Jatropha (Jatropha curcas) is a drought-resistant perennial shrub with an economic life of 35-50 years. With the increasing interest in biofuels, it is now considered as one of the promising sources of biofuel and has proved to be a viable feedstock because of the 30% oil composition of its nut, which can be easily processed into fuel as Jatropha Methyl Ester (JME), a form of biodiesel.

At present, the biggest biodiesel feedstock and the strongest contender of jatropha in the Philippines is coconut oil.

Market Opportunity

Increase in Actual Sales

• There is a substantial growth in the amount of the sales of biodiesel. Actual sales increased from 44,399,918 million liters in 2007 to 64,482,908 million liters in 2008.


Increasing Demand (Projected for 2009-2015)

• The Biofuels Act of 2006 created a guaranteed market for biodiesel thorugh the mandated blends specified by the law.

Exports

• Market opportunities in the industry exist in the exportation of the excess supply of biodiesel in the local market. Furthermore, countries with no enough agricultural lands can invest in the production of jatropha and the processing of JME in the Philippines and then export the latter.

• Starting 2010, the Philippines will be exporting 30 million gallons of jatropha oil as biodiesel feedstock to the US in view of a contract entered into with a U.S based company.

Philippine Advantage

Natural Resources

• Jatropha The biggest jatropha plantations in the country to date are the 787 hectares of jatropha nursery-cum-pilot-plantations of the Philippine National Oil Company-Alternative Fuels Corporation (PNOC-AFC) in Cagayan de Oro in Mindanao and Nueva Ecija and in Luzon.

Seedlings grown in June 2007 were 571,074.

• Available Land

Idle lands all over the Philippines with a total area of 2,003,572 hectares suitable for jatropha plantation.

Central Visayas and Bicol have the top 2 largest land areas suitable for the production of the said feedstock.

Ideal Locations

Support Industries/Infrastructure

• The contract-growing scheme is a popular practice in the country where many farmers are willing to enter with the processors or manufacturers.

Human Resources

• Availability

-The country, being an agricultural country, has many readily-available farm workers who are very knowledgeable on the details and technicalities of farming in the Philippines.

-Big labor force that it highly skilled, educated, English proficient and has strong and good work ethics for industries.

Industry Potentials

Growth Rate in Number of Industry Players

• From 2005 up to present, there are 11 BOI and DOE-registered biodiesel producers in the country engaged in the production and processing of various biodiesel feedstock.

Contribution to the Economy

• Employment generation and livelihood improvements in the rural areas

• Foreign exchange savings brought about by the decrease in fuel importation

Industry Players and Capacity

Government Support

Laws and Policies

• The Biofuels Act of 2006 (RA 9367)

-mandates the use of biofuels to all fuel products distributed and sold by oil companies in the Philippine market

• Omnibus Investment Code (EO 226)

-specifies the granting of incentives to investment projects/activities that are included in the Investment Priorities Plan

• PEZA Law (RA 7196)

-specifies the granting of incentives to investment projects/activities that are located within economic zones

• R-VAT Law (RA9337)

-provides for the value added tax on the various commodities as well as those that will be given exemptions

• JAO 2008-1

-provides guidelines governing the biofuel feedstock production, and biofuels and biofuel blends production, distribution and sale

Development Plans and Programs

• Focus of strategic program and projects of the government for biodiesel

-Improving cultivation and diversification of feedstock

-Meeting demands

-Developing cost effective technologies

-Improving support infrastructure

-Increasing investment

-Implementing sustainable incentives across industry sectors

-Improving condition of retail competition

-Better monitoring of biodiesel quantity, quality and price

-Improving enforcement of guidelines and industry standards

-Strengthening DOE capability in its management role of the new industry

Market/Technical/R&D Support

• Integrated R&D program conducted by PNOC-AFC, PCCARD and UPLB:

-Preliminary evaluation to improve variety (i.e. seed quality testing, storage and development of cost-effective propagation technique)

• S&T Services (NBB website development and hosting with GIS capability and testing facility/analytical laboratory)

Financial Support/Guarantee

• Credit assistance provided for by the Land Bank of the Philippines and the Development Bank of the Philippines for agri-based and renewable/alternative energy sources projects.

Incentives

Fiscal

• RA 9367 (The Biofuels Act of 2006)

-zero specific

-VAT exemption

-Wastewater charges exemption

-Financing activities by government financial institutions

• EO 22 (Omnibus Investment Code)

-ITH

-Importation of consigned equipment for 10 years

-0% duty importation of capital equipment, spare parts and other accessories

• RA 7196 (PEZA Law)

-ITH

-special 5% tax on gross income

-tax and duty-free importation

-exemption from export taxes, wharfage dues, impost and fees

-exemption of payment of local government fees

-0% Vat

• RA 9337 (-R-VAT Law)

-zero rate for ethanol and biodiesel

Non-Fiscal

• EO 226 (Omnibus Investment Code)

-Employment of foreign nationals

• RA 7196 (PEZA Law)

-Special Investor’s Visa Visa

-employment of foreign nationals

-simplified import and export duties

• Others

-Financial Assistance by Government Financial Institutions

-Promotions by BOI, PEZA, investment promotion agencies (i.e. Clark Development Corporation, SBMA), DOE

Costs of Doing Business

Project Cost for a 2 M li Capacity Plant

Salaries and Wages
Minimum Daily Wage Rate (as of May 2009)