Bantay Kita calls on DENR to uphold process of public consultations in application for exploration permit
Bantay Kita, a national coalition advocating for enhanced natural resource governance, appeals to the Department of Environment and Natural Resources (DENR) to uphold process of meaningful public consultations as it lifts the moratorium on applications for exploration permit of metallic and non-metallic minerals through Administrative Order 2018-13.
Exploration will determine an area’s mineral potential. This can guide government in identifying if and how much minerals it is willing to develop.
“Exploration requires consent from local government units and communities. We welcome information that would help stakeholders make evidence-based decisions. We expect that necessary data and documents are disclosed to them so that they can arrive at factual conclusions. We urge that the consent process be genuinely applied, and decisions made by stakeholders be respected,” Bantay Kita Coordinator Tina Pimentel stressed.
Executive Order (EO) 79 S. 2012, Section 4 allows the granting of exploration permits, despite the moratorium on issuance of mineral agreements. It also states the exploration permit grantee shall be given the right of first option to apply for development of minerals in the exploration site.
EO 79 Section 6 provides that “mining rights and mining tenements over areas with known and verified mineral resources and reserves, including those owned by the Government and all expired tenements, shall be undertaken through competitive public bidding.”
“In light of the lifting of the exploration moratorium, we implore the Mines and Geosciences Bureau (MGB) to prepare the guidelines for competitive public bidding, with emphasis on transparency and citizen engagement at the soonest. We also appeal to the DENR to release the results of the mining audit which is said to be the basis for the lifting of the exploration permit moratorium,” Ms. Pimentel concluded.
Bantay Kita, a national coalition that advocates for transparency and accountability, lauds Senator Grace Poe for filling Senate Bill (SB) No. 1883 – an act improving disclosure and transparency of the extractive industries. The bill upholds the right of the people to information on matters of public concern such as the mining, coal, oil and gas industries. It also helps ensure that development and utilization of natural resources provide intergenerational benefits to all Filipinos.
“The purpose of this bill is aligned with Pres. Duterte’s call during the SONA to guarantee that extractives proceeds contribute to all, not just a select few, for today and tomorrow,” said Bantay Kita National Coordinator Tina Pimentel.
SB 1883 institutionalizes the Philippine Extractive Industries Transparency Initiative (PH-EITI) which will ensure the sustainability of the disclosure of relevant and timely data including taxes and fees collected by government, and social and environmental monitoring reports. The bill is a timely complement to the on-going fiscal rationalization that impacts extractive companies.
The PH-EITI shall be operationalized through the Multi-Stakeholder Group, which represents all sectors – from the industry, government, civil society, and indigenous peoples.
“With the disclosure of data, communities will be able to make better and informed decisions. EITI offers a space for citizens to engage in resource management,” Ms. Pimentel added.
The direct and non-direct payments received by the local government units shall be provided and disclosed in a detailed report through the Environment and Natural Resource Data Management Tool (ENRDMT). This tool will assist local governments units in tracking proceeds from national wealth and enable them to plan accordingly. The ENRDMT will enable the public to monitor expenditures made against these proceeds, leading to enhanced public financial management and ability to guarantee that proceeds contribute to sustainable development.
The Bill requires a publicly available register of beneficial owners. Beneficial owners are natural persons who ultimately own or control extractive companies.
“A beneficial ownership registry will lead to increased accountability, help track illicit financial flows, ensure correct tax payments, and enable government to enforce foreign ownership restrictions,” Tina Pimentel stated.
52nd PH-EITI MSG Meeting - EITI MSG with the new civil society representatives and Madagascar delegates
Bantay Kita reconvened the Selection Committee to help identify individuals who would best represent civil society’s interest in the Ph-EITI MSG. The seven (7) new civil society representatives were welcomed during the 52nd MSG Meeting at the Palacio del Gobernador, Intramuros, Manila.
The new civil society representatives to the PH-EITI MSG are: Aniceta Baltar, Concerned Citizens of Abra for Good Governance and Atty. Jansen Jontilla, Environmental Legal Assistance Center, Inc. as Luzon representatives, Dr. Glenn Pajares, Sectoral Transparency Alliance on Natural Resource Governance in Cebu, Inc. and Ladylyn Mangada, Philippine Political Science Association as Visayas representatives, and Chito Trillanes, Social Action Center – Ecology Desk, Diocese of Tandag, Surigao del Sur and Nelson Cuaresma, Concerned Advocates Saving Terrestrial and Marine Ecosystems, Inc. as Mindandao representatives. Finally, to represent the indigenous peoples' rights in Luzon, Esther Roxanne Veridiano, Philippine Task Force for Indigenous People’s Rights.
