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Annual Mining Philippines 2015

17 September 2015

Speaker: Data will show the Philippines has the highest, if not the highest in terms of corporate income tax and as well as personal income tax. In fact, Singapore has something like for personal income tax is only 17%. So you can see the disparity there. So perhaps we should give a warm round of applause for Senator Sonny for pushing for that. And we just hope also that kind of a mindset will also be used as far as mining taxation or the revenue sharing scheme is concerned. Now this one I would like to call for Senator Bongbong Marcos to please answer the same question that I post to Senator Sonny. There’s a microphone beside you. Before anything else Senator Marcos I would like to welcome Congressman Lito Atienza. He’s here. Let’s give him a warm round of applause. Well just to repeat the question. Essentially, we’ve been discussing so many things about the ills and the challenges the mining industry has been facing for the past 3 days. We have been bombarded with statistics, data, facts, of what the challenges are. At the same time, what are the benefits that we could have derived from mining but this were not realized because of the... and even perception challenges that the industry is facing, so as a senator, what can you do to address this particular issue?

BBM: Thank you and good afternoon everyone. First of all, like Senator Sonny, I can also say that I am not an expert on the mining industry and that I have some ideas on the industry, but what I do know a thing or two about is the relationship between national government, and specifically the local government because of my time in local government and in my present position as chairman of the committee on local government in the senate, I would like to examine some of the issues that have been raised about the problems that have been encountered by the industry at the local government level. However, before I get to that, I have to start with some observations on this government’s approach, this administration’s approach to mining in general. And what we have been able to see, is that the focus of this government has not been the development of the industry, has not been, or the encouragement of investment in mining industry in the country, but merely the focus has been very, very narrow in revenue generation. I think the view that this administration has taken is because the law, because the mining that was upheld in 2005, then that is a necessary evil. And since it is a necessary evil, that we have to deal with, that we have to live with, then the best that we can do is to just make as much money out of the whole industry as we can and that is inconsistent with other policies in other industries as well. So that has I think and influenced everything that we have been talking about when it comes to the mining industry. For example, in 2012 the industry was excluded from the IPP. The reason being given, again, not getting its fair share. And with the 50/50 share between government and private sector, that still is seen as not getting their fair share. And so again the focus is on revenue generation for the government not the development of an industry. We, I think, you are all experts in the industry. You know perfectly well the benefits to the economy that mining can bring. It was with some surprise that I learned from Phillip, that from a high of 4.1 percent contribution to the GDP in 2010, we have now decreased again to less than 1% I believe is point 8% more or less for the last years to or from the mining industry. That has been the effect of this kind of policy. So despite that the government will help the industry, government has in fact played no part in encouraging investment in mining. Again because of its very narrow focus on revenue generation out of the industry. And in fact, another indicator that this is a fact the government’s policy towards mining, that revenue generation is the only part that is important to the government when it comes to the mining industry is the fact that if we look very hard, no matter how much studying you make of it, there is no mining policy in this government today. We do not have any kind of plan. We do not have any kind, as Philip he was, to use Philip’s world, the vision. There is no vision as to what we want the mining industry to be 5 years from now, 10 years from now, 15 20 years from now. How do we maximize the benefits to the people of the mining industry? How do we improve our economy by exploiting, in of course a responsible way, the mining industry, and that is something that, it has been a detriment to many of the efforts of the mining industry to develop and it has also an effect not only in the national scene, but you will see later, also to the local scene. Many in fact of government’s actions are actually contrary to the principles and intent of the 1995 mining act- Philippine mining act. Well, what are the examples? The examples are, the proposed expansions of the no go zones for agricultural lands and tourism sites. Now, that’s reasonable because we say that we are essentially still have a basis, the foundation of our economy is the agricultural sector and that is important. However it seems to be a flat policy that has not been arrived at by any kind of cost benefit analysis. In fact, whatever losses we may suffer by converting agricultural lands and allowing mining, to allow mining companies to come in, what would be better for the community? What would be better for the country? What is the net effect of this action? So it would seem that there is very little informed and studied information that is reaching our policy majors and there has been I think a blanket decision from the very top that mining is bad. And that is the “be all” and the “end all”” as far as they are concerned and again that’s what drives that policy that it is just making money out of this evil industry that we will have to live with because of the law that was upheld on the supreme court.

