MANILA, Philippines – The controversial executive order on mining that aims to review resource contracts, tighten rules and cut tax breaks is not yet final, a Palace official said.
On Tuesday, February 14, Presidential Spokesperson Edwin Lacierda told a press briefing that concerns raised by various business groups are unfounded since consultations among mining stakeholders for a comprehensive policy guideline that would be “workable for all” are still ongoing.
“The draft will also take into account consultations with the stakeholders. So I can assure the Joint Foreign Chambers that their concerns would be addressed and that the draft that they saw is no longer the draft that [Malacanang is] working on….It has been improved. It has undergone several changes,” Lacierda said.
He also said that “the finalized EO will take into consideration all the concerns of the stakeholders—the mining companies, the environment as well as the government.”
The controversial draft order, entitled Institutionalizing and implementing reforms in the Philippine mining sector, providing policies and guidelines therefor, and for other purposes, is similar to attempts of other governments, including South Africa, Australia and Zambia, to extract more revenues from mining and add more controls.
The draft order aims to widen a ban on mining to more areas and boost national government revenues through higher fees.
The Aquino government is under pressure to spend more–and fast–on infrastructure and improve social services after the economy performed poorly at 3.7% in 2011, making it the 2nd country in Asia with the steepest economic growth decline.
The draft mining EO has been sent to various Cabinet members, including Finance Secretary Cesar Purisima, and has been leaked to the media.
Purisima has been quoted as saying that “The revenue that the government shares from mining must be increased.”
Lacierda said that the draft EO “has been passed on to several Cabinet departments” and once finalized, Executive Secretary Paquito Ochoa Jr will call a meeting on it.
“I can tell you that the draft that they have been shown has undergone several changes,” Lacierda said.
The draft EO has caused a raucous among business groups in Manila. The Joint Foreign Chambers wrote a strongly worded letter to President Aquino on February 9.
“The draft EO as presented is profoundly disturbing in that it creates great uncertainty for established and potential investors into the Philippines. It proposes to review all existing contracts, and renegotiate or impose an increased Government tax or royalty share, and potentially close out granted contracts completely,” they wrote.
The President had said that he expects to sign the EO this month.
The following large-scale mining firms in the Philippines stand to be affected by the current version of the executive order:
- Xstrata Plc – has a stalled $5.9 billion copper and gold project in Mindanao
- OceanaGold Corp., the Australian gold producer that is developing the $185 million Didipio mine in Luzon
There are existing over 500 mining contracts and permits granted to small, medium, large companies that are both local and foreign.
Interest in the mining industry has gained after the Supreme Court affirmed in 2004 a law allowing foreign investors to tap mineral wealth in the country.
Untapped mineral resources in the Philippines have been estimated to be worth $1 trillion.
Investments have trailed behind at only $3.8 billion from 2004 to 2010 as environmental groups, church-based, and other interest groups, as well as local government units have kept their resistance against mining activities intact.
The industry has paid around P9.1 billion or $215 million of taxes, fees and royalties in 2010, and has employed about 197,000, according to the environment department.
They are granted income-tax holidays that range from 4 to 7 years, which should be reviewed, according to some economists. – Rappler.com
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