Nation at a Glance — (03/01/18)
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
Philippines hails US move to blacklist local IS-linked groups
The Philippines hailed on Wednesday, Feb. 28, Washington’s decision to blacklist two local pro-Islamic State groups, including one which occupied the southern city of Marawi last year, triggering a months-long battle.
The US State Department and the Department of Treasury designated the Maute group and the Dawlatul Islamiyah Waliyatul Masrik as “terrorist organisations” on Tuesday, blocking US-based assets belonging to them or their supporters and barring Americans from dealing with them.
“The (move) is an affirmation of what Philippine authorities already know — that the Maute Group and the Dawlah-Islamiya are terrorist groups that need to be dealt with decisively using the full force of the law,” a statement by the defence ministry in Manila said.
“They will be denied access to the US financial system and will face sanctions as may be deemed appropriate, making it more difficult for them to conduct their activities in the Philippines and abroad.”
Militants from the Maute group were routed from Marawi last October after a five-month battle sparked by its bid to establish an IS caliphate in the largely Catholic country’s southern Mindanao region.
The US, a long-time defence ally, helped Philippine forces with intelligence input, including reconnaissance flights, during the fighting which claimed more than 1,100 lives and reduced large parts of the city to rubble.
However the Philippine military warned last week that remaining members of the group have recruited about 200 gunmen to mount another attempt.
The Dawlatul Islamiyah, or Dawlah-Islamiya as designated by the Philippine defence ministry, is a smaller faction also based in Mindanao.
“We are profoundly committed to preventing ISIS from gaining (a) foothold in the Philippines and in Southeast Asia, and we should continue working together on this objective,” Philippine Foreign Undersecretary Ernesto Abella told reporters, using an acronym for IS.
Brigadier-General Bienvenido Datuin, spokesman for the Philippine military, said the US move would boost local counter-terrorism efforts.
“(A) specific advantage… is the checking of money trail, financial sources, logistics lines and conduits of terror groups in foreign countries that may have connections with local violent extremists,” he said.
Other armed Philippine groups that have made the US terror blacklist in previous years include the New People’s Army, waging a decades-old Maoist armed rebellion, and the Abu Sayyaf, which linked up with the Maute gunmen in Marawi last year. — AFP
Duterte allies seek to emulate Chinese Communist Party programs
In a sign of China’s growing influence in the Philippines, President Rodrigo R. Duterte’s political party is holding a two-day summit in Manila to develop policies that imitate the Communist Party’s anti-poverty programs.
Duterte’s ruling PDP-Laban party wants to follow China’s Communist Party in boosting opportunities in the countryside and assessing leaders based on the number of people they lift out of poverty, Philippine House Speaker Pantaleon Alvarez, who serves as the party’s secretary-general, said in a speech Tuesday night. Two officials from China’s Communist Party briefed Philippine officials on President Xi Jinping’s programs on Feb. 27.
“Let us be thankful that the Communist Party of China is here with us,” Alvarez said.
Soon after Duterte took office in June 2016, the Philippine leader announced a separation with the U.S. and embraced closer ties with China and Russia. He has since downplayed his nation’s legal victory over Beijing in a South China Sea territorial dispute, while China has responded with $24 billion worth of funding and investment pledges.
If China wants, it can just add Philippines as one of its provinces “like Fujian,” Duterte said on Feb. 19 to an audience of Filipino-Chinese businessmen. “Province of Philippines, Republic of China,” Duterte added before an applauding crowd.
Disputed Territory
Duterte’s spokesman Harry Roque said the remarks were made in jest, and that the Philippines stands by its rights to disputed features in the South China Sea.
Xi assured Duterte that China won’t build anything on the Scarborough Shoal, which has been a flash point between the two countries. Still, China had completed an air and naval base on the disputed Fiery Cross Reef, according to photos published by the Philippine Daily Inquirer.
