By Adrian H. Halili, Reporter
REGULATORY uncertainty is expected to hinder further foreign investment in the Philippine mining industry, Canada’s ambassador said.
“One of the inhibitors to deeper, you know, investment here has been the frequency, the uncertainty of some of the (changes in) regulations. You know, the regulatory framework,” Canadian Ambassador to the Philippines David Hartman told BusinessWorld on the sidelines of a mining industry event last week.
The government plans to implement a new mining fiscal regime for companies operating within and outside of mineral reserves to drive economic growth.
Under the proposed tax regime, the government expects to generate around P5.5 billion from royalties on miners operating within mineral reservations, P1.31 billion from royalties on miners operating outside reservations and P3.37 billion from windfall profit taxes.
In 2023, the value of mineral production hit P249.05 billion, according to the Mines and Geosciences Bureau.
“What we are hearing now from the government is trying to move in the direction to give that level of certainty to the market, so that (foreign companies) can make these investments,” he added.
Earlier, the Department of Finance proposed a margin-based royalty of 1.5-5%, with only four tiers, compared to the 10 tiers in House Bill No. 8937.
Large-scale metallic mining operations inside mineral reservations will still pay the government the equivalent of 5% of their gross output.
“It is a very costly sector in which to do business. And so, obviously, people are going to be looking for that greater degree of certainty,” he said.
Mining companies currently pay corporate income tax, excise tax, royalty, local business tax, real property tax, and fees to indigenous communities.
Separately, the Department of Environment and Natural Resources said that it is seeking to shorten the approval process for mining permits by one to three years.
According to Environment Secretary Maria Antonia Yulo-Loyzaga the typical approval period for mining permits could run as long as six years.
“We hope that in fact this year, with the work we are doing on digitalizing permitting… we can shorten that permitting time,” Ms. Yulo-Loyzaga told reporters.
Meanwhile, Mr. Hartman said that more capital market participation on the Philippine bourse could draw more interest from Canadian investors.
“I think the more that we can go to capital markets here to participate in some of these processes, the more interest that will be,” he said.
The Philippine unit of Australian-Canadian mining company OceanaGold Corp. is set to list on the Philippine Stock Exchange on Monday, May 13.
“The fact that there’s all of these policy initiatives underway from the government, makes the Philippines a much more palatable, a much more interesting, a much more potentially prosperous area in order to do business,” he added.
OceanaGold Philippines, Inc.’s initial public offering consists of 456 million common shares, equivalent to a 20% stake in the company.
“The Philippines has all the raw ingredients, all the capacity to grow this industry here…the future potential for the mining sector, for future economic growth, for the prosperity of the people of the Philippines is incredibly promising,” Mr. Hartman said.
