Mining still important for PH economic growth - economist
MANILA, Philippines - The mining sector will be an important source of economic growth for the Philippines, according to world renowned economist, Nouriel Roubini.
Speaking at the Philippine Investment Summit 2013 in Makati City on January 30, Roubini said that mining is going to become an important part of the country's economic growth in the future, along with tourism.
However, before this growth can happen, Roubini warned that structural reforms are needed.
“It is important to make sure that the effects of mining on the environment are taken into account. It is important that these regulations are fixed to incentivize investors,” said Roubini.
Finance Secretary Cesar Purisima echoed these sentiments. “Mining (production and revenues) declined (in the last quarter's GDP growth announcement). Once we address the issues that the President (Benigno Aquino III) wants to address, it can provide can provide an extra gear to the Philippine growth story,” he said.
Contribution to economy
In the 4th quarter of 2012, the mining and quarrying sector contributed a mere 0.2% to the overall economy, bringing the overall impact of the sector to the GDP to a 0.1% contraction.
Nickel mining was the biggest contributor to the sector with a growth of 33.5%, a far cry from the miniscule 7.7% the year before. However, the growth of the sector was weighed down by a lackluster performance of Gold Mining, which declined by 50.9%.
The year 2012 was a rocky one for the mining sector. The country's biggest gold producer, Philex Mining, stopped operations at its Padcal mine in Bengue province following a tailings pond spill in August 2012.
In July 2012, the Aquino administration signed Executive Order (EO) 79 imposing a moratorium on new mining permits pending the passage of a new law on the revenue-sharing scheme between the industry and government.
Mining firms are awaiting the resolution of these, as well as legal issues, so they can go ahead with their investments. The $5.9-billion Tampakan copper-gold project of Swiss mining firm Xstrata and local partner Sagittarius Mines, for example, pushed back its commercial operations to 2019 because of a South Cotabato provincial ban on open-pit mining.
The delayed Tampakan project was expected to account for at least 1% of gross domestic product (GDP) per year of operations.
This has significantly hampered the growth of the mining sector. In the 3rd quarter of 2012, following the signing of EO 79, Philippine GDP grew 7.1%, among the fastest in the world, but the mining sector contracted by 2.2%. Prior to the release of GDP data, the government significantly slashed its mining investment forecasts for 2013 to 2016.
“We’re hoping that Congress will legislate the [draft mining] bill. Starting in June or July when the new Congress comes in the issue in income sharing and all related concerns in the mining industry especially the many conflicting laws and regulations will soon be resolved,” said Socioeconomic Planning Secretary Arsenio Balisacan speaking at the announcement of Philippine’s 2012 annual GDP growth.
Speaking at the recent Extractive Industries Transparency Initiative, Purisima repeated this saying that mining can contribute one to two percentage points to the country’s economy growth if current governance issues are resolved and mining became more transparent.
“The past two years and 10 months of the Aquino administration, you’ve seen how good governance can change the fortunes of a country. In an economic environment where it’s very difficult, we’ve seen the country do much better than its performance in the past when the world economy was doing well,” he said.
Purisima said there should be transparency in both contract granting and tax payments made by mining firms. - Rappler.com