In other indicators of China’s burgeoning presence in the Southeast Asian nation, Philippine state television last year began rebroadcasting programs from China Global Television Network. Immigration officials are also being trained to speak Mandarin since China became the country’s second highest source of tourists last year, eclipsing the US and Japan. — Bloomberg
Duterte sparks frenzy for telecom penny stocks
There’s a gold rush in Philippine telecom minnows and everybody’s invited. For now.
President Rodrigo Duterte’s decision to award a new telecommunications license has sparked a frenzy as speculators bid up the prices of once-forgotten penny stocks which may benefit from the shakeup of the sector’s current duopoly of PLDT Inc. and Globe Telecom Inc.
NOW Corp.’s market value has surged almost 400 percent so far this year on wagers the broadband service provider will be part of a new consortium to challenge the incumbents. Its market value of about 21 billion pesos ($403 million) is 8,400 times the 2.5 million pesos in net income it posted in 2016. Earlier this month, it became more valuable than GMA Network Inc., the nation’s second-largest broadcaster, which earned 3.6 billion pesos during the same period.
EasyCall Communications Philippines Inc., a former 1990s provider of paging services that’s seeking to build a wireless broadband network, has risen over 1400 percent since the end of November. Transpacific Broadband Group International Inc., a satellite station operator, is up more than 200 percent over the same period. The benchmark Philippine Stock Exchange Index has eked out a miserly 3 percent gain in comparison.
The ongoing interest was evident in trading Wednesday. EasyCall was up 49 percent and Transpacific 13 percent as of 11:39 a.m. in Manila. The benchmark stock index was down 1.2 percent.
The Philippines will bid out a new telecom license in the first half of 2018, a process set in motion by Duterte’s invitation in November to Premier Li Keqiang for a Chinese company to invest in the sector and improve services. The bidding was moved to May from an original plan of March upon the request of contenders, said Eliseo Rio, acting head at the Department of Information and Communications Technology.
The proposal sparked investor interest in potential domestic partners for any Chinese bidders, and NOW, EasyCall and Transpacific Broadband are among the 10 biggest gainers this year in the all-share index. Bets that they can leverage their franchises, existing operations and listed status to potential overseas bidders will likely continue until the bidding, according to Jonathan Ravelas, chief market strategist at BDO Unibank Inc.
“This gives hope to small, listed telecommunication companies that they could be the third major player,” Ravelas said. “The government probably wants a company that can be up and running immediately.”
The speculation has even spread even to some real estate shares, according to market participants.
Golden Haven Inc., a builder of memorial parks that expanded into mass housing, has seen its shares surge over 1,300 percent this year on speculation its billionaire owner Manuel Villar will use the company to list his telecom venture that will bid for the frequencies the government will sell. Even Villar’s Starmalls Inc., a shopping mall builder, has risen over 170 percent in 2018 on the same speculation.
However, to some in the market, the rally has gone too far and there is a growing risk of a pullback. Rachelle Cruz, an analyst at AP Securities Inc. in Manila, is cautious on the sector given the speculative nature of the moves, even for shareholders of the company which gets the license.
“Share prices are already stratospheric and will likely collapse once the bidding is over,” she said. “Even the winner would see its stock collapse because raising the capital it needs will lead to massive dilution while its first five years of operations isn’t likely to be profitable.”
Gains in the stocks will moderate as the bidding nears, with the realization that the winner can’t build the business overnight, said Paul Michael Angelo, an analyst at Regina Capital Development Corp. “The incumbents will put up a tough competition,” he said.
As for the companies themselves, they aren’t convinced by the naysayers, preferring to highlight the logic they see behind the moves.
“There is irrational speculation, there’s rational speculation,” NOW President Mel Velarde said of his company which this month won a renewal of its franchise for another 25 years. “In this particular space, we are in the right spot and we want to seize this opportunity.” — Bloomberg
Draghi looks on as Europe’s horse trading sends Guindos to ECB
If Mario Draghi had to design the way his colleagues get picked, it would probably be a bit different from how it is now.
