British firms await mining policy

Philippine Daily Inquirer –
http://business.inquirer.net/192076/british-firms-await-mining-policy

18 May 2015

POTENTIAL British investors in the mining and oil industries are on
wait-and-see mode while the Philippine government scrambles to come out
with an equitable revenue-sharing scheme covering extractive sectors.

As for existing UK companies doing business in the country, their
expansion activities are being put on hold as the interpretation of
various policies, especially on taxation, differs from one agency or
local government to another, lamented Asif Ahmad, British Ambassador to
the Philippines.

“There are projects that are frozen, where they simply said ‘we are not
going to touch them until the rules are clear.’ There are others where
they have already made an investment, ready to extract and suddenly the
rules have changed,” Ahmad told reporters on the sidelines of last
week’s signing of a P5-million grant agreement between the British
Embassy in Manila and civil society group Bantay Kita in support of the
Department of Finance-led Extractive Industries Transparency Initiative
or EITI.

Ahmad pointed out that mining and oil projects followed a longer
timetable from exploration until extraction, hence a more predictable
regulatory environment augurs well for firms engaged in the extractive
business.

The UK envoy added that such investments entailed huge capital, so any
delay in their entry or implementation would result in lost
opportunities, not only for the company but also for the country.

“If it is a very expensive extractive investment where there’s
downstream investment as well, you can’t suddenly change the rules
because these are global industries—they will simply decide that they
have got other places to invest in,” he said.

Ahmad cited as one concern the issue with the Bureau of Internal Revenue
on refunding the value-added tax on imported capital equipment, even as
the tax perk had been clearly dangled by the Board of Investments and
the Philippine Economic Zone Authority under their investment promotion
and generation blueprint.

“There is disconnect in the policies of one government agency to
another,” he noted.

“It’s not that British companies do not want to pay their taxes; it’s
just that they want to pay when they are correctly and clearly
negotiated,” he added.

As for the pending mining revenue-sharing scheme, Ahmad said that while
British firms understand that the government was carefully weighing
options so that gains trickle down to host communities, the policy
should come out as soon as possible.

“They can’t afford to wait any longer… They have to immediately make a
decision if this is the place where they will place their investment or
not,” he said. Ben O. de Vera