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.
Achieving Compliance Despite the Shifting Political Tides
By Tina Pimintel, Bantay Kita
The Philippines has been working on its Extractives Industries Transparency Initiative (EITI) commitments for a long time, and has succeeded in spite of shifting political situations. How has it managed this complex issue?
Find out here.
The Philippines is one of the most mineralized countries in the world. 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).
Mainstream paradigm acknowledges that mining contributes to economic growth and social development. But oftentimes, mining is also associated with environmental degradation, worsening inequality, conflict, corruption, displacement, and health issues.
In the Philippines, the legal framework that governs minerals management is the Mining law of 1995. The law recognizes the economic potential of mining while adhering to sustainable development principles.
A Shift in Tides
On June 30, 2010 Benigno Aquino III was inaugurated President of the Philippines. He ran on an anti-corruption platform during the campaign.
The international community took notice, and invited the Philippines as one of the eight founding conveners of the Open Government Partnership when it was launched in September 2011. The Open Government Partnership (OGP), being a multilateral initiative that promotes principles of transparency, citizen empowerment, and anti-corruption, was a good fit for the goals of the Aquino administration.
Early in his term, President Aquino issued Executive Order No. 79 (2012) providing more concrete directives on responsible mining and environmental protection. The Executive Order also committed to the Philippines’ participation in the Extractive Industries Transparency Initiative (EITI). EITI is a global standard of transparency where mining, oil, and gas companies report how much they pay government and for government to state how much it receives from them. A multi stakeholder group (MSG) governs the EITI. A Secretariat supports and coordinates the effort. The same E.O. also established the Mining Industry Coordinating Council (MICC). The MICC is an interagency body responsible for facilitating dialogue with stakeholders and reviewing mining related laws and conduct of auction, among others.
Former Davao City Mayor Rodrigo Duterte clinched the Presidential elections and assumed office on June 30, 2016. One of his first actions was the release of an Executive Order 2, in July 2016. E.O.2 operationalizes the public’s right to information involving public interest. While this E.O. is limited to offices under the executive branch, the E.O. is viewed as an important pillar in providing the right to information to its citizen’s.
Staying the Course despite Turbulent Waters
President Duterte made pronouncements on promoting responsible mining as a key industry for the nation’s economic growth. He appointed staunch environmentalist Gina Lopez as Secretary of the Department of Environment and Natural Resources (DENR). Carlos Dominguez, a businessman with prior ties to the mineral industry, was named Chief of the Department of Finance (DOF).
In mid-2016, Sec. Lopez ordered an audit of existing mining operations, as recommended by Pres. Duterte. On February 2017, as a result of the audit, five mining operations were suspended and twenty-three were closed. This caused a falling out between DENR and the mining industry. There was concern that companies would no longer volunteer to participate in EITI. This would be detrimental to transparency efforts that provide a strong foundation for policy reforms towards improved minerals management. To allay this possibility, DENR issued an Administrative Order (DAO) 17-07 on March 2017, compelling all mining companies to participate in Ph-EITI..
Sec. Lopez’s pronouncements also caused a stir within the executive branch. DOF Secretary Dominguez, co-chair of the Mining Industry Coordinating Council (MICC) called for a review of the DENR orders. According to the DOF, this move was upon Pres. Duterte’s directive.
The public squabble was divisive. It had strained the cabinet and put PH-EITI efforts temporarily on hold.
The PH-EITI (EITI) Secretariat is lodged at the DOF. The change in administration put the Secretariat in an insecure situation in terms of directive, staffing and funding. The Secretariat received clear support from the DOF to fulfill its mandate only in October 2016.
Attainment of EITI compliance has been a PH-OGP National Action Plan (NAP) commitment since 2013. Despite the shifting political tides, PH-EITI has been steadfast in its work. On October 2017, its efforts were recognized as the only country that had made satisfactory progress against the 2016 EITI Standards.
Bantay Kita’s Efforts to Navigate the Shifting Tides
Bantay Kita (BK) is a national civil society coalition that pushes for transparency and accountability in the extractive industries. Our work is anchored on research, capacity building, and advocacy. We navigate the shifting tides through constructive multi-stakeholder engagement. BK is a PH-EITI MSG representative and a commitment holder in the PH-OGP for EITI compliance.
In the Philippines, the OGP Action Plan is co-created by civil society and government through island-wide consultations. BK actively participated in this process. EITI had been a commitment since the 2013 OGP action plan. BK worked to help ensure that the EITI maintained its position.
To do so, we widely disseminated the invitations to the OGP island-wide consultations to members and networks of BK. We worked in collaboration with the PH-EITI Secretariat and concerned government entities to align efforts.
Bantay Kita conducts regular outreach, awareness-raising, and capacity-building activities that also contribute to the effort. We illustrate how extractives impact a community’s social, economic and environmental context.
In August of this past year, the 2017-2019 OGP National Action Plan (NAP) was approved. We have since then been implementing our commitments.
