By Lenie Lectura & Dennis D. Estopace
Conclusion
Advocates said mineral extraction has not been kind to the provinces that host the business. In a statement on Tuesday, Bantay Kita (BK) said mining does not contribute $866,335,600 to government coffers.
BK, a coalition of organizations pushing for transparency and accountability in the extractive industry, claims that large-scale miners paid a mere P5.4 billion to the government, or 0.003 percent of total government revenues, in 2013.
“This is contrary to claims that the sector contributes P40 billion to state coffers,” the group said in the statement, citing the 2015 Country Report of the Philippine Extractive Industries Transparency Initiative (EITI) as source of data.
The Chamber of Mines of the Philippines (CoMP) has stated in a recent statement that the poorest provinces in the Philippines do not host mining operations.
“This does not, however, counter the fact that those hosting mining remain to have poverty incidence above the national average of 26.3 percent,” BK said.
Citing data from the Philippine Statistics Authority (PSA) 2015 First Semester Poverty Statistics, BK said mining provinces that have high poverty incidence are Compostela Valley, with 36.8 percent; Agusan del Norte, 39.6 percent; Agusan del Sur, 54.8 percent; Surigao del Norte, 39.6 percent; Surigao del Sur, 41.6 percent; Leyte, 46.7 percent; Eastern Samar, 50 percent; Camarines Norte, 44 percent; and Zamboanga del Norte, 56 percent.
All of these provinces play host to mining firms. Some have hosted mining operations for many decades.
Shallow indicator
CORDILLERA Administrative Region, which the CoMP claims to have a low poverty incidence while playing host to large-scale miners Philex Mining and Lepanto Consolidated Mining, is in no way dependent on the mining sector, according to the BK.
Citing figures from the PSA Regional Accounts data, mining and quarrying activities only contributed 3 percent of regional GDP compared to agriculture’s 11 percent in 2013, the BK said. The mining sector’s contribution on average is low at 5 percent from 2010 to 2014. Mining and quarrying is second to the lowest contributor to the region’s industry sector, BK added.
The mining industry has a significant contribution to national and local development, according to the CoMP. The group cited Bataraza in Palawan, Claver in Surigao del Norte and Siocon in Zamboanga del Norte as examples of fourth-class municipalities that were transformed into first-class municipalities after the entry of mining.
However, BK said the country’s classification of municipalities is a shallow indicator of people’s well-being or progress as it merely measures income of the municipality.
Bataraza still posted a poverty incidence rate (PIR) of 30.6 percent in 2012, Claver at 41.4 percent and Siocion at 49.2 percent, BK said, citing the 2012 PSA municipal and city level poverty estimates.
More contribution
IN 2013 large-scale mining companies only paid 1.21 percent of their estimated sales of P73.4 billion as a unique payment for the minerals on top of the regular taxes, which all businesses in the country pay.
The BK coalition estimates foregone revenues at P4.5 billion in the form of tax incentives granted to seven firms that year.
The sector has generated less than 1 percent of total employment for the past decade, BK said, citing data from the Mines and Geosciences Bureau.
“This is due in part to the sector’s highly mechanized nature and the absence of a labor-intensive processing industry in the Philippines,” BK added.
“The bulk of the country’s minerals are exported as raw, with no value added, to China and Japan.”
According to BK, the mining industry should give the government a higher share as payment for the finite minerals they extract, beyond shaping up and complying with environmental laws.
Next step
SOME pundits see federalism “as the next logical step after devolution.”
“In the Philippines advocates of federalism believe that the structure of the federal system would respond to the geographical obstacle and differences caused by cultural diversity on governance because it allows fragmentation, while, at the same time, promoting national interest,” academicians Alex B. Brillantes Jr. and Donna Moscare said in a 2002 conference in Kuala Lumpur, Malaysia. “It is also claimed that the federal structure will accelerate the country’s development.”
Pundits also believe that power becomes decentralized to the states, giving officials a wide berth in organizing their respective economies.
One of the sectors that could be further reorganized is in power generation, distribution and transmission.
For example, some states may opt to build more coal-fired power plants, while others may invest in renewable energy. Revenue-sharing from these investments and businesses could also be redefined.
Currently, the government refers to the Local Government Code (LGC) in cases of revenue sharing.
The LGC has hiked the financial resources available to local government units (LGUs) by broadening each LGU’s taxing powers. Also, the LGC provides them with a specific share from the national wealth exploited in their area, e.g., mining, fishery and forestry charges, and increasing their share from the national taxes, i.e., internal-revenue allotments (IRA), from a previously low of 11 percent to as much as 40 percent, according to Brillantes and Moscare. “The Code also increases the elbowroom of local governments to generate revenues from local fees and charges.”
According to the Alyansa Tigil Mina, another advocate for better regulation of the extractive sector, the mining law states that mineral taxes only apply to companies operating in mineral reservations.
“There are only four provinces that are been identified as mineral reservations [but] mining is present in 13 provinces,” the group said.
Still waiting
PLAYERS in the power industry, for their part, remain mum on the effects of federalism.
Since they are running a highly lucrative business, sources said they are just being careful when sharing their insights, particularly on a sensitive issue, such as the change in the form of government.
“It’s hard to say at this point since we know very little about the type of federalism that will be adopted,” Joseph C. Nocos, Alsons Consolidated Resources Inc. vice president for business development, said in a text message. “I would be happy to give a more detailed reaction once we get more information.”
Aboitiz Power Corp. President Antonio Moraza said the company has yet to provide a comment on this.
Personally, Moraza said, he is “not familiar with federalism.” Though “offhand, I don’t’ think it will have any direct impact.”
Image credits: AP
3 comments
test
I respectfully disagree with points made in article: “Federalism seen to offer uncertain future for Power and Mining”.
First, it is not surprising that mining is a small part of GDP. How can it play a larger role when, with the exception of the Ramos Admin, it has been opposed and largely destroyed.
Second, due to the opposition, responsible miners have had a challenging time doing business. Mining is in fact not a good business in the Philippines. The so called “Greedy” have made their money in other sectors, namely real estate. If you disagree, look at the profits of the responsible miners and compare those to profits of real estate companies. Then look at how the share prices of miners have performed compared with the share prices of most other companies in the last decade.
Third. It is false that responsible miners do not pay high taxes. This is inaccurate. The tax on responsible miners in the Philippines is too high and not competitive with other countries. On top of this, responsible miners provide services.
Fourth, responsible mining is not the cause of poverty. There is no evidence to suggest that it is a cause. Unfortunately, most Philippine regions are poor. And one of the poorest, ugliest areas to live is in Metro Manila, where there is no mining.
The Philippines is one of the richest countries in the world. We can use our resources like Canada or Australia or Indonesia or Peru. Or we can continue to live in denial. Let’s be proud of ourselves and use what we have through an intelligent mining strategy.
well said, Jose. These editors could be paid by mining and power firm. As if their points really matter now.