* This is my column in BusinessWorld last April 12, 2018.
There are two similarities between the mining industry
and Boracay.
The first is that both have small contributions to GDP,
and the second is that both can be closed by the Duterte government for six
months without any compensation to affected enterprises including
environment-compliant ones. Mining companies and Boracay establishments show
the face of business uncertainties in the country.
Mining production is 0.6% of GDP while Boracay production
of services is 0.1% of GDP, an amount that is “very insignificant” according to
the National Economic and Development Authority (NEDA).
By extension, the six-month closure Boracay island will
adversely affect only a few number of businesses and jobs. That’s a very flawed
argument.
Meanwhile, last April 9, President Duterte told mining
companies: “I’m going to give you six months from now. Six months. I do not
want to see any bald [areas]. I want [to see] the trees as tall as me by six
months. Without the replacement of those trees, consider your permit revoked.
Better pack up your things. You can go and that would be closed permanently.”
In early 2017, the former DENR secretary who was rejected
by the Commission on Appointment (CA) issued a ban on open pit mining. That ban
has not been lifted until now even though the Mining Industry Coordinating
Council (MICC) has already recommended ending the ban.
The continuing investment uncertainties in Philippine
mining are partly discussed by the Fraser Institute’s “Survey of Mining
Companies 2017” report. Fraser is a famous free market think tank in Canada
while the survey is an annual study of mining and exploration companies around
the world with the goal of assessing how mineral endowments and public policies
like taxation and regulations affect exploration and extraction investment.
In the 2016 Report, 104 jurisdictions were covered while
it was 91 for 2017.
These 91 jurisdictions are: 13 states in the US, 12
states in Canada, 9 states in Argentina, 7 states in Australia; 15 countries
each in Africa and Latin America/Caribbean, 12 countries in Europe, and 8 countries
in Asia-Oceania.
These numbers show the investment attractiveness of the
91 places. The index is constructed by combining the Best Practices Mineral
Potential index (which rates regions based on their geologic attractiveness)
and the Policy Perception Index (which measures the effects of government
policies like taxation and regulations on exploration investment (see table).
Fraser noted that “The 10 least attractive jurisdictions
for investment based on the PPI rankings are (starting with the worst)
Venezuela, Chubut, Zimbabwe, Guatemala, Democratic Republic of Congo (DRC),
China, Philippines, Indonesia, Bolivia, and Ecuador.”
While rich countries in the world like Ireland, Finland,
Sweden, Canada, USA, and Australia have business-friendly mining policies as
indicated in the table, poorer countries like the Philippines have
business-unfriendly policies in the sector. And this can be a good explanation
among many other factors why many poor countries remain poor.
Nature has given the Philippines and other now poor
countries good natural and mineral endowments. Their governments though have
given these countries bad policies and extortionary regulations. All the fears
of “mineral depletion,” “unmitigated surface soil destruction” and other
concerns did not happen in these rich countries. Why?
The rule of law. Investments and environmental laws are
strictly enforced and followed by all players, big and small, local and
foreign.
It is not “nature preservation and environmental
conservation” that determine sustainable mining and job creation. Rather, it is
the rule of law. This is the essence of government raison d’etre or reason for
existence.
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See also:
BWorld 192, Cobalt mining and TRAIN, March 16, 2018
BWorld 196, Mining tax and TRAIN, March 20, 2018
BWorld 201, Expanded environmental rights and anti-coal drama, April 05, 2018
BWorld 202, Tourism, casinos, and Boracay, April 08, 2018
BWorld 203, TRAIN, inflation and PPP, April 10, 2018
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