MANILA, Philippines - The Department of Finance yesterday stressed the need to increase levels of transparency in the mining sector and to subject the government’s mining rights to a competitive bidding.
In a speech before the Extractive Industries Transparency Initiative yesterday, Finance Secretary Cesar V. Purisima said the Aquino Adminisration wants a responsible resource extraction in the country as it seeks to increase revenue share from resource contracts.
Purisima said transparency should not only be on revenues they pay to government, but also on their plan. “At the beginning, (it must be) set forth by the mining company on what they’re going to do so that there is economic sustainability,” he said.
“That’s why we’ve been pushing the DENR to change the model in terms of granting contracts involving the mining industry – for exploration or for development. I’ve been pushing for the idea of auctioning,” he said.
“When I look at the past of the mining industry, and there’s this debate going on how much is the proper share of government, how much is government really getting – I think it’s important we settle this issue, define the parameters before we move forward and claim we’ve been able to accomplish a better regulatory environment for the mining sector,” Purisima explained.
Purisima does not see the logic of giving incentives to the mining participants “because the incentives are the minerals itself.”
While it has some of the richest geology in the world, with potentially the world’s third largest deposits of copper, the Philippines has never lived up to its potential.
“Many studies have been done to say the Philippines to have the most highest poverty incidence. So in moving forward in the industry, we need to find a way to harness the wealth that has been endowed to our country so we can not only alleviate poverty, but establish a sustainable business model in the extractive industry area,” Purisima said.
Purisima believes that mining will significantly contribute to the government’s coffers once the country is able to resolve the issues besetting the industry.
“This industry can actually provide an extra gear or two to the Philippine economy. In fact, I believe that mining can easily provide one or two percentage point growth of GDP if we were able to do it properly,” Purisima pointed out.
“The past two years and 10 months of the Aquino administration, you’ve seen how good governance can change the fortunes of a country. In an economic environment where it’s very difficult, we’ve seen the country do much better than its performance in the past when the world economy was doing well,” Purisima added.
In July last year, the government unveiled a new mining law that aims to generate more revenues, improve environmental standards and make national and local laws consistent with each other.
The government imposed a moratorium on new contract at least until a law on sharing mining revenues is passed by Congress.
“At the heart of this reform agenda is to implement better governance in this industry; to implement more transparency, accountability and at the same time, empower the stakeholders so we can truly achieve the potential of mining in the Philippines,” Purisima said.