The European Central Bank president twice stopped short of praising the process for board appointments — aside from a mention of safeguards to independence — when asked this week about how his future vice president was chosen. Minutes later, the man himself, Luis de Guindos, also spoke at the European Parliament as the first serving euro-area finance chief to be named by counterparts to the Frankfurt institution.
Every central bank endures its own appointments system, with corresponding strengths and weaknesses, but the ECB’s unique setup adds eccentricities. Of the six senior officials and 19 central bank governors on its Governing Council, each got there based on their passport, though with a commitment to not favor national interests. For critics, prioritizing citizenship over expertise, particularly for the Executive Board, is a defect.
“The process is just flawed, from beginning to end,” said Charles Wyplosz, a professor at Geneva’s Graduate Institute. “The politicians that make these appointments see it as part of the bigger game of spoils for their compatriots.”
The ECB’s board is currently in an appointments cycle starting with the replacement of Vice President Vitor Constancio in May, and culminating late next year with Draghi’s retirement. Candidates proposed by euro-area members are vetted by finance ministers, and following input from lawmakers and the ECB, they are then appointed by heads of government.
Read more: Guindos Clears Symbolic Hurdle for ECB Vice Presidency
Spain openly campaigned for a post after a six-year absence, and Guindos will now replace Constancio. European lawmakers, whose opinion isn’t binding, preferred Philip Lane, the Harvard-educated governor of Ireland’s central bank, but his country withdrew his candidacy.
The Spaniard, a former Lehman Brothers banker who guided his economy through the region’s debt crisis, has raised eyebrows of Frankfurt officials cherishing the political autonomy of the ECB, an institution modeled on Germany’s Bundesbank. Guindos insisted to lawmakers this week that he’ll defend its independence.
“It’s a big institutional mistake,” Algebris Investments Chief Executive Officer Davide Serra told Bloomberg Television this month. “This idea that you go from politician to the ECB board, I think it’s very dangerous.”
Draghi declined to comment on Guindos, telling lawmakers that the ECB will issue its own assessment on March 8.
“Independence of the ECB is enshrined in the treaty” of the European Union, he said. “It would be protected by the treaty, which goes beyond any sort of personal profile. And the candidate for the position will be assessed for his competences.”
The vice presidency episode is the prelude to a tussle for the bigger prize of Draghi’s job. The first Italian to be ECB president will retire in October 2019. Germany has never held the post despite being the bloc’s largest economy, making the Bundesbank’s Jens Weidmann a contender. With ECB officials Benoit Coeure and Peter Praet also leaving next year, the stage is set for horse-trading among governments.
“The board isn’t a collection of states, it’s a team of competent people who must not be responding to their local constituencies,” said Carlo Alberto Carnevale Maffe, a professor at the SDA Bocconi School of Management in Milan, who cites the Bank of England system as a better example. In the U.K., they don’t discuss if a deputy governor “should be Scottish or whether the Welsh should be given a minor role,” he said.
Aside from the Executive Board, all other Governing Council members lead euro-zone central banks. Each holds their country’s passport and can be vulnerable to national distractions, such as Latvia’s governor, Ilmars Rimsevics, who is fighting for his job amid a graft investigation at home.
Read next: Weidmann Cites Thomas Becket Example for Guindos Shift to ECB
Some members hail from institutions “with experienced staff and a long tradition of independent central banking,’’ said Stefan Gerlach, the former deputy governor of Ireland’s central bank and now an economist at EFG in Zurich. “The fabric of society in some countries in the periphery is often weaker and they don’t have a long history of a strong and independent civil service.’’
For all its faults, the ECB’s design does reflect the diversity of the euro region, and it might be too much to expect the guardians of an international institution with so much at stake to be blind to nationality.
