Philippines

EITI Status Satisfactory progress
Joined EITI in 2013
Latest Data From 2016
Latest Validation 2016
Last updated 29 August 2019

Overview

The Philippines is a leading producer of nickel, a significant producer of gold and copper, exports some iron ore, chromium, zinc and silver, and produces some oil and gas. The oil and gas industry is facing a rapidly maturing production profile, with production from the Malampaya project, which accounts for over 90% of gas production, in long-term decline.

The extractive sector in the Philippines makes a relatively small contribution to the national economy. The latest disclosure (2017 EITI Report) shows a marginal increase from 0.79% in 2016 to 0.85% in 2017 to GDP and 7.3% to total exports (5% in 2016). The mining sector contributes the most in the sector with 0.65% to GDP and 6.7% to total exports. However, there is considerable anti-mining sentiment in the country especially at subnational levels where environmental impact and displacement of indigenous peoples caused by mining operations have been the focus of much debate. Small-scale mining is also contentious, due to poor regulations and overlapping policies between central and local government.

The EITI has been used as a platform for dialogue by stakeholders, and as a source of credible information to inform policies on the appropriate fiscal regime for mining. The government is implementing reforms in the mining sector which include an audit of mining companies' compliance with environmental regulations and rules on social expenditures. The Philippine EITI Report complements this effort by providing information on companies' mandatory and voluntary social expenditures and contributions to mandatory environmental funds.

Beneficial ownership disclosure

Beneficial Ownership (BO) disclosure and Politically Exposed Persons (PEP) reporting in the Philippines has been a significant aspect of transparency in the Philippines. The multi-stakeholder group identifies tax evasion, money laundering, and compliance with the Constitutional provisions on the nationality of mining companies as the national issues that their work on beneficial ownership aims to address. It faces constraints, however, in terms of data privacy restrictions.  

The Philippines EITI previously published a Beneficial Ownership (BO) roadmap on 15 December 2016. The roadmap includes plans to include provisions on beneficial ownership disclosures in the proposed EITI Bill currently pending in Congress. The roadmap also spells out plans to work with the Securities and Exchange Commission (SEC) to make information on beneficial owners publicly available, and to engage the Anti-Money Laundering Council to harmonise Philippine EITI's BO work with the national agenda. The SEC recently issued a regulation which now requires BO disclosure from all companies through the annual filing of their General Information Sheets (GIS).

A 2017 BO scoping study commissioned by Philippines EITI and a pilot reporting of selected companies in the 2017 EITI Report identify clear challenges and opportunities on how BO disclosure can be implemented in the country. The 2017 EITI Report recommends

1. Entry points for reforms and suggests how various authorities can engage with relevant policymakers

2. How the MSG can develop effective reporting requirements

3. How a public registry can be set up to share BO data. For example, it is suggested that the Contracts Portal be repurposed to disclose not only contracts but also ownership information. 

4. Options for the utilization of BO data

The Department of Finance sees the Philippine EITI as aligned with at least three goals in the Duterte Administration’s ten-point socioeconomic agenda: institute more effective tax collection, increase competitiveness and the ease of doing business, and promote rural and value chain development, as to a critical albeit specific sector
Carlos G. Dominguez, Department of Finance

Production

The Philippines is a leading producer of mineral commodities such as nickel, gold and copper.  While production volume for nickel increased from 2012 to 2014, production has gradually decreased since 2015 -2017. Nevertheless, the country accounted for 11% of the world’s production of nickel in 2017. Other commodities being produced in the Philippines include chromite, zinc, iron, silver, crude oil and natural gas.

Domestic production follows a similar trend as mining - declined from 3 million barrels of oil in 2014 to only 1.5 million barrels in 2016.  Production from Galoc oil field has been the main contributor to the total output, producing 1.4  million barrels of oil in 2017.

Exploration activities in mining are spread nationwide, while coal production is focused in the province of Antique. Oil and gas exploration is focused offshore.

Natural resources

The Philippines has rich deposits of gold, copper, nickel, chromite as well as reserves of coal, zinc, iron, molybdenum, crude oil and natural gas. While the Philippines is ranked as the world’s fifth most mineralized country by estimated reserves valued at USD 1.39 trillion, only around 2.35% of the 9 million hectares holding mineral reserves are covered by mining permits as of August 2018. As of 2018, the Philippines accounted for 6.4% of the world’s total estimated reserves of nickel. 