The main challenge we encountered in the development the of the NAP was competing concerns. Each group, be it government or civil society, had its own issue. Each issue was put forward. Representatives had an opportunity to explain their program– to show how it met the OGP objectives, to illustrate that it had both government and civil society support, and to assert why it merited to be considered. EITI is not easy to sell. It is technical and to many, boring. People feel more connected to other concerns like enhancing participatory audit, improving public service delivery, and increasing local government competitiveness.
Charting the Waters
Once the commitment was accepted, the real work began. Charting the waters is more challenging due to several issues. First is the existing legal framework for transparency. Policies that are created by executive order or department order do not carry the same weight as a law. Its application is limited, and penalties are weak compared to a law. The Data Privacy has a law, the PH-EITI and FOI have executive orders. Compelling mining companies to participate in EITI is a Department Order. The call for public disclosure in FOI is contradicted by the long list of exceptions, and provisions of the Data Privacy law.
Clear criteria of “public interest” is absent. This leaves a lot of room for discretion in determining what falls under “public interest.”
The mining law allows for multi-stakeholder monitoring of contract implementation, specifically environmental impacts of mining operations. However, there is no credible selection process of civil society representatives in the said body. There is also no room for citizen engagement in the planning stage.
Though strides have been made for increased disclosure on extractives data through the EITI reports and the contracts portal, more needs to be done. There is still a lack of access to timely, complete, reliable, and accurate data on auxiliary rights awarded to mining companies, and environment monitoring reports to name a few. By having access to these documents, communities have the bases for monitoring. Being unaware of such rights granted to mining companies often becomes a source of conflict in operating areas. Issues of land grabbing and displacement, and illegal logging abound in mining concession areas.
There is also the perennial challenge of the lack of resources and the will power to champion the reform that had been accepted. This boils down to the question of prioritization and commitment.
Selecting the Appropriate Vessel
Bantay Kita sees OGP as an appropriate vessel to seek allies for reforms within the OGP national and international family (EITI, FOI); a venue to collaborate; an opportunity to push for interlinking advocacies and to build trust among CSOs and between civil society and government.
Particular to BK’s advocacy, we will continue to use OGP as an avenue to drive for the harmonization and clarification of guidelines on information in favor of disclosure. In the short term define “public interest” to fully operationalize the Executive Order on FOI. In the long-term, to legislate the FOI bill. Institutionalize governance reforms (EITI) and mainstream it in the subnational level; set timelines and monitoring government compliance for the enhancement of processes, and online platforms that are in line with the open data policy (accessible, timely, complete, usable, comparable), as well as disclosures; provide more opportunities for citizen engagement in the whole extractives value chain; clear criteria for providing permits and licenses; focus on demand-driven data by developing a more user-centered approach on determining what is relevant to stakeholder; develop redress and grievance mechanisms; and continue the facilitative and consultative work. Underlying all this, is the guarantee that basic rights to freely and confidently, express, assemble, and associate are present.
 http://www.denr.gov.ph/about-us/mission-vision.html The DENR is responsible for conserving, managing and developing the country’s environment and natural resources, including mineral resources.
Institutionalizing Community Participation in Minerals Management at the Subnational Level in the Philippines
Bantay Kita launched a new project entitled "Institutionalizing Community Participation in Minerals Managem ent at the Subnational Level in the Philippines" funded by The United Nations Democracy Fund.
This project aims to pursue a three-pronged approach to implement in the Philippine Extractives Industry Transparency Initiative governance model in three provinces – Palawan, South Cotabato and Agusan del Sur: (i) increasing the capacity of local civil society and indigenous people groups to participate in subnational Philippine Extractives Transparency Initiative multi-stakeholder groups; (ii) promoting the establishment of local multi-stakeholder groups with fair representation from marginalized sectors through the issuance of a provincial resolution; (iii) encouraging the participation of marginalized population in political dialogues. The representation of community stakeholders is a vital component in achieving effective and sustainable development outcomes.
Bantay Kita strongly condemns the tagging of indigenous peoples rights defenders as terrorists. We stand in solidarity with our fellow advocates in asserting our rights to express and assemble.
The Philippine Government through the Department of Justice has drawn up a list of over 600 “terrorists” based on the Section 17 of the Human Security Act of 2007. The list includes indigenous rights defenders like Beverly Longid, current member of Cordillera Peoples Alliance (CPA) Advisory Council member, and Windel Bolinget, CPA Chairperson and National Co-convener of KATRIBU national alliance of indigenous peoples, among others.
Bantay Kita, a national coalition of over 80 organizations pursuing natural resource governance reforms, has worked in partnership or in parallel with CPA and KATRIBU. We have coordinated on minerals governance initiatives in the Cordillera, as mines operate within the IP’s ancestral domains. We assert these individuals are rights activists, not terrorists. Indiscriminately tagging advocates as “terrorists” impedes their work and further disenfranchises the communities that they serve. It maligns their reputation, but moreover, puts them, their families, and those they associate with in danger.
We are deeply troubled that the on-going government efforts creates an environment of fear to express and associate. These are basic tenets of freedom engrained in our Constitution. The fear further constricts the already narrow civic space.
Bantay Kita demands that the Government uphold the fundamental freedoms and guarantee safe spaces to express, organize and affiliate.