* This is my article in BusinessWorld last September 17, 2018.
The Philippines is suffering from a deteriorating
merchandise trade gap. From January to July 2018, total exports was only $38.74
billion (vs. $39.87 billion same months in 2017) while total imports was $61.23
billion (vs $52.92 billion same months in 2017). So the trade deficit was
$22.49 billion or an average of $3.2 billion a month. This is the worst trade
performance of the country all these years.
Among the direct results of widening trade deficit is the
peso depreciation, averaging only P51/US$ last year, now trading at P54/US$.
The expectations are it will depreciate to around P55 in order to further
encourage exports while discouraging less essential imports.
Many sectors look at various measures to spur the
country’s exports but one thing that escapes their radar is to bring in the
miners — have more metal exports, raw ores or semi-processed; have more mining
investments and permits.
The Duterte administration though seems to be doing the
opposite. The discredited and rejected ex-DENR Secretary Gina Lopez closed many
mining firms even for frivolous and unsubstantiated cases and banned open pit
mining. Her successor did not significantly reverse those idiotic policies
despite recommendations by the Mining Industry Coordinating Council (MICC) to
remove the ban on open pit mining, among others.
Below are primary data from the DENR’s Mines and
Geosciences Bureau (see Table 1).
From the above numbers, notice the following:
One, very small contribution by small-scale gold mining
despite the huge environmental damage created by thousands of such units. Two,
low mining investments when a huge, single biggest foreign direct investment
(FDI) in the country, the $5.9-billion Tampakan gold-copper mining project, has
been tempered for nearly a decade now. Three, low exports share of metallic and
nonmetallic exports when the opportunities are high. Four, significant tax
collections by national and local governments. And five, declining number of
approved and registered MPSA, FTAA and EP.
The opportunities for high mining exports are opened by
recovering prices of important metals where the Philippines has good reserves,
particularly gold, copper and nickel (see Table 2).
These and related issues will be covered in the
forthcoming Mining Philippines 2018 on Sept. 18-20, 2018 at Sofitel Philippine
Plaza.
One pronouncement by President Duterte a few months ago
is that he will ban the export of raw mining ores, only semi-processed and
manufactured mining products will be exported.
This mandatory, state-dictated mining manufacturing has
been done in Indonesia some two decades ago and Indonesia is a much bigger
mining player than the Philippines. The result was rather catastrophic — many
companies, local and foreign, that went there later became bankrupt. The capex,
opex and marketing chains were larger than expected and prices of manufactured
metals were highly fluctuating.
Government is a lousy business entity and, hence, cannot be
trusted to render non-lousy business regulations. It should stick to enforcing
its environmental rules to all players, big and small miners, and not demonize
the big ones.
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See also:
BWorld 248, Inflation, energy prices and mini-greed, September 12, 2018
BWorld 249, Reduce fares and increase passenger convenience by increasing supply, September 13, 2018
BWorld 250, E-smoking and ASEAN integration, Part 2, September 23, 2018
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