It’s also a matter of debate whether the region’s political wrangling does yield weaker appointments than elsewhere, said Jacob Funk Kirkegaard of the Peterson Institute in Washington. He points to some U.S. Federal Reserve regional presidents whose background is business rather than economics, but who do get weigh in on monetary policy decisions.
Some “are just silent all the time,’’ he said, but “they’re good administrators, they’re good leaders, they know that doesn’t mean they’re monetary policy heavyweights. The same could be true of the ECB.’’
Draghi also knows more than anyone that the current system got him appointed in the first place, and some investors have no reason to complain.
“The ECB and Mario Draghi should be congratulated and thanked for taking it through the crisis,” said Ray Dalio, founder of Bridgewater Associates. — Bloomberg
Oil set for first monthly drop since August on US stock fears
Oil is poised for its first monthly decline in half a year as January’s rally fades on growing fears over booming U.S. shale supply.
Futures in New York were little changed, putting them on course for a 2.8% drop in February. An industry report was said to show U.S. oil inventories rose last week, which would be the fourth expansion in five weeks if confirmed in government data. The head of OPEC plans to dine with shale producers in Houston next week at a time when America is pumping at record levels and threatening the group’s efforts to curb a global glut.
After the best start to the year in more than a decade, oil has had a tumultuous month. Prices tumbled early in February following a global asset rout, only to recoup some losses as equities rebounded. While output curbs by the Organization of Petroleum Exporting Countries, a supply disruption in Libya and turmoil in Venezuela have helped underpin prices, expanding U.S. shale production continues to haunt the market.
“Basically what investors are weighing is U.S. shale versus OPEC right now,” Tamas Varga, analyst at PVM Oil Associates Ltd said by phone. “It’s not clear yet who will be the winner as U.S. oil production keeps going higher despite the OPEC cuts.”
West Texas Intermediate for April delivery fell 3 cents to $62.98 a barrel on the New York Mercantile Exchange as of 11:09 a.m. in London, on course for the first monthly decline since August. The drop this month comes after prices rallied 37% in the five months through to the end of January. Total volume traded was about 21% below the 100-day average.
Brent for April settlement, which expires Wednesday, dropped 4 cents to $66.59 a barrel on the London-based ICE Futures Europe Exchange. The contract lost 1.3 percent, or 87 cents, on Tuesday. The more-active May contract gained 7 cents to $66.59. The global benchmark crude traded at a $3.70 premium to April WTI.
U.S. Data
The American Petroleum Institute was said to report U.S. oil stockpiles rose by 933,000 barrels last week. Government data Wednesday is forecast to show inventories rose by 3 million barrels, according to a Bloomberg survey.
U.S. crude output is forecast to rise to a record level in February, stoking fears that shale producers may derail OPEC’s strategy of reducing output to clear a global glut. The producer group’s Secretary General Mohammad Barkindo said he will meet with U.S. shale company executives for dinner on Monday in Houston, the second time he has met with some of the cartel’s top rivals.
Events in OPEC members Venezuela and Libya have also influenced oil’s course this month. Libya’s exports from a key port will be “modified” after protests disrupted production, putting the nation’s output at risk of a decline again. In Venezuela, crude output could fall to 1.1 million barrels a day by year-end, according to consultancy Rapidan Energy Group, as the U.S. leans toward imposing oil-sector sanctions before elections in April. — Bloomberg
Finance chief seeks ‘total clarity’ in Bangsamoro fiscal policy
Department of Finance (DoF) Secretary Carlos G. Dominguez III said that the legislators should be clear in crafting the provisions of the Bangsamoro Basic Law (BBL) to avoid problems in the future.
During the hearing of the joint House committees on local government, muslim affairs, and peace, reconciliation, and unity on Wednesday, Feb. 28, the panel continued threshing out the financing mechanisms of the proposed Bangsamoro Autonomous Region (BAR).