In the Philippines, communities can be involved in developing social and community programs with extractive companies' support, such as the construction of schools, hospitals and roads. Communities are then involved in monitoring the terms of contracts and making sure programs are fully delivered. In order to do this, access to timely, relevant, and comprehensive data and contracts is key. Equally important is understanding what the data means. These components are vital for community participation in natural resource governance.
Read more here: https://eiti.org/blog/improving-community-participation-in-natural-resource-governance
Bantay Kita (BK) supports legislative proposals that seek to rationalize fiscal incentives.
BK believes that provision of fiscal incentives can be an effective tool to encourage investments towards particular economic activities. When applied wisely, it can contribute to equitable development, linkages and jobs creation, increase value added, economic diversification, and technology and knowledge transfer. Conversely, scrapping incentives accorded to activities that do not meet to the country’s investment objectives can contribute to a fairer share for the Philippines. Moreover, it can allow for activities more aligned with the country’s priorities to thrive.
BK underscores that fiscal incentives rationalization should be anchored on the country’s long-term strategy. We highlight that non-fiscal costs and benefits resulting from economic activities should be integrated in the decision-making process. Bantay Kita also deems that other fiscal instruments like corporate income tax (CIT) should be carefully considered in combination with incentives to further enhance the country’s long-term strategy.
In the case of mining, Bantay Kita considers incentives at the point of extraction unnecessary. The Philippines is one of the richest countries in the world in terms of minerals to land ratio. In a 2013 and 2016 survey, the Philippines ranked in the top 10 in terms of mineral potential out of 112 countries (Taylor & Green, 2017). The abundance of minerals should be sufficient to attract investors. Minerals are finite; prudent use of this resource while maximizing benefits and minimizing losses is crucial.
Based on the 2016 Philippine Extractive Industries Transparency Initiative (EITI) Report, BK estimates forgone revenues from Income Tax Holidays (ITH) granted to large scale metallic mines was P4.9B. Government proceeds in the same period from the said subsector was P11.1B. The CIT was the biggest contributor at P5.7B or about 50%. This was followed by royalties from mineral reservations at about P2B. In Bhutan, companies primarily engaged in mineral extraction, basic ore dressing, or crushing are ineligible for Income Tax Holidays (ITH).
Bantay Kita supports the lowering of the Corporate Income Tax, with the exemption of the mining sector. Below are several examples of countries that have a lower standard CIT relative to rates on mining companies:
We therefore urge Congress to maintain the CIT for mining companies.
In the current fiscal regime, only mining companies operating in declared mineral reservations pay 5% as mineral royalties. To date, there are four provinces identified as mineral reservations: (1) Zambales in Central Luzon, (2) Surigao del Norte, (3) Surigao del Sur, and (4) Dinagat Islands in the CARAGA Region. Per 2016 Ph-EITI Report, only 12 of the 30 mining companies (39%) operate in mineral reservations.
Bantay Kita proposes imposing 5% mineral royalty payments on all mining operations based on market value of gross output. This can further maximize the country’s gains from mineral resources. Extracting minerals is a one-time opportunity to improve people’s lives. Using actual figures from the 2016 PH-EITI Report, the increase in excise tax from 2% to 4%, and imposition of 5% royalty on all mining operations will have provided the government additional P4.3B. Other countries have begun to follow this trend. Tanzania imposed an increase in metallic mineral royalties from 4% to 6% in July 2017. The Democratic Republic of Congo (DRC) did the same. The DRC increased mineral royalties from 2% to 3.5% for non-ferrous and base metals in March 2018.
In terms of GDP, mining contributed 1.1%. The share of large scale metallic mining to the Philippine economy is low. However, there are other opportunities to increase the country’s take from mineral extraction. We appeal that policymakers deliberate on imposing windfall gains tax to capture a fair share from the extraction of our minerals, similar to the Democratic Republic of Congo policy. The DRC set a “super profit tax” or windfall gains tax of 50%.
Moreover, governance reforms are necessary for fiscal reforms to be effective. We urge that tax rates and fiscal incentives be reviewed in the context of clear, measurable, and transparent criteria. We emphasize that monitoring the outcomes of fiscal incentives and tax rationalization in the achievement of set goals is paramount. For the extractive industries, the utilization of the Extractive Industries Transparency Initiative (EITI) as the platform for review may be considered. The Philippine EITI (PH-EITI) Report may be expanded to extensively discuss social and environmental costs and benefits. Moreover, we opine that the PH-EITI’s scope may also be extended to reflect economic linkages.
 Bantay Kita (BK) is a coalition of over 80 organizations nationwide that advocate for fiscal and governance reforms in the oil, gas, am mining sectors so that the country gets its fair share. Bantay Kita is a Publish What You Pay affiliate, a member of the Philippine EITI Multi-stakeholder group, and a commitment holder in the Philippine Open Government Partnership.
 EITI reports the fiscal terms and amounts paid by mining, oil and gas companies. It also reflects the economic gains from the industry.