BOI okays incentives for SMC carton plant

The Board of Investments (BOI) has approved the grant of incentives for San Miguel Corp.'s (SMC) P268-million corrugated carton plant in Davao.

To be undertaken by its 60-percent owned subsidiary Mindanao Corrugated Fibreboard Inc. (Mincor), the project has been registered as a non-pioneer project entitled to a preferential tax rate on gross income effective for three years as well as other incentives and privileges.

BOI documents show that the project is an expansion of Mincor's current manufacturing capacity for corrugated carton boxes by at least 25 percent. At least 75 percent of its annual production will be sold to exporters, qualifying the project for incentives under the Investment Priorities Plan (IPP).

At the start of the project, Mincor expects to produce 48,500 metric tons of corrugated carton boxes, increasing to 56,000 metric tons in 2002 and to 62,000 metric tons by 2004.

Based on a timetable presented to the BOI, Mincor plans to complete the acquisition and installation of capital equipment and machinery by May 2000. Commercial operation is to start in August 2000.

The machines are estimated to cost P248.892 million, accounting for the bulk of total project cost. The company also plans to spend P7.636 million on a new building and P8.921 million on mechanical, electrical and civil works.

The project, according to Mincor, will be financed mostly through short-term loans (P197.43 million) and from additional equity (P71 million).

From the operation of the new facility, Mincor expects its sales to reach $17.87 million this year, gradually increasing to $23.99 million in 2002 and to $26.379 million by 2004.

Mincor said its entire production will be sold to direct exporters in Mindanao. The company is currently serving long-term arrangements apart from the initial 10-year contract signed with Del Monte Fresh in 1995.

The company said its traditional markets include Japan, Korea, Hong Kong, Middle East and China.

Mincor is owned by SMC (60 percent) and Macondray & Co. (40 percent). In 1997, the company entered an alliance with Rengo Co. Ltd. of Japan which left SMC with 60 percent, Rengo with 30 percent and Macondray with 10 percent.