Mining investors won’t be given perks

Mining investors won’t be given perks


The government will stop granting incentives to the mining industry under planned policy reforms, a Cabinet official yesterday said.


Environment Secretary Ramon Jesus P. Paje said the Mining Industry Coordinating Council (MICC) -- created under Executive Order (EO) 79 issued earlier this month -- made the decision during its first meeting last Wednesday.


“The DTI (Department of Trade and Industry) and the BoI (Board of Investments) agreed to abolish these incentives,” Mr. Paje told reporters.


The MICC is an inter-agency body tasked to facilitate the implementation of EO 79, including the establishment of the order’s implementing rules and regulations. It is composed of representatives from the Cabinet’s Climate Change Adaptation and Mitigation and Economic Development clusters, the Justice department, National Commission on Indigenous Peoples and the Union of Local Authorities of the Philippines.


Mr. Paje said that while tax perks for specific businesses were provided for in the law, the MICC was of the opinion that the government could “simply opt not to grant these incentives.”


“It’s only a privilege. All that the BoI has to do is say no when these firms apply for incentives. And that was what we agreed on in the meeting. The DTI said they will not grant these incentives,” he explained.
This was confirmed by Trade Secretary Gregory L. Domingo, who said in a text message: “Yes. We will suspend acceptance of new applications.”


All changes to the fiscal incentives regime, he added, will be applied “prospectively.”


According to the Mining Act of 1995, firms with mineral agreements and financial or technical assistance agreements are entitled to the applicable fiscal incentives under the Omnibus Investments Code of 1987.


These include income tax holidays, incentives for the use of pollution control devices, and tax and duty exemptions on imported capital equipment and spare parts, among others.


Mr. Paje said the MICC in particular was looking at removing income tax holidays granted to mining firms. Large-scale miners are entitled to register for a five-year income tax holiday once they start commercial operations.


“In the meeting, we agreed that the BoI will inform companies even before they apply that they will not grant any fiscal incentives,” the Cabinet official said.


The Chamber of Mines of the Philippines (COMP) declined to comment yesterday.
“We will announce our position... in due time,” said Rocky G. Dimaculangan, COMP vice-president for communications.


But Eugene D. Gregorio, public affairs director of TVI Resource Development (Philippines), Inc., said the move could turn off investors.


“It could affect how investors regard the potential of mineral resource development in the country,” Mr. Gregorio said.