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AS the
national government signaled its determination to make
mining a prime growth driver by offering investors the
extraction rights to 65 abandoned sites, an industry
group prodded it to give the local government units (LGUs)
hosting mining operations their rightful share of taxes.
“Is the
right amount of share being given to the local
governments? Is it reaching them? Are there delays?
There are questions on corruption that have to be
answered,” Chamber of Mines of the Philippines (CMP)
President Philip Romualdez said on Tuesday at a forum on
financial transparency in the mining industry.
The
chamber estimates that the mining companies in the
Philippines may invest as much as $10 billion between
2004 and 2012.
“The
industry is moving so fast. More new projects are moving
forward,” Romualdez said. The chamber forecast last year
investment of $6.5 billion in the six years to
2010.
Overseas
companies are targeting the Philippines to feed surging
global demand for metals, including copper and nickel,
Romualdez said, adding that the country competes with
mineral-rich neighbor Indonesia to win investment flows
in mining.
An audit
partner of the CMP had discovered cases where the share
of certain LGUs in excise taxes were short, even though
the mining company concerned had paid the right amount
of taxes to the national government. This prompted the
CMP to push for transparency, noting that shortfalls in
remittances to LGUs could aggravate concerns in some
sectors about whether a cost-benefit analysis justifies
hosting an extractive, high-impact economic activity as
mining.
Specifically, the chamber is pushing implementation of
the Extractive Industries Transparency Initiative (EITI)
which provides a mechanism to equally serve the
interests of the government, industry and civil society
as the mining industry is revitalized.
Part of
the initiative’s thrust is to ensure that the right
share of taxes reaches the local government units
hosting mining sites so that the communities they serve
can benefit from such funds.
In 2005
the Philippines adopted the United Kingdom’s EITI—which
mandates the development of a reporting template and
audit plan in agreement with the mining company in an
area, the local government unit and the national
government.
For
instance, RS Bernaldo & Associate, the partner of CMP in
its transparency initiative, found out that the
2004
share of the excise tax of the Philex Mining Corp.
remitted by the national government to the LGU was
short of
6 percent of the excise tax, money that could have been
used for the local economy.
In 2004
Philex Mining Corp. passed on to the government 76.8
million worth of excise tax. As mandated by
law, 40
percent of the entire excise tax was distributed by the
national government to the LGU. This should
be 30.7
million, but the LGU only received 28.8 million.
“If the
government is receiving a hundred million a year, the
question I want to know is how the government
is
utilizing the money,” Romualdez said. “As far as mining
is concerned, we are very happy to be the catalyst
for
sustainable development. What we need is a catalyst for
growth.”
Mining
activities will provide revenues to the local community,
which will be used to invest in livelihood projects or
infrastructure-related activities beneficial to the
local economy so they will germinate and be nurtured,
Romualdez stressed.
He said:
“This is about bringing issues to the surface that will
help the people understand the impact of mining and the
benefit it could give to the community.”
Mining
companies, he added, cannot “continue to be in the
dark,” paying taxes to the national government without
any assurance that the local government or communities
are getting their just share.
Philex
Mining Corp.’s corporate environment and community
relations manager Victor Ma. A. Francisco said
the
delay in payment or the under-remittance of the LGU’s
share of taxes deprives those concerned of funds vitally
needed for development.
“It’s is
unfair for us and to the people in the locality; [the
money] should have been used for the development
of their
education and health, among many others,” he said.
Earlier,
Mines and Geosciences Bureau director Horacio Ramos said
the government may jointly develop with investors, or
sell the mining rights of more than 65 abandoned mines.
Environment and Natural Resources Secretary Angelo Reyes
transferred to Philippine Mining Development Corp., the
corporate arm of the Department of Environment and
Natural Resources, the mining rights to more than 65
abandoned mines with a combined land area of 68,625
hectares.
Overseas
companies, including Anglo American Plc., the world’s
secondlargest mining company, are partnering with local
miners in exploring in the Philippines, which the
government estimates may have $1 trillion in mineral
wealth. The companies plan to benefit from global demand
for raw materials driven by China.
Philippine mining development “may be able to generate
revenue by bidding out these cancelled mining rights,”
Ramos said in a phone interview in Manila Tuesday. “The
government can also opt to develop
these
projects with the private sector” through state-run
Natural Resources and Mining Development Corp.
--With Bloomberg |
