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Foreign investors want P-Noy’s SONA to include gov’t support for mining

(The Philippine Star) - July 11, 2014 - 12:00am

MANILA, Philippines - Foreign investors want President Aquino’s next State of the Nation Address (SONA) to include the government’s support for the extractive industry in the Philippines, the Canadian Chamber of Commerce said yesterday.

The chief executie delivers his fourth SONA at the House of Representatives on July 28.

In a speech delivered during a forum on minerals development held at the Development Academy of the Philippines (DAP), chamber president Julian Payne said despite government’s pronouncements that it seeks more foreign investments, the actions of the national and local authorities discourage foreign investor interest in the local mining sector.

 “The obvious conclusion that foreign investors interested in large-scale mining in the Philippines are reaching is that, despite rhetoric to the contrary, the national as well as most local authorities do not want or welcome foreign investment in large-scale mining in the Philippines,” said Payne, addressing stakeholders in the mining sector.

He said such actions include “little support by authorities to facilitate FDI (foreign direct investment), including for mining which is capital investment intensive and would benefit from eased restrictions.”

The chamber is also protesting the declaration by the government of around 85 percent of the total land area of the Philippines as no-go zones for mining activities.

 “The government should review the recent no-go zones in maps that have been published, which make 85 percent of the country off-limits to minerals exploration,” Payne said.

He noted that despite the moratorium imposed on the granting of new mining contracts to large-scale mining projects pending the passage of a law for a new mining taxation scheme, no such restrictions for small -scale mining are imposed.

The mining industry is also complaining about the new mining taxation scheme created by the Mining Industry Coordinating council, saying the tax structure discourages investments in the extractive sector.

The MICC approved in May the imposition of either a 10 percent tax on gross revenues or a tax of 55 percent on adjusted net mining revenues (ANMR) plus a percentage of windfall profit, whichever would give higher revenues to the government.

ANMR pertains to the difference between gross sales and direct cost (direct mining cost and administrative expenses).

Contractors shall still be liable to pay real property tax, stock transaction tax, documentary stamp tax, withholding tax on passive income, as well as regulatory fees and charges.

Incentives to mining investments shall be limited to duty-free importation of specialized capital equipment and five-year amortization of pre-operating expenses.

The new revenue sharing scheme would apply to metallic mining projects holding a mineral production sharing agreement (MPSA) and financial and technical assistance agreement. (FTAA).

The draft bill had been submitted to the Office of the President for approval; the Chamber of Mines of the Philippines (COMP) is appealing for a review of the draft bill.

 “The Philippines mining fiscal regime was already tough for foreign investors. With recent unilateral moves by the government to cancel the investment tax holiday for national investors, and to cancel the cost recovery period for foreign investors, the fiscal regime for mining has already become completely uncompetitive for both local and foreign investment compared with other countries, said Payne.

Miners, instead, are proposing a revenue-sharing scheme based on the actual profits made by mining firms such as a sliding tax rate system in which rates depend on metal prices.

This is expected to help miners sustain production during difficult market conditions. In turn, the government would enjoy a higher share when miners rake in greater profit. 

As such, the Canadian business chamber is calling for a definitive statement from Malacanang on the government’s stand on the development of the extractive sector.

“My understanding of what foreign investors want as support to large-scale mining is a strong statement by the President in the next SONA that he supports a minerals industry in the Philippines including foreign investments,” Payne said.

The Canadian business chamber is also urging the replacement of the MICC by a new Consultative and Advisory Council on Mining (CACM) which would have a wider stakeholder representation in government, private sector and business groups.

 

CANADIAN CHAMBER OF COMMERCE CHAMBER OF MINES OF THE PHILIPPINES CONSULTATIVE AND ADVISORY COUNCIL DEVELOPMENT ACADEMY OF THE PHILIPPINES FOREIGN GOVERNMENT MINING PAYNE PHILIPPINES TAX
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