And so that is just some observation on the national government’s attitude towards the mining industry. Now I to speak for the local government. Why do I speak so much about the national government? Well I think as I go on you will see the effects of that policy or like of it to the problems that you are encountering at the local government level. Now let’s move on to the local government. Local government, when it comes to the local communities and the big mining companies come in, the local governments are very simple. What have you done for me lately? What are you going to do for us? How will it help us? We know that you are going to come in, you are going to cut down trees, you are going to cause all kinds of trouble, the environment is going to suffer greatly, you promised that you were going to put in reforestation and redevelopment, but in fact, what are the numbers and what are you going to be able to do for us? Now, the financial side of it is part of it but it is not the only part of it. So the suggestion of the mining industry the 40% share of the local government be directly remitted to the local government and immediately, not after 3 years, immediately be remitted to the local government is a good start. You have to remember that if you are going to remit any kind of profit to the local government after 3 years, what will the mayor be thinking? What is the governor thinking? “Baka mapunta pa sa kalaban ko na susunod yung lahat ng advantage na ako ang nagtrabaho nito ako ang nag-ayos nitong lahat para makabuti, and who is going to gain credit? So despite many of the legal arguments that have been made here today, when you get to the local government level, it is not a legal argument that you are having to make. It is a political argument that you are having to make. So the 40% remittance is an important point but it is not the answer to all the problems that you encounter at least in the government level. Mister Francisco earlier asked what is it that we are doing wrong? Why is it that people do not know about the good things that the mining industry does? And I’m afraid that you’re starting point, when you enter into a local community and propose a mining project, all they know about mining is the marcopper that released into the sea, the cyanide release by the... the sediment release also, the sediment spill of the Benguet mine. All of that. That’s all they hear about. That’s all they hear about and unfortunately and that is what our media, in fact even the national government and the DNR have said that these are the things that we have to watch out for. We do not talk about the other side of the coin. They do not talk about the benefits that could be gained from the industry and so that unfortunately, I do not want to sugar coat it, but that unfortunately is the starting point. “Ay naku! Itong mga malalaking kumpanya, papasok dito, sisirain lahat dito, tapos natapos na sila, aalis na sila.” And the other, it’s very general sentiment is that, I remember when I was a governor. There was a mining company that came in that made a proposal to mine, the local said “bakit ba sila pa ang yayaman e atin naman yan?” Dapat na ii-small scale nalang natin yan. So ang proposal nila is yung, the mining project that was being proposed, ipaghati-hati nalang natin at gawin nating small scale. Now you and I all know that this is not to the best advantage even with local community. But that has to be explained. Local sensitivities have actually been trampled upon and there have been instances and I can say this with some confidence because I’ve experienced it myself, where as a governor I would just get reports that there’s a certain group that is starting to cut down trees, starting to build roads, they are starting to bring equipment in. and they didn’t know anything about it. And immediately, what was the immediate reaction? What is going on? Why are you doing it? And who told you that you could do it? And