PSE chief hits DENR’s ‘irresponsible’ order

By Riza Lozada

The head of the Philippine Stock Exchange has assailed the “surprise” release of results of the audit by the Department of Environment and Natural Resources of 28 mining oper­ations of firms listed at the lo­cal bourse, saying the move of Environment Secretary Regina Lopez created “a huge issue for those operating the stock exchange.”

Lopez should have been more cautious in making such an announcement, said Phil­ippine Stock Exchange (PSE) President and CEO Hans Si­cat.“What we saw last week, we believe that there was a surprise announcement in the media of a suspension, clo­sure of mining firms including those companies that are pub­licly listed.”

“We thought this is actu­ally a worrisome trend, if not, a very irresponsible move from the DENR,” the PSE chief said. Sicat said the DENR an­nouncement created con­fusion in the market, while global prices of nickel have increased by 7 to 8 percent when the results came out. “It’s interesting that an announcement from a par­ticular agency can move global prices,” he said. He noted that the gov­ernment should be con­sistent in its policies.

“It’s not something we want to project to global inves­tors. We always talk about con­sistency of policy, consistency of execution,” Sicat pointed out. “Surprise announcements like this, which do not synch or align with the overall econom­ic plan of the economy, makes you wonder whether the pol­icymakers have an angle es­sentially on the game plan, or you have a situation where a particular individual or groups of individuals have hijacked a well-thought out economic plan,” Sicat said.

Meanwhile, it was learned that a compromise, backed by the Department of Finance, was reached in the deadlock between the DENR and giant mining firms that give to Presi­dent Duterte the “final call” on the 28 mining operations that Lopez ordered closed.

The inter-agency Mining Industry Coordinating Coun­cil (MICC) also approved a resolution that calls for the creation of group that would review mining contracts and other related laws and formu­late measures to help people displaced by closed mines.

The secretary of Depart­ment of Trade and Industry (DTI) chairs the MIC; its members are the secretaries of the DENR and the DOF, the director-general of the National Economic and De­velopment Authority (Neda), the president of the Union of Local Authorities of the Phil­ippines (Ulap) and representa­tives of business and civil soci­ety, and academe.

Last Thursday, the MICC approved a resolution that called for the creation of group that would review mining contracts and oth­er related laws and formu­late measures to help people displaced by closed mines.

It also carried out the President’s order to observe due process in the audit of mining operations that ef­fectively sent the DENR order for a second review.

In a briefing Thurs­day night after the MICC meeting, Finance Secretary and MICC co-chairman said due process would be fol­lowed in the audit of the op­erations mining firms, par­ticularly the 28 companies covered by the DENR clo­sure and suspension orders.

The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, laud­ed the outcome of the MICC meeting and has called for an open dialogue on mining sector from public and private sectors.

“We certainly welcome the announcement from Malacañang that the mining companies up for closure or suspension will be given an opportunity to respond to the mining audit,” PCCI Presi­dent George Barcelon said.

“PCCI sees this an­nouncement as an opportunity to call for an open dialogue on mining as a legitimate indus­try, capable of contributing to economic growth in a sustain­able manner,” Barcelon added.

He said that the min­ing industry has contributed P17.6 billion to the coun­try’s gross domestic product (GDP) from 2008 to 2016. “We believe there should be a balance between the pro­tection of the physical environ­ment and the welfare of people who live off the land,” he added.

Dominguez said the MICC would assist the DENR in the implementation of the closure and suspension or­ders and to draft measures to help people and localities af­fected by the mine closures.

“The government has to prepare for the fallout of these decisions,” he said. An MICC resolution re­quired mining companies to “strictly observe the law, rules and regulations” related to their operations and those found guilty of violations “shall be meted the appropriate penalty under relevant laws.”

It said the review would be based on the mining com­panies’ contracts and relevant laws, taking into account “the valid exercise of the State’s po­lice power to serve the common good, especially of the poor.”

Dominguez said min­ing companies may appeal the decision of the DENR’s recommendations before the Office of the President. ”There is a clause there that they can appeal or invoke arbitration.