Mr. Dominguez told the panel that it is “incumbent upon the members of the congress to make it very clear, the division of responsibility, the division of control, the division of the revenues, so that in the future, we won’t end up in court every day.”
“One of the most important things in putting up the law is total clarity as who has what right and especially who has the right to retain national funds, nationally enacted taxes,” Mr. Dominguez added.
The Bureau of Budget and Management (DBM) echoed the same sentiment, saying that it is “material” to determine if the BAR will be treated as a national or as a local government unit.
“If it [Bangsamoro region] going to be treated as a national agency, then definitely, it will have annual budget and it has to be reverted, consistent with all the rest of national government agencies. But if it will be treated as a local government unit, it is effectively one unit lower than the national government… once the funds are transferred or downloaded to the LGUs, it loses that character of having to be reverted at the end of the year and it continues,” DBM Undersecretary Tina Rose Marie L. Canda said.
The chief financier said that if the investment comes from the national government, it would have the right to retain the funds, and the same goes for local government.
“I don’t have any objection to retaining local funds in the political entities there that are their right to control,” Mr. Dominguez said. — Minde Nyl R. Dela Cruz
Fed remarks sink shares; market sees 4 rate hikes
SHARE prices fell on Wednesday, Feb. 28, after comments from the chairman of the Federal Reserve, which were taken to mean that the Fed may resort to more than three rate hikes this year.
The 30-company Philippine Stock Exchange index (PSEi) shed 117.09 points or 1.36% to close at 8,475.29 today. The all-shares index lost 35.79 points or 0.69% to 5,082.94.
“PSEi’s dip could be due to weakness in the US markets last night after Jerome Powell signaled the possibility of more than three hikes this year,” Papa Securities Corp. trader Gabriel F. Perez said in an e-mail.
The new Fed chairman expressed optimism on the growth of the US economy, which could prompt US monetary authorities to raise interest rate hikes more frequently this year.
“It’s no longer a question of whether the Fed will raise interest rates, because they will raise interest rates. The question is frequency — how many times? Will it be two, three, or four? After last night’s testimony, there are more adherents for four rate hikes (and the market is now looking at) three and four rate adjustments,” Philstocks Financial, Inc. Head of Research Justino B. Calaycay, Jr. said by phone.
US markets ended in negative territory following Mr. Powell’s statements, with the Dow Jones Industrial Average giving up 1.16% to 25,410.03. The S&P 500 index was down 1.27% at 2,744.28, while the Nasdaq Composite index slipped 1.23% to 7,330.35.
The slower growth of SM Investments Corp., which disclosed yesterday that profit grew 6% to P32.9 billion, also failed to draw investors back into the market, according to Mr. Calaycay.
“We expect earnings to at least provide some push. But using SM as an example, it wasn’t really what could compel investors to rush back to the market. Right now we’re looking at the market consolidating and, we hope, building a firmer foundation or firmer support level as we await more numbers,” the analyst said.
The property sector posted the largest decline, dipping 91.59 points or 2.4% to 3,721.70. Holding firms lost 147.41 points or 1.68% to 8,585.06; financials dropped 11.28 points or 0.50% to 2,225.65; while services declined or 0.31% to 1,745.89.
On the other hand, the mining and oil sector recovered, rising 24.43 points or 0.20% to 12,253.82, while industrials climbed 13 points or 0.11% to 11,440.91.
A total of 16.91 billion shares changed hands, valued at P9.97 billion, against P9.25 billion on Tuesday. Advancers outnumbered decliners, 111 to 96, with 52 unchanged.
Foreign investors were net sellers for a seventh straight day, with outflows of P939.04 million, up sharply from the P276.98 million booked on Tuesday. — Arra B. Francia
PSEi falls after Fed chair signals more rate hikes ahead
Local equities dropped on Wednesday, Feb. 28, in light of hawkish comments from the United States Federal Reserve, indicating more than three rate hikes for the year.