how do you feel, how is it possible that you feel that you can do it without us knowing, without us the locals knowing, but that actually happened because the approvals are done at the national level, times of it at the regional level, but really at the national level, So, we are not informed. So this again is a problem not of the mining industry but of government. This is something that has to be looked at. Because the treatment of local sensitivities is extremely important. As I said, I will go back to my thesis. The argument that needs to be made at a local level is not a legal one. The argument that needs to be made at the local level Is a political one and to some extent an economic one. This makes the ground right. For non-locals to come in and to oppose the mining project, on an ideological basis, these groups come in not because they have specific reason, they say that the river is going to be polluted, or the forest is going to be deluded, or this is what is going to happen. No! They come in because of their ideological belief that mining is bad. There is no good that comes from it. And there is no benefit that comes from it to the local community. How do you counteract that? You have to counteract that by being patient. You have to patient and you have to explain what exactly it is that you intend to do. Most people do not understand what is entailed by a mining project. Again when these people came to me and said “atin nalang iyan. Hati-hati nalang yan. Gawin nating small mining yan o tayo nalang ang mag develop.” And my answer to them was, do you have the money to explore, what they were proposing was 200 hectare area, and to explore and to dig holes. And do you have the money, can you afford if at the end of all that exploration fails, and is found out that it’s not viable and you write off whatever it is 200 300 million dollars, so this is the kind of argument that is never actually explained. We are coming in, we are making huge investments, and we are taking great risks and we are taking the risk away from you and those risks are passed on to the private sector and we are taking great risk. Now, they might not be beneficial, but if they are, the benefits are enormous. And so the general tendency also is to say we will build schools, we will build hospitals, we’ll help you do this, that and the other thing. What I think to go back again to the point on local sensitivities, what I think needs to be understood, by the industry and everyone involved in it, is that every province, every city, every municipality, for that matter every barangay, is different from every other local government unit. And therefore the needs of that local government and that needs of that local community are specific, are unique to that... Certainly there are general similarities, but you also have to understand that this is not only something of what are the needs for today. What are the needs for the future. And this is, will have to be done with extremely close consultation with the local government but not necessarily only the politicians. Politicians have a very specific agenda. It’s generally for themselves. Never mind that. That’s a terrible... to make coming from me. But I am happy to say that we have enlightened the local government, in fact the most enlightened government officials in my view are in local government. But in any case.... To go back, not only local politicians, because they have an agenda, that is political, that applies only to them. What you must focus on, is the actual long term development in the local community and to that there you have to go into a much deeper, a much more again sensitive, the word sensitive keeps coming up. Sensitive approach to trying to understand what in fact the community needs. Sometimes what they say they need upon further study you will discover is not in fact what they need. But that is something that you must be able to find out. Now, how do you do that?

