By INA ALLECO R. SILVERIO
MANILA — The militant peasant group Kilusang Magbubukid ng Pilipinas (KMP) today assailed Malacañang’s draft executive order on the mining industry saying “the draft EO is deceptive.”
“The anti-people and anti-environment Mining Act of 1995 remains as the political backbone of Malacañang’s draft EO on the mining industry. This proposed EO is packed with trickery and deception,” said KMP spokesperson Antonio Flores.
Malacañang recently announced that it is intent on coming out with an executive order that will tighten regulations on mining, cut tax breaks for mining firms, and review resource contracts. The planned EO for mining , Malacañang said, aims to raise state revenues from the mining industry while limiting the negative impact of mining operations on the environment.
Review mining contracts for increased valuation
According to a report on Bloomberg News, President Benigno Aquino III is going to release an EO that will introduce competitive bidding for mining rights. The proposed EO was also said to include a wider ban on mining in some areas of the country, as well as a provision on increased economic valuations on projects before they are approved.
The eight-page document directly came from Malacañang and sent to various agencies for feedback. Bloomberg News managed to obtain a copy. The existence of the draft has already been confirmed by Finance Secretary Cesar Purisima.
Aquino’s proposals call for a review of all existing mining contracts to ensure that these are in line with the new policies, “provided however that the review shall not result in the impairment of contracts,” according to the document, which was accompanied by a letter from the Office of the President of the Philippines signed by Aquino’s executive secretary, Paquito Ochoa.
The letter, entitled Memorandum from the Executive Secretary, was addressed to Finance Secretary Purisima, Trade and Industry Secretary Gregory Domingo, as well as the head of the National Economic Development Authority and the secretaries of science and technology and agriculture.
In a previous interview with the media, Purisma said, the government’s shares in mining should be increased. This was, according to mining industry reports, connected to the move of 11 other countries to increase taxes or royalties on sales of resources such as gold and coal.
Among the mining firms with massive investments in the country are Xstrata Plc which has a stalled $5.9 billion project; and OceanaGold Corp., the Australian gold producer with mines in New Zealand and the Philippines. Oceana is operating a project reportedly worth $185 million in Didipio mine in Northern Luzon.
According to the draft EO, the move toward competitive public bidding for mining rights will depart from the current first come-first serve procedure. The Aquino administration wants to increase revenues from mining by revoking an income tax holiday for miners and reviewing mining fees, taxes and incentives.
There is also the plans to downstream mineral processing and ban direct shipping of raw or unprocessed strategic metallic ores three years after the proposed EO order takes effect.
In the meantime, the EO also states that some areas will not be allowed for mining such as prime agricultural lands and eco-tourism zones.
A move to legitimize large-scale mining
The KMP is not impressed by the proposed order, saying that its was designed to weaken local ordinances against large-scale mining.
KMP’s Flores said the creation of a so-called Mining Industry Development and Sustainability (MIDAS) Council was “another layer of bureaucracy to strengthen and legitimize large-scale and destructive mining.”
“This explains why investors did not criticize the MIDAS and instead assailed small-scale mining,” he said, referring to the statement of the Joint Foreign Chambers (JFC) and the Philippine Mining and Exploration Association, Inc. (PMEA). The joint statement claimed that “the discrepancy between benefits and liabilities is more pronounced in small-scale and unregulated mining, and not in the highly regulated large-scale mining industry.”
“Aquino’s draft EO on mining would not solve the massive land-grabbing, destruction, and plunder of large-scale mining TNCs of our natural resources,” the peasant leader said.
For its part, the The Chamber of Mines of the Philippines (CMP) is already calling for a dialogue with Malacañang and the presidential Mining Policy Study Group and other concerned government agencies “to discuss more practical and doable options for reforms that are consistent with responsible mining and the sustainable development framework.”
In the CMP’s position paper on the Malacañang-proposed EO titled “Institutionalizing and Implementing Reforms in the Philippine Mining Sector, Providing Polices and Guidelines Thereof, and for Other Purposes,” the group said the Minerals Development Council and the Mining Investment Security Task Force should be reactivated to ensure the security of mining investments. It said the two agencies were previously successful in monitoring the needs of the mining sector and that they were effective in enforcing security protocols in mining areas including those classified as “hotspots.”
Encourage other enterprises, not mining
A known critic of the Mining Act of 1995, however, said the Aquino administration should stop encouraging mining companies from plundering the country’s mineral resources and instead give support to micro, small and medium enterprises.
Bayan Muna Rep. and House Committee on Small Business and Entrepreneurship Development chairman Rep. Teddy Casiño is proposing amendments to the Barangay Micro Business Enterprises (BMBE) law.
According to Casiño, “For the economy and the business climate to improve in the country, one must start on the needs of our own local entrepreneurs. The following steps are definitely in order: 1. Reduce the cost of electricity and oil by initially removing or reducing the VAT and, in the long term, by bringing back regulation and government support; 2. Reduce the stringent requirements, fees and processes for putting up and sustaining a business or company; 3. Allow small firms to reap the benefits of historically low credit interest rates by rationalizing our credit systems; 4. Come up with a national strategy to consolidate micro and small firms in order to link them up with medium and large scale enterprises.”
The MSME sector is comprised of more than 750,000 firms, accounting for 99.6 percent of total establishments and contributing 61.2 percent of total employment. Most MSMEs are into the production of consumer goods, mostly food and retail services.
Casiño said the various proposals to amend the BMBE law aims to encourage small firms to register their businesses by increasing and rationalizing the incentives granted to micro business enterprises, as well as increase their access to credit.