CommodityReservesUnitSignificance
Oil43million barrels
Gas3772billion cubic feet
Condensate109million barrels
Gold4536billion metric tonsThe Philippines has the world’s third largest reserves of gold.
Coal297.76million metric tons
Copper5051million metric tons
Nickel783million metric tonsThe Philippines has the world’s fifth largest reserves of nickel.
Chromite38million metric tons
Zinc11.4million metric tons
Iron483million metric tons
Molybdenum306million metric tons

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Mineral Production

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For details on the scope of data included, please consult the EITI Reports.

Revenue collection

The latest EITI disclosures (2017) show that the Philippines received USD 722 million (Php 37.8 billion) from the extractive industry. This was a 26% increase from the previous year ( USD 536 million or Php 28 billion in 2016). Almost 74% of these revenues came from oil and gas, with the rest from mining.

Oil and gas revenues were mainly collected through the government’s share of oil and gas production (63% of oil and gas revenues) and corporate income tax (28%), while mining revenues were mainly collected through corporate income tax (38% of total mining revenues) and excise tax on minerals (24%).

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Reconciled revenues by company (Top 5 companies)

Revenue allocation

Local government units (LGUs) are entitled to 40% of the total collections from extractive companies in their locality. To facilitate the transfer of LGUs’ shares, the relevant central government agencies issue a certification to the Department of Budget and Management (DBM), which is then tasked to release the shares to the LGUs.

Starting 2016, the country also implemented a system of direct transfers of shares from the Bureau of Treasury to the LGUs, effectively speeding up subnational transfers. Currently, DBM is finalizing the draft joint circular containing enhanced guidelines with provisions for the following: streamlined processes, compressed schedules, transparency in the allocation of the shares, and posting/reporting requirements in the utilization of the shares.

Social and economic contribution

The extractive sector in the Philippines makes a relatively small contribution to the national economy. Based on the 2017 EITI Report, the contribution of the extractive industries to the Philippine economy (in GDP terms) increased from 0.79% in 2016 to 0.85% in 2017. The share of non-metallic mining to the country’s GDP grew slightly from 0.29% in 2016 to 0.34% in 2017, exceeding the 0.31% share of metallic mining. The share of oil and gas to GDP increased very slightly from 0.19% to 0.20%. The entire sector`s share of export also saw an increase from 4.95% in 2016 to 7.3% in 2017. According to the Report, although these increases are small, they show the export potential of these two sectors that have primarily been focused on meeting the needs of the domestic economy for construction materials and power generation. This entire sector employed at least 204,400 people in 2017.

Mandatory social and environmental expenditures of participating large-scale mining companies totaled Php 2 billion for the fiscal year 2017. Environmental expenditures or annual EPEP accounted for 59% of the total followed by social spending or annual Social Development and Management Program (SDMP) which accounted for 31% of total spending

Policy recommendations and reforms

Like all other four EITI Reports, the Philippines 2017 EITI Report offers recommendations on improving transparency in the sector. Among the several recommendations, it is suggested that the Philippines considers mainstreaming EITI implementing as a way of improving transparency in the sector - since mainstreaming will make government and corporate accounting systems available on an online platform that is accessible anytime. The report also stressed several other recommendations in previous reports that have not been addressed including the need for the Department of Energy to improve data on extractive sector contribution (eg disaggregated employment statistics). 

Previously, the Philippines 2012 EITI Report found that local governments were not able to quantify how much they receive from extractive companies. The MSG recommended that the relevant government agencies and the Department of Budget and Management (DBM) should monitor and report on such transfers, disaggregated by local governments and revenue stream. As a result, all collecting agencies (Department of Energy, Bureau of Internal Revenue, Mines and Geosciences Bureau of the Department of Environment and Natural Resources) are now required to provide all information required by PH-EITI in the certifications they submit to the Department of Budget Management, enabling local government to assess whether they are getting their proper shares. PH-EITI also collaborated with the Bureau of Local Government and Finance to implement an online reporting system for local government units. This system ensures timely reporting of extractive revenues in mining communities and adheres to the requirements of the EITI Standard on reporting subnational data. With the implementation of LGU online reporting, reported LGU reconciled amount increased from PHP452 million in 2014 to PHP626 million in 2016 and PHP 1 million in 2017.