You will need to talk to as many of the policy makers and the decision makers in your province in the LGU as you possibly can. And not only the political leadership, but even the business community and of course the NGOs. As much as possible, as far down as possible. If you could talk to ordinary people. Again it is not an easy process. It is something that we as local government executives have to do as a matter of course. And it is something that you’ll have to do as well. Because you have to address your efforts to what is in fact the reality on the ground.

It is not an obvious. Sometimes the needs are obvious but most of the time they are not. And that is something. If you’re able to gather this kind of information and your response will be seen as “That is correct! Tama siya! That is what we need. This is right. It will really help the community. Once you have done that and you have gotten the local community, well then you have the gotten the local community on your side. And that is going to be a game changer for your relationship to the local community. It is an extremely important part of the work that you are trying to do. The general concern of any local community are things like employment, are things like jobs, things like how much income will come to the community but more importantly how much income will be gained by individuals and again how do you do that? It has to be addressed on a long term basis. And this is where the problem with the national government comes in. How do you address the needs on a long term basis? You talk to the regional development council, you talk to NEDA and NEDA has to, and the RDC’s have to coordinate your efforts and NEDA must include your efforts in the development plan of...

And that is why the policy of the national government becomes central to the problems that you face at the local level. That is why it is so important that there is an understanding not only at the local level but even in the national level because you are not going to be there for 2 years, you are not going to be there for 5 years, you will probably be there for 10 to 20 years. And you must plan over the life of the business. You cannot plan just for the next 5 years, or the next 3 years. You must plan over. And that is why again national policy is important because it is the only place that resides in any kind of long term plan for a local community. By necessity, a politician only thinks the planning horizon is 3 years because we don’t know if, I don’t know if I’m going to win the next election. So let’s just talk about 3 years. And that’s why it has to be at a national level. It has to be part of a long term development plan that is encouraged, and that is subscribed to, and encouraged and endorsed by NEDA, by the RDC of that region and of that province. That is where we begin to see the failure of national government to actually encourage the industry around the country. So that is simply the best way to approach this problem that you have in the local communities. Now the problem that you see with the IPs. I believe that in fact yesterday we had a demonstration here of some groups that came in and again it is just about local sensitivity. You have to be patient, you have to sit down and explain to them, “we will respect whatever ancestral domain that is accredited to you, you will get your share and beyond that we are going to do other things. Besides, you have to get pass. That’s why I keep saying, that’s why I keep counselling patience. You must get pass. You must be sensitive to the actual needs of the local community. And you cannot approach it, I have here in my notes, it cannot be a shotgun approach. Basta pag papasok tayo, we’ll build 3 schools, 2 hospitals, we’ll help them with the roads, and irrigation, etcetera etcetera. You do not know what the local community in fact needs and until you do you cannot respond to those needs properly. Again, it comes down to that very simple idea Is that you are here and you are coming to our area and you are proposing this massive industry which we do not know what the effect will be. That is why you have to explain it and we do not know what the long term effects will be which brings us to my final point. The sensitivity on the degradation of the environment and the... Now as I said your unfortunate starting point are only the disasters that have happened in the past. They do not talk about any, I do not hear myself of any, how many schools have been build. It was the first time that I heard earlier on about the actual specific projects that were going out. So maybe there is a PR there. Maybe you can help yourselves a little bit more there. But again it is….

One of the speakers: That’s why I became the chairman of the board of Manila Standard.

BBM: Well, every little bit helps so again in all for example there was a greater deal on this course on the ordinances that have been passed at the local level that banned mining from their area. Now the principal, the national law cannot be superseded or amended by a local ordinance. It’s something that is well understood. Why is it not being enforced? Who will enforce it? Who will enforce it is the national government. But they cannot enforce what they do not know they need to enforce because they have no policy and that again it boils down, that is why I spent so much time speaking here today, of talking about national policy and its shortcomings when it comes to the development of the mining industry. So we have to focus on that but at the same time you have to do the homework on the ground level and be sensitive to the local, and sometimes you feel that they’re unreasonable but always look further. Be patient, ask more questions. Think more about it and eventually you will begin to see. It’ll become clear to you. Identify also those in the local community who have an understanding. They might be against mining but they are willing to listen. That’s the important thing. You have to find those to help you to spread the word that in fact if done well, if done properly, if done sensitively it can be good. Now, it brings us as I said to this issue of the sensitivity towards the preservation of the environment. I think that sometimes people who live in cities do not quite understand how close people in rural areas are to the land. And especially with the IP’s. I have a little experience on that because during the hearings in the Bangsamoro we have talked about IP’s and the continual refrain was that we have been put on this earth to take care of the environment and that is what it means to them. And I sometimes smile when I see this campaigners coming from Manila going to provinces and say “we must preserve the environment, we must do this, we must do that, people should be more sensitive” and I laughed because you live in cities, you do not understand. People in the countryside have to live with the environment. They have to make their living of the land. And any damage to that land will take that living away. And that is what they use to feed their families, to grow, to send their children to school, to build their homes, etcetera, etcetera. So again it comes down to an understanding of the local condition at the same time, unless national policy is clear. Unless national policy thinks in the long term. And unless national policy is coordinated, then we will still have the same problems at the local community. There is a way to get around that kung kaya talaga ninyong kumbinsihin ng mabuti ang local community then you can have a policy at a local level. However, there is a much more difficult way of going about it. National policy still holds the key. Thank you.

Speaker: Thank you very much Senator Marcos. That was a well done of ... and honesty. When you talked about politicians. But seriously though a lot of points that you raised will be useful