House Bill 5367, which provides a new revenue-sharing arrangement between government and large-scale mining companies in the Philippines, was filed at the House of Representatives and referred to its Committee on Ways and Means on Tuesday last week.
“There can be common ground for all stakeholders but genuine dialogue must continue. There has not been much of that lately,” Peter Angelo V. Perfecto, executive director of the Makati Business Club, said in a text message. “We maintain that there is vast potential for the mining sector to contribute to the country’s growth and development, but this requires the right policy and regulatory mix.”
Under the proposal, the government, as “owner of the minerals,” gets 10% of the miner’s gross revenues or a 55% share in net mining revenue yearly, whichever is higher; and 60% of windfall profit in case margin (net revenue divided by gross revenue) exceeds 50%.
While the bill provides that mining companies will enjoy exemptions from corporate income tax, duties on imported specialized capital mining equipment, mayor’s fee and/or business permits, it also states they still have to pay value added tax, capital gains tax, stock transaction tax, documentary stamp tax, withholding taxes on passive income, donor’s tax, environmental fees and real property tax, among others.
Also sought for comment, John D. Forbes, senior advisor of the American Chamber of Commerce of the Philippines, said via text: “We are concerned that the proposal could make the Philippines much less competitive for long-term investments for new production by responsible international mining firms.”
Henry J. Schumacher, executive vice-president of the European Chamber of Commerce of the Philippines, shared his concern, saying in a separate text message: “It makes the Philippines non-competitive as a mining destination, which is unfortunate given the country’s assets below the surface.”
More miners have expressed opposition, with Global Ferronickel Holdings, Inc. Executive Vice-President Dante R. Bravo describing it as “arbitrary and discriminatory” and OceanaGold Corp. Chairman James E. Askew saying current terms are already “very high in cost compared to other places we could invest... If it is to be made even higher, then it would further prejudice attraction for serious investments in this country.”
“Many people from the industry appear to be not happy with that. It’s not competitive against other mining industries in the world,” Horacio C. Ramos, president of San Miguel Corp. subsidiary and nickel and gold extractor Clariden Holdings, Inc., told reporters in Makati City last Friday. “There were years of consultations but they did not take into account the position of the industry.”
Value of mining investments in the country totaled $1.31 billion in 2013, up 61% from 2012, according to Mines and Geosciences Bureau data. The sector, however, contributed just 0.58% to gross domestic product in 2010-2013, according to the first Philippine Extractive Industries Transparency Initiative (EITI) Country Report last year, which deemed this low “relative to its potential.” The Philippines ranks the fifth most mineralized country in the world with reserves estimated to be worth $1.387 trillion, the report added. Some $840 billion of metallic ore, however, remain untapped.
Source: Business World Online
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