They may do so and the government commits, as (DENR) Secretary Lopez has said, that the government will follow the law,” he added. Lopez said the DENR has submitted its recom­mendations to the Office of the President but also said “the mines are not closed until the President decides.”

In a preliminary report to Dominguez, the Bureau of Local Government Fi­nance (BLGF) said that losses such as taxes, fees and other charges directly collected by the local governments from mining firms are estimat­ed at P441.92 million, while the LGUs’ share from min­ing taxes collected by the na­tional government account for another P211.72 million.

“The total estimated po­tential revenue loss of the af­fected LGUs from all sources, based on 2015 data, amount to P653.64 million,” BLGF Executive Director Nino Alvina said in his prelimi­nary report to Dominguez. The BLGF said the prov­inces affected either by the closure or suspension order are Benguet, Nueva Vizcaya, Palawan, Cebu, Bulacan, Zambales, Eastern Samar, Dinagat Islands, Surigao Del Norte, and Surigao Del Sur. Alvina said the BLGF based its initial report to the Finance Secretary on 2015 data because reports for 2016 will come in by the end of the first quarter or March 31.

He said the BLGF had sourced its data from the pre­liminary estimates of local treasurers and their electron­ically submitted Statements of Receipts and Expenditures (eSREs) that now cover reports on earnings from mining and other extractive industries.

The preliminary reports would still have to be re­viewed because some LGUs are hosting two to five min­ing projects, Alvina said.

Dominguez last week in­structed city and municipal treasurers in areas hosting mine sites to submit their re­spective reports on the final and complete revenue impact of the DENR directive by the end of this workweek or by Feb. 10.

According to Alvina, LGUs directly collect from mining firms operating in their municipalities and cities the following taxes and fees: real property tax (RPT), local business tax, mayor’s permit fee, regulatory and administra­tive fees, and occupation fees.

“The provinces of the af­fected component municipal­ities are also imposing gover­nor’s clearance, verification fee, environmental fees, soil deple­tion tax, and processing per­mits for vessels,” Alvina said.

He said that for the RPTs imposed by cities, the LGU gets a 70 percent share while the remaining 30 percent is shared with the barangays, of which half goes to the ba­rangay directly affected, and the other half shared equal­ly by component barangays. For the RPTs collect­ed by provinces, the prov­ince receives a 35-percent share, while 40 percent goes to the municipality, and the remaining 25 per­cent to barangays where the mining site is located.

Alvina said that RPTs account for some P43.97 million of the estimated reve­nues that LGUs will lose from the closure and suspension of mining operations while business taxes and other fees and charges account for P358.56 million, and provin­cial revenues, P39.9 million.

As for their share in min­ing taxes imposed by the na­tional government, Alvina said the estimated losses of P211 million of the affect­ed LGUs comprise 43 per­cent of their total share from National Tax Collections. Dominguez has given a short one-week deadline for local treasurers in LGUs af­fected by the mining closure and suspension orders to sub­mit their respective reports as they could already quickly access data through the web-based Environment and Nat­ural Resources Data Man­agement Tool (ENRDMT).

In Department Order 049-2016 issued in Septem­ber last year, Dominguez instructed local treasurers to include in their quarterly and annual financial reports to the DOF all environment and natural resources rev­enues and expenditures, particularly the payments made by the mining and other extractive industries to their respective LGUs. Municipal and city trea­surers have been forwarding their Statements of Receipts and Expenditures electroni­cally since 2011 and are now required to submit them through the ENRDMT.

Dominguez had asked for the impact assessment re­ports because alongside the massive loss of jobs and its effect on the national econo­my, the DENR’s move might imperil the fiscal state of the affected LGUs, given that mining companies account for a hefty part of the tax revenues collected by lo­cal governments in munic­ipalities hosting mine sites.

The finance secretary said last weekend that these assessment reports would aid the government in com­ing up with a comprehen­sive strategy to address the impact of the DENR move on the employment and fis­cal situations in the commu­nities where the concerned mining sites are located.

Dominguez said his pri­mary concern is the negative impact of the DENR direc­tive on jobs, second on mu­nicipal finances and third on the country’s GDP growth. “The national impact, the impact on the GDP—that, of course is a concern. But the people’s welfare is our first concern,” he said.