The 2012 PH-EITI Report also showed a significant discrepancy between companies' declarations on royalty payments paid to indigenous peoples and the amount being recorded by the National Commission on Indigenous Peoples (NCIP). The report thus recommended a better monitoring procedure for NCIP. Through the EITI process, royalties paid to IPs are now monitored properly, leading to a decrease in discrepancy from 154% to 22% in 2013. However, the variance again increased in the last years due to the lack of supporting documents for the amounts disclosed in the templates of participating companies. PH- EITI also worked with NCIP in developing a monitoring tool for IP royalties.

Having demonstrated our capacity to meet international standards and build dynamic partnerships between and among stakeholders, the Philippine EITI is now looking forward to mainstreaming transparency into more inclusive efficient and effective systems.
Hon. Janet Abuel, Acting Secretary, Department of Budget and Management, Philippines

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

  • The 2017  Report includes a pilot report on transparency in Small-Scale Mining (SSM) in South Cotabato.
  • The 2015-2016 EITI Report includes a scoping study on beneficial ownership and a pilot reporting of six large-scale non-metallic mining companies.
  • contracts portal was launched in October 2015, extracting contract information from PDF and allowing more interactive use.
  • The 2014 EITI Report includes information on Mining Forestry Programmes as well as a list of environmental projects and expenditures of mining companies
  • The 2013 EITI Report includes two scoping studies on small-scale metallic mining and large-scale non-metallic mining.
  • The 2012 Report in cludes figures on commodity reserves and information on free and prior informed consent (FPIC), environmental funds and detailed explanations of contracts and the policy for contract disclosure.

Implementation

The PH-EITI work plan, agreed by the MSG, contains the following five objectives for EITI implementation in 2016, reflecting on national priorities in the extractive sector:

Objective 1: Show direct and indirect contribution of extractives to the economy through the EITI process given that the current data does not provide a complete and accurate picture of the extractive industries’ contribution to the Philippines economy.

Objective 2: Improve public understanding of the management of natural resources and availability of data through a regular flow of information through effective communication (mass media, social media, forums, lecture series and publications).

Objective 3: Strengthen national resource management / strengthen government systems through implementation and institutionalisation of policies to ensure sustainability. Activities under this objective would address the gaps in existing government systems as well as make sure that reforms are firmly in place at times of the administrative changes in the country.

Objective 4: Create opportunities for dialogue and constructive engagement in natural resource management in order to build trust and reduce conflict among stakeholders. It is noted that the forums, dialogues and regular MSG meetings in the past years proved effective in ventilating issues and coming to a common understanding of how such issues may be addressed through the EITI process. Drawing from the positive outcome of stakeholder engagement in previous years the PH EITI plans on undertaking on a more active role of facilitating public engagement.

Objective 5: Pursue and strengthen the extractive sector’s contribution to sustainable development through creating mechanisms for transparency and accountability on national and subnational levels.

Governance 

The Government of the Philippines committed to implement EITI on 6 July 2012, through  Executive Order No. 79. Subsequent to this, Executive Order No. 147 was issued formally creating Philippine EITI. The 2012 statement on EITI by then President Benigno S. Aquino III outlines the reasons for joining the EITI, while the multi-stakeholder statement of commitment to the EITI states the MSG’s principles of engagement.  The MSG’s Terms of Reference notes the roles and responsibilities of MSG members, while the MSG’s internal rules regulates its functioning. The Philippines submitted its EITI Candidature application (and annexes) on 5 April 2013 to the EITI Board. The new administration under President Rodrigo Duterte has stressed its call for responsible mining, and has ordered an extensive audit of mining companies.

The MSG has been involved in Congressional hearings on legislative amendments  where provisions on making the EITI mandatory for companies are included. 

Timeline

Validation

The country was admitted as EITI candidate in 2013.

The Philippines' Validation against the 2016 Standard commenced on 1 January 2017. The Philippines was found to have achieved satisfactory progress in implementing the EITI Standard in October 2017.

The Philippines's progress by requirement

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