Group for Transparency in the Mining Industry to be Formed

The Philippine equivalent of the Publish What You Pay (PWYP) is being formally organized in the Philippines. Action for Economic Reforms (AER) and Alyansa Tigil Mina (ATM), in cooperation with PWYP, Revenue Watch, and 11.11.11, organized a two-day workshop on 13-14 October 2009 towards forming a network that likewise serves as an institute that will advocate transparency of contracts, revenues, spending and the whole value chain of the extractive industries.  Given, the pressing concerns, the composition of the group, and the resource constraints, the focus of the advocacy, at least on the early stage, is mining.

Thirty-two (32) representatives, representing 19 organizations participated in the two-day workshop. The participating individuals and organizations came from different sectors. Some are environmental groups; others focus on transparency issues.  A few individuals or groups work on economic issues (e,g., taxation) And a significant number are groups  opposed to or critical of the way extractive industries are being done in the Philippines.

Goals

Among the goals of Bantay Kita are:

Institutionalize transparency in the extractive industries, contributing to good institutions, which are a sine qua non to sustainable and development-oriented resource extraction.

Maximize people’s benefits, especially revenue gains, from the extractive industries.

Build the capabilities of communities and civil society organizations in engaging the extractive industries at each stage of the value chain.

Challenges

At present, the Philippines does not obtain significant revenues from the mining industry.  The revenue collection from the mineral industry (as a proportion of gross production value) from 1997 to 2007 was 7.5 percent, way below the national average for revenue effort (revenue as a proportion of GDP) for the same period, equivalent to 16 percent. This is appalling, considering that the Philippine revenue effort is likewise low, in comparison to the performance of similarly situated countries.

The low revenue collection from mining is a result of very generous fiscal incentives given to the industry and the practice of tax evasion, which is rampant in the Philippines.

An urgent task for the network then is to reverse fiscal policy on fiscal incentives that are redundant at least in relation to the mineral industry. The incentives are unnecessary because the investors will anyhow invest because they want the resources. In other words, incentives in resource-seeking industries are undesirable. In this regard, the network will support the legislation that will rationalize fiscal incentives in the Philippines.

Furthermore, the Philippine government, especially the current administration, lacks transparency.  It is for example, very difficult for a citizen or a public interest to access public information on contracts, revenues, and audited statements. In this regard, various civil society organizations and the enlightened segment of the media have campaigned for a Freedom of Information Act.  Bantay Kita will benefit from such legislation, and hence it will likewise join the advocacy for the passage of the bill that is still being deliberated in the Philippine Congress.

Last but not least, Bantay Kita will prepare for any eventuality that the EITI (Extractive Industries Transparency Initiative) will be formed in the Philippines.  Bantay Kita will be the vehicle for the participation of NGOs and civil society in the EITI process.

Planned activities

The workshop in mid-October 2009 has provided the legitimacy and the mandate for the formalization of Bantay Kita. An interim Board has been formed.  The interim Board is  composed of  representatives of a) development groups engaging the mining sector, b) mining communities, c) transparency initiative, and d) economic reform advocacy. Its preliminary tasks include appointing a coordinator, revising the strategy paper based on the workshop’s inputs and proposals, and mobilizing resources, including approaching institutional donors.

The formal launching of Bantay Kita is scheduled in mid-2010.

Message

In the Philippine context, extractive industries, especially mining, have not contributed to development.  In fact, the supposed gains from revenues have not materialized.  It has been shown that bad institutions—manifested in corruption, regulatory capture, opacity, and low tax collection—explain why extractive industries in the Philippines have become a “resource curse.”  Thus, in building good and string institutions, we view as crucial the national advocacy for transparency, better revenue collection, maximization of benefits for the communities and the taxpayers, and building of capacities of citizens’ groups.   Such advocacy deserves support from the international community in the same manner that the Philippine advocacy will supplement the international advocacy for transparency and good rules.

The Philippine advocates under Bantay Kita value PWYP membership.  PWYP, for instance, has been instrumental in facilitating the formation of Bantay Kita. We expect greater, more fruitful  cooperation in the international as well as national campaigns between PWYP and Bantay Kita.

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