Position Paper on Legislative Franshise in Mining Operations

Bantay Kita is a coalition of over 80 organizations nationwide with 60 network affiliates, including Indigenous Peoples Organizations,  working towards improved governance of extractive industries. In line with our objectives, we support proposals that amplify the right of communities to equitable revenue share, and safeguard environment and the well-being of people from the detrimental effects of mining operations.
 
HB 5674 entitled as “An Act Requiring Legislative Franchise as a Pre-Requisite to the Issuance of a Mineral Agreement or Financial and Technical Assistance Agreement“ and HB 6259 otherwise known as “An Act Amending Certain Portions of Republic Act No. 7942 by Prohibiting Mining in Watershed, Requiring a Legislative Franchise for Mining Operations and for other Purposes” propose objectives that are aligned with Bantay Kita’s aspiration to enhance natural resource governance in support of sustainable development
 
We support the bills objectives as it promotes environmental protection and economic growth. We also commend legislators for pushing greater transparency and accountability in the extractive industries, as well as increased scrutiny of proposed mining operations. 
 
The Philippines is recognized as one of the most mineralized countries in the world.  Bantay Kita agrees that proceeds from resource extraction can contribute to economic growth and social development with improved governance and fiscal reforms. We recognize legislators as important stakeholders in managing our country’s natural resources. They should be involved in ensuring that investments made will incur the most benefits for the Filipinos.
 
We concur with Congress that enhanced evaluation is required to understand the full impact of a mining operation, and serve as a basis for an informed recommendation. In this light, Bantay Kita suggests that Congress directs the executive branch  to establish technical parameters for a scientifically proven assessment of mineral potential of an area that would be undertaken along with an appraisal of the economic, social, and environmental impacts an extractive activity will generate.  Beyond considering the present and mid-term impacts, we urge Congress to also include the effect of resource extraction on climate change and an area’s vulnerability. 
 
Aside from a more comprehensive data-driven examination of the potential impact of  mining operations, Congress may also instruct the executive branch to consider and compare other viable investments in the area. This will be helpful in determining the best option for a site.
 
We recommend expanding and institutionalizing existing initiatives such as the PH-EITI (Philippine Extractive Industry Transparency Initiative) which is a global standard for transparency of the extractive sector. A national multi-stakeholder group including the government, civil society, and the industry decides how EITI process should work. Recently, the Philippines has been recognized as the first country to achieve satisfactory progress against the EITI standard. A proposal institutionalizing Ph-EITI (H.B. 4116) is  pending in Congress. It promotes revenue and contract transparency, accessibility of data and information, and genuine participation of relevant stakeholders in resource governance. Moreover, it ensures oversight in all stages of mine life.
 
Bantay Kita also advocates for fiscal reforms in mining.  To date, taxes, which form the bulk of proceeds received from resource extraction, contributes insignificantly to the economy. The 2016 Ph-EITI Report states that government collected P11.1B from large scale metallic mines.  This is 1.1% of the country’s Gross Domestic Product and 0.6% of total government revenues.  This may be attributed to the low tax rates and unsuitable tax instruments applied to mining.  Moreover, fiscal incentives are also enjoyed by mining companies. We urge Congress to review the current mining fiscal regime and consider modifications that would provide the country, and the communities where mining companies operate, a fair share.
 
In conclusion, Bantay Kita reiterates its support for proposals to improve natural resource governance that maximize benefits and minimizes losses for the present and future generations.