Reforms to Mining Act opposed

September 17, 2014 at 10:16

By  |

5:25 am | Thursday, September 11th, 2014

MANILA, Philippines–The joint foreign chambers and local business groups have pressed the government anew to respect the Philippine Mining Act as proposed reforms to the law threaten to make the sector even more unattractive to foreign investors.

In a briefing Wednesday, Julian H. Payne, president of the Canadian Chamber of Commerce of the Philippines, said a proposal by the Mining Industry Coordinating Council would place the so-called average effective tax rate (AETR) for mining at a high of 79 percent, making the Philippines one of the least attractive locations for mining investments.

The current mining fiscal regime places the AETR (which covers all taxes and fees paid by a company throughout a mine’s lifetime) at about 60 percent.

This, Payne said, was already higher than the 58 percent in Canada and Australia; 50-55 percent in Peru and South Africa; 41 percent in Chile; and 35 percent in Papua New Guinea.

“Mining companies will go where the proposed fiscal regime is a lot more attractive. Mining companies will not invest in the Philippines (under that regime). The end result is that there will be less investment in mining, and less revenue for the government,” Payne said.

“The argument that (minerals) are national resources and that a bigger share should go to the people than mining companies should (take account the fact) that these mining activities generate jobs and not just tax revenues. The total direct employment in 2012 was a quarter of a million, while the indirect jobs generated numbered 1.8 million in 2012, which was almost twice the size of the BPO industry. Thus, when we talk of share of national wealth going to the country, you just don’t talk about taxes. We should talk of employment,” he added.

As it is, the Philippines has been ranked by the Fraser Institute of Canada among the top 10 least attractive locations, largely due to policy and bureaucratic obstructions and lack of government support.

This was despite the fact that the country was ranked by the same institution as among the most attractive countries for mineral development in terms of mineral potential alone.

Of the 9 million hectares that have high mineral potential, only 60,000 hectares, or about 35 percent, are occupied by large-scale mines. The Philippines’ mining reserves are estimated to be worth $1.4 trillion.

Other key obstacles seen hampering the growth of the mining industry include policy instability; unpredictable legal systems such as challenges to the constitutionality of the Mining Act; illegal mining and security concerns; and the declaration of “no-go” zones that covered about 65 percent of the country.

As such, the business community presented eight recommendations meant to help revitalize the mining industry.

Based on the groups’ policy brief, the business community has urged the government to come up with a fiscal policy that is competitive and equitable; respect and implement the Philippine Mining Act; and continue processing mining applications and begin issuing approvals for new projects.

“We’re not optimistic but we’re here because we believe that the Philippines has to understand the benefits of responsible mining. In the short term, we hope the recommendations will be taken up. The Philippines cannot afford not to have responsible mining, as this is directly linked to addressing poverty and unemployment,” said Ian Porter of the Australian-New Zealand Chamber of Commerce (Philippines).


All rights to the stock images are owned by Getty Images and its image partners and are protected by United States copyright laws, international treaty provisions and other applicable laws. Getty Images and its image partners retain all rights and are available for purchase by visiting gettyimages website.
Arangkada Philippines: A Business Perspective — Move Twice As Fast | Joint Foreign Chambers of the Philippines