Mining revenue scheme up for Palace approval
September 27, 2013 at 17:17
PROPOSED CHANGES to the revenue-sharing scheme for mining have been submitted to Malacañang and could soon be approved by President Benigno S. C. Aquino III.
“The draft… is already up for consideration of the Office of the President,” said Mines and Geosciences Bureau (MGB) director Leo L. Jasareno, a member of an interagency body created to operationalize revisions to the government’s mining policy.
“I can’t give any further comments. Let’s wait for Malacañang to make the announcement,” Mr. Jasareno told reporters when pressed for details.
“But I can make the assurance that whatever comes out will be competitive. The government will not make a proposal that is not competitive and will kill the industry.”
Executive Order (EO) 79, issued in July last year, defined the Aquino administration’s new mining policy. Among others, it extended a moratorium on the issuance of new mining permits until Congress approves a new revenue-sharing law. It also established the Mining Industry Coordinating Council (MICC), which was tasked to thresh out an implementation plan.
Last week, Sec. Ramon “Ricky” A. Carandang of the Presidential Communications Development and Strategic Planning Office said the Palace was in the process of finalizing a draft law.
Mr. Carandang said the proposal would be vetted by the Cabinet’s economic cluster “in the next few weeks.”
The Chamber of Mines of the Philippines recently criticized the government over ongoing policy uncertainty, noting that some revenue-sharing proposals were “uncompetitive” and could lead to a dramatic decrease in investments.
The industry group is calling for a single fiscal regime applicable to both holders of mineral production sharing agreements (MPSAs) and financial or technical assistance agreements (FTAAs). It also said the new revenue-sharing scheme should be “progressive,” meaning based on net profits rather than gross output.
MPSAs, under the Mining Act of 1995, are granted to firms with at least 60% local ownership. They are subject to a 2% excise tax based on the market value of gross mineral output, plus regular taxes. MPSAs for areas in mineral reservations are subject to an additional 5% royalty.
FTAAs, meanwhile, are the only arrangements that permit 100% foreign ownership and are subject to a 50-50 revenue-sharing agreement. This includes all regular taxes and other fees.
The government is targeting some $3.3 billion in mining investments from 2013 up to 2016 based on MGB data. Broken down, investments are expected to reach $1 billion this year, $901.75 million next year, $757.6 million in 2015 and $619.5 million in 2016.
Last year, investments in priority mining projects reached $719.7 million, down 31.16% from 2011’s $1.15 billion.