The 30-company Philippine Stock Exchange index (PSEi) shed 1.36% or 117.09 points to close at 8,475.29 on Wednesday. The all-shares index also lost 0.7% or 35.79 points to 5,082.94.
“PSEi’s dip could be due to weakness in the US markets last night after Jerome Powell signaled the possibility of more than three hikes this year,” Papa Securities Corp. Trader Gabriel F. Perez said in an e-mail.
The new Fed chairman expressed optimism on the growth of the US economy, which would prompt them to raise interest rate hikes more frequently this year.
“It’s no longer a question on whether the US Fed will raise interest rates, because they will raise interest rates. The question of the frequency, how many times, will it be two, three, four. After last night’s testimony, the ante on a four-time rate hike has seen more adherence, they’re looking at three and four rate adjustments,” Philstocks Financial, Inc. Head of Research Justino B. Calaycay, Jr. said by phone.
US markets ended in negative territory following Mr. Powell’s statements, with the Dow Jones Industrial Average giving up 1.16% to 25,410.03. The S&P 500 index was down 1.27% to 2,744.28, while the Nasdaq Composite index slipped 1.23% to 7,330.36.
The property sector posted the largest decline, dipping 2.4% or 91.59 points to 3,721.70. Holding firms lost 1.69% or 147.41 points to 8,585.06; financials dropped 0.5% or 11.28 points to 2,225.65; while services decreased 0.31% or 5.45 points to 1,745.89.
On the other hand, the mining and oil sector recovered, rising 0.2% or 24.43 points to 12,253.82, while industrial climbed 0.11% or 13 points to 11,440.91.
A total of 16.91 billion issues switched hands, valued at P9.97 billion, higher than Tuesday’s P9.25-billion turnover. Advancers trumped decliners, 111 to 96, as 52 issues remained flat.
Foreign investors were sellers for the seventh straigh day, with net outflows ballooning to P939.04 million, against the P276.98 million booked in the previous session. — Arra B. Francia
Peso weakens after Fed chair testimony
The peso weakened against the dollar on Wednesday, Feb. 28, following the bullish testimony of US Federal Reserve (Fed) Chair Jerome H. Powell.
The local currency closed at P52.10 versus the greenback on Wednesday, seven centavos weaker from its P52.03 finish on Tuesday.
The peso opened the trading session weaker at P52.15 per dollar, while its intraday low stood at P52.18. Its best showing, meanwhile, was at P51.99 against the US currency.
Dollars traded inched upwards to $652.1 million from the $648.7 million that switched hands in the previous session.
A trader interviewed on the phone on Feb. 28 said the peso weakened in the morning session after Mr. Powell testified before the US Congress on late Tuesday (Manila time).
“The peso dipped strongly today amid hawkish remarks [Feb. 28] by Federal Reserve chair Jerome Powell in his testimony to US Congress signaling three or four Fed rate hikes for the year,” the trader told BusinessWorld on Wednesday.
In his Capitol Hill testimony, Fed Chair Powell indicated that the US economy is growing, emphasizing the accelerating wage growth and the robust labor market.
“After easing substantially during 2017, financial conditions in the United States have reversed some of that easing.At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong,” Mr. Powell said.
He then hinted that the Fed would stick to its current path of gradual rate hikes, spooking the market, Reuters reported.
“With the expectation that US rates are definitely rising after Powell’s speech, I expected a weakening of the peso versus the greenback,” Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines said in a text message. — Karl Angelo N. Vidal
GBP highlights optimal power mix to achieve ‘energy security’
Given its anticipated economic growth and its installed energy capacity, the country’s optimal energy mix would be 70% conventional energy, 30% renewable energy, said the top official of Global Business Power Corp. (GBP).
“To achieve energy security, we must optimize the resources available to us whether they’re conventional or renewable,” he said, adding that GBP is working to ensure that its energy portfolio complement each other and readily addresses its customers’ diverse requirements,” said GBP President Jaime T. Azurin in a statement.
