INVESTORS
MANILA, MARCH 9, 2012 (MALAYA) AMADO P. MACASAET (photo)
('The mining industry is now threatened with two problems that can deter what
has appeared to be rapid development.')
THE government is sending mixed signals to local and foreign investors. It
entices capital to come to the country by offering incentives and other perks
through the Board of Investments.
Billions of pesos are lost to tax exemptions and other freebies. However, the
government has not seen fit to examine the contributions of the firms which were
granted the incentives in the areas of employment generation, higher
productivity, community development, and others.
There seems to be very little particularly in the export sector as indicated
by the decline in foreign trade. The bulk of the foreign exchange reserves is
for the account of millions of Filipinos working abroad.
In a correct move to skirt the Constitutional prohibition limiting to 40
percent the participation of foreigners in public utilities and natural
resources, the Supreme Court agreed to allow foreigners to have full ownership
of mining ventures through the "foreign technical and financial agreement with
the state" and the mineral production sharing agreement, also with the
government.
The mining industry is now threatened with two problems that can deter what
has appeared to be rapid development. First, the Department of Environment and
Natural Resources has practically prevented new entrants or investors from going
into mining.
The most shameful act is the refusal of the DENR to issue an environmental
clearance certificate to the $5.9 billion copper-gold project of Sagittarius
Mines in South Cotabato.
There is nothing in the law that prohibits open pit mining but the DENR is
patently against it, against Sagittarius project, anyway. This is the only
reason no environmental clearance has been issued.
The issue is so confused. DENR Secretary Ramon Paje said two weeks ago that
he has finalized a draft of an executive order presumably smoothing out the
kinks in the mining industry.
He said appeals may be filed only with the Office of the President. He said
he saw the signature of the President on the EO coming in a few days. He pointed
out that the "final" EO was crafted by four people in the government.
The mining industry was not represented.
Two or three days later, Executive Secretary Paquito Ochoa declared that he
had drafted his own version of the same Executive Order but wisely explained he
would consult the stakeholders before a formal draft is presented to the
President.
Now comes Finance Secretary Cesar Purisima who said he wants a 50 percent
share in the profits or production of minerals or processed ores. If Purisima is
allowed his way, he makes the government an Indian giver. It takes back what is
so solicitously gave.
Manuel V. Pangilinan of First Pacific and many other "first" companies in the
Philippines owned by an Indonesian group, might have been right in saying that
the 50 percent share demanded by government would leave the profit and loss
statements of mining companies splattered with thick red ink when prices of
metals come down.
As it has been its wont, the House of Representatives crafted a bill imposing
a unitary tax on cigarettes and alcohol. In the case of cigarettes, the tax on
the lowest end product that has the biggest would be an estimated 1,800 percent.
On the other hand, the tax on imported cigarettes would be slightly more than
80 percent while local machine-packed cigarettes would pay close to 250 percent.
The disparity between imports that do not require any investment except a
warehouse, and local is so glaring one wonders why the government defends it.
The unitary tax system proposed in HB 5727 is patently in favor of cigarettes
imported by British American Tobacco which sells the Lucky Strike and Dunhill
brands. If HB 5727 becomes a law, the $300 million cigarette operation of Philip
Morris in Tanauan City in Batangas which has teamed up with Lucio Tan's Fortune
Tobacco can turn belly up faster than many of us suspect.
The cigarette market will be dominated by British American Tobacco and by the
smugglers who are already estimated to be responsible for around $100 billion
revenue loss every year.
While the country is trying to be self-sufficient as it had shown that
possibility when the economy shifted to the service sector as a main driver of
growth, the Department of Finance which is practically the brains behind HB
5727, is moving heaven and earth to increase dependence on imports of
cigarettes.
As shown in the confusion over the executive order(s) proposed for mining and
the unitary tax on so-called sin products, it is becoming clearer and clearer
that the economic managers of President Aquino are aware of what their right
hand is doing.
Unfortunately, the left hand is doing the opposite.
Damage, maybe beyond repair, is the only possible result.
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
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