270 million—also worth P34.5 million in revenues for government agencies (P25.6 million for the fish port; P6.2 million for customs and P1.9 million for local governments). These do not include revenues from business and/or mayor’s permits, health and sanitation certificates, barangay clearance fees, etc.

Nine fish transshipment companies, fish processors/exporters and other business locators have 595 local staff members while other related enterprises employ 95 more. There are also 69 small- and medium-scale fish and residue buyers and 24 fish vendors.

The DFPC is home to local boats, about 50 of them at any given time, that leave at dusk and arrive in the morning. Each day, they haul in from 3 to 5 tons of galunggong, matang baka, bilongbilong, hasahasa, tamban, squid and—occasionally—tuna.
Industrial complex
Opened in 1995, the DFPC is the seventh PFDA commercial fish port and the second major one after General Santos. It is Mindanao’s most modern commercial fishery post-harvest facility.

The P359.1-million complex, built with funds from the Overseas Economic Cooperation Fund (OECF) of Japan, preceded that in General Santos City by two years.

It serves local and foreign vessels, processes, stores and packages fishery and marine products for marketing here and abroad.

Located in Barangay Daliao, in Davao City’s Toril District, the 4.5-hectare complex is an alternative transshipment port in the Asia-Pacific region and the East Asean and Growth Area. It is about 25 kilometers from the sparkling-new Davao International Airport.

After more than 10 years in operation, the DFPC is still the only fish port in the Philippines where foreign fishing and long-line vessels are allowed to unload tuna catch for transshipment.

Some 13,000 square meters are leased to tuna transshipment companies and marine products traders.

The 2.5-hectare harbor basin can accommodate 45 (75-ton) commercial fishing vessels at any given time. Two breakwaters protect the harbor basin and service outrigger municipal fishing boats as docking/berthing areas.

An industrial complex, the DFPC operates its own waste water treatment facility and a 350-kilowatt stand-by electric power generating set.