He said ancillary services would require a capacity equivalent to 22%, which could be sourced from the Philippines’ optimal energy mix calls for sourcing its requirement from 70% conventional a combination of conventional and renewable energy sources. — Victor V. Saulon
Cobalt, batteries, and TRAIN
Many people are enamored — and rightly so — with consumer electronics and gadgets like smartphones, iPads, laptops, and so on. Then, there is new and huge global demand for electric cars and bikes, even electric buses and trucks.
All these products and equipment need batteries, which, in turn, require large volumes of cobalt, considered by some analysts as the “new oil.”
This is good news for the Philippines.
First, cobalt prices seem to be skyrocketing. Second, the Philippines has the 4th largest cobalt reserves (#1 is Congo) and the projected reserves/production (R/P) ratio is 70, meaning at 2017 estimated production level, it will take 70 years for our cobalt reserves to be depleted.
Another good news for the Philippines is in nickel. First, world prices are also rising high though not as fast as cobalt prices. Second, we have the 5th largest nickel reserves (#1 is Australia) although our R/P ratio for nickel is only 21 years (see table).
Why have cobalt prices risen too fast recently?
According to Darton Commodities projections as cited in a Bloomberg report, cobalt use in electric vehicles and other lithium-ion battery applications was around 55,000 tons in 2017 and this is projected to rise to around 160,000 tons in 2025 and 330,000 tons in 2030.
Mining exploration and drilling technology keeps improving so new reserves for cobalt, nickel, gold, copper, and other metals that the Philippines has will be discovered soon and this will raise the R/P ratio for these commodities.
During the BusinessWorld Stockmarket Roundtable last Feb. 20, at Shangri-La Hotel, about two or three of the four speakers that afternoon (Gus Cosio of First Metro, April Tan of COL Financial, Jun Calaycay of Philstocks Financial, and Mike Gerard Enriquez of Sunlife Financial) mentioned the short- and medium-term potentials of the Philippines mining sector. These finance guys see the trend in global commodity supply and demand and hence, their global prices.
BMI Research also showed optimistic outlook for the sector: metallic mining output 6% growth to $3.98 billion in 2018, 5% growth to $4.18 billion in 2019, $4.34 billion in 2020, $4.47 billion in 2021 and $4.56 billion in 2022.
As of end-2016, estimated Philippines reserves are: 1.854 billion MT of gold, 1.696 billion MT of silver, 1.761 billion MT of copper, 116.136 million MT of nickel, 116.001 million MT of iron and 47.264 million MT of chromite.
Various uncertainties in the sector should be relaxed if not ended soon. The good potentials are there in terms of corporate income, jobs generation, mandatory community development projects, and government (national and local) tax and nontax revenues.
These uncertainties range from (a) resource nationalism (“keep out foreign capital in mining” or “export only processed minerals, not raw ores”), (b) more regulations (“ban open pit mining,” “suspend or close more metallic mining”), and of course, (c) more mining taxes (“raise the mining excise tax from 2% to 4%, 6%…,” “raise mining royalties…”).
The recent Tax law RA 10963 known as Tax Reform for Acceleration and Inclusion (TRAIN) has, out of nowhere, raised the mining excise tax from 2% to 4%. It seems that this was not contained in the original House and Senate versions prior to the Bicameral Committee meetings but were just inserted along the way, along with the coal tax hike and tobacco tax hikes.
Now TRAIN 2 is in Congress and there are moves to further raise the mining excise tax on a per-commodity basis, but without reducing or removing other taxes, royalties and mandatory community expenditures.
There should be a limit to the politics of envy via high and rising taxation. When companies create lots of direct and indirect jobs, give lots of social and economic services to their personnel and community residents who are not even company employees, pay lots of taxes, regulatory fees and royalties to the government, the itch of tax-tax-tax should be tempered.
Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.