Europe-PH News

The Mining Policy Bane or Boon

July 26, 2012

Carmencita H. Acosta

Europe-PH News

One cannot please everybody. No one knows this better than the world’s heads of state or of governments. The Philippine’s President Benigno Aquino is perhaps too familiar with the humdinger that he opts to just do what he perceives is right. Take his mining policy, for example. Aquino’s recent executive order (EO) on mining policy, which is to increase taxes on the mining sector and ad environmental safeguards, is being considered a bane by foreign business groups. However, it also states appreciation of the executive order as a constructive framework upon which responsible mining can move forward in the Philippines.

The joint foreign Chambers of the Philippines (JFC) claims that the aforesaid EO no. 79, s. 2012 will deter multinationals from doing their business in the Philippines. At the same time, JFC also says that it believes this new mining policy has the potential to advance the objective of delivering a more favorable Philippine investment environment and direction for responsible mining. It is well to list here the member organizations of JFC in this country: American Chamber of Commerce, Australian-New Zealand Chamber of Commerce, Canadian Chamber of Commerce, European Chamber of Commerce, Japanese Chamber of Commerce and Industry, Korean Chamber of Commerce, and Philippine Association of Multinational Companies Regional Headquarters.

The JFC position also applauds the government’s commitment to honor existing agreements or contracts. But while renegotiation of existing contracts remains open within the new EO, the JFC notes that renegotiation would only occur through mutually acceptable agreement between the government and the contractor.

Following is the JFC’s further stand on the matter: “[JFC] is of the view those retrospective or retroactive rulings or legislation by any government is detrimental to both domestic and foreign investment and unnecessarily damaging to sovereign credibility in the international investment community. In addition, the JFC believes that the new mining policy should be implemented in line with the Philippines’ obligations under highly-regarded and well considered Foreign Investment Protection Agreements (FIPAs).

“However the JFC has concerns about 4 of the EO which states that while the government will continue to grant and issue exploration permits, it will decouple such agreements from the granting of mineral agreements which government says will not be entered into until a legislation rationalizing revenue sharing takes effect.

The JFC sees such a decoupling as a deterrent to investment. The EO states that those with exploration permits will have the first option to develop, should an economic deposit be discovered. The JFC is of the view that no mining company can be expected to spend extremely large amounts of money on exploration without certainty, the grant of a mining title and without first knowing the fiscal regime.

On environmental concerns, JFC says: “the creation of an inter-agency forum with a range of powers including dialogue with stakeholders as well as capacity and institutional-building programs for policy implementation is a positive step in the right direction. An important aspect of the MICC will be to manage not just the relationships between national government departments, but also with LGUs and other stakeholders to ensure effective implementation of this new EO. The JFC welcomes the high-level structure of MICC membership and believes the opportunity should be taken to include other key stakeholders such as the mining industry which in all instances acts as the contractor to government…”

 

Source: Expat Newspaper; Economy & Business; 27 July 2012

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