The Philippines is a leading producer of nickel (the world’s largest in 2014), 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.
Extractive industries accounted for 0.75% of GDP, close to 4% of government revenue and 11.5% of exports in 2014 according to the 2013 PH-EITI Report. In 2015, the mining sector contributed .6% to GDP , 4.8% to total exports, and .6% to total employment. There is a 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 new administration has recently ordered an audit of all mining companies to check their compliance with environmental regulations.
The EITI has been used as a platform for dialogue by stakeholders,and as 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.
The main taxes levied on the mining sector are corporate income tax, excise tax on minerals and royalties on mineral reservations, while the major oil and gas levies are the government’s share in oil and gas revenues, corporate income tax and withholding tax on profit remittance to principal. The Bureau of Internal Revenue (BIR) is the main body responsible for collecting taxes paid to central government, while the Mines and Geosciences Bureau of the Department of Environment and Natural Resources and the Department of Energy collect sector levies for mining and coal, oil and gas respectively. Local government units (LGUs) are responsible for collecting subnational payments. All large-scale mining and petroleum contracts are disclosed, including 44 published on the PH-EITI contracts portal.
How to invest in the Philippines
Philippines Tax Profile
|Contracts in Philippines |
The Philippines’ mining, oil and gas contracts
Mining licences are awarded on a “first come first served” basis, while oil and gas petroleum service contracts (PSCs) are concluded through a public competitive tender. The 2012 moratorium on new mining licences was lifted in 2013, with 150 new exploration permit applications received by November 2015. Another moratorium has however been issued by the new administration on the processing of applications for new mining projects.
As of 2015 there were 29 active oil and gas service contracts.
The Philippines’ mining licence registry
The Philippines’ Department of Energy petroleum maps
The Philippines 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 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 multi-stakeholder group identifies tax evasion, money laundering, and compliance with the Constitutional provisions on nationality of mining companies as the national issues that their work on beneficial ownership aims to address.
The Philippines is a leading producer of mineral commodities such as nickel (the world’s largest producer in 2014), gold (20th) and chromite (17th), but also produces copper, zinc, iron, silver, crude oil and natural gas. Oil and gas production has slumped since 2010, but output of most minerals aside from gold, silver and iron ore has grown. Exploration activities in mining are spread nationwide, while coal production is focused in the province of Antique. Oil and gas exploration is focused offshore.
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 mineralised country by estimated reserves, only around 2% of the 9m hectares holding mineral reserves are covered by mining permits. Total reserves of gold, copper and zinc declined between 2010 and 2014, while estimated reserves of nickel and chromite grew significantly.
|Gas||3772||billion cubic feet|
|Gold||4536||billion metric tons||The Philippines has the world’s third largest reserves of gold.|
|Coal||297.76||million metric tons|
|Copper||5051||million metric tons|
|Nickel||783||million metric tons||The Philippines has the world’s fifth largest reserves of nickel.|
|Chromite||38||million metric tons|
|Zinc||11.4||million metric tons|
|Iron||483||million metric tons|
|Molybdenum||306||million metric tons|
For details on the scope of data included, please consult the EITI Reports.
The latest EITI disclosures (2013) show that the Philippines received USD 982 million from extractive industry taxation. