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Give the poor jobs

Publication Date : 26-06-2014

 

“Damn the torpedoes, full speed ahead.” That was supposed to have been said by US Adm. David Farragut during the American Civil War. It means, if you want to win you have to take risks.

As I said last week, action is needed in the last two minutes of the presidency. The groundwork has been laid, it’s now time to move.

“We cannot wait for progress to trickle down to the poor. We have to act,” said President Aquino in his fourth State of the Nation Address (Sona) last year. Well, he’s acting, all right—except that he is acting to add to the number of the poor. And indeed he will, if he, as expected, accepts the Mining Industry Coordinating Council or MICC’s recommendation to tax the mining industry to death.

There are three sectors of most help to the rural poor, to which the bulk of the poor belong: Agriculture, tourism and mining. Agriculture has been a poor employer; its daily wage per farmer is unacceptably low (a meager 157 pesos or US$3.58) and a huge number of those “working” the farms do so for free, as family members.

Tourism is doing well, but requires skills that many of the poor don’t have; and infrastructure is yet to come.

Mining, on the other hand, can employ thousands, hundreds of thousands of the unskilled who most need help. Mining can generate export dollars in the billions and can be a great tool to achieving the kind of “trickle-down” economy the President says he wants.

Well, the President can kiss that dream economy goodbye once he accepts the MICC’s foolish recommendation. As it now stands, the Philippines has the world’s third worst mining policy regime (only better than Venezuela’s and Kyrgyzstan’s, which are not the worlds’ most enlightened countries). And to think that the Philippines already imposes one of the highest tax rates in the world. If Aquino accepts the new “GO/NO GO” map where almost every place in the country is a no-mining zone, there would be no hope at all for the industry.

I’m at loss why the President is so opposed to mining when it can do so much good to so many of those most in need of help.

Some $12 billion in mining investments is on hold while  the tax regime remains uncertain. This will disappear if the 10-per cent tax on gross revenues or the 45 per cent to 55 per cent of adjusted mining revenues, plus a percentage of windfall profit (whichever is higher) is imposed as the MICC desires.

To put this in context, $12 billion is the six-year total of what the Philippines now gets (I excluded the share transfer of Coca-Cola last year) in foreign direct investments. That is 525 billion pesos. And this government wants to just throw that away?

Countries all over the world derive great benefits from mineral extraction operations. Mining investments generate jobs, build infrastructure, and inject money into communities. These translate into better access to health and education in rural areas where they are most needed. Simply put, mining investments create inclusive growth which is much needed for the country’s development.

President Aquino has been badly advised about mining, and seemingly he has accepted the advice without question. So mining operations, except for those already ongoing, will be on hold until the next hopefully more enlightened president comes along or until P-Noy can be convinced to change his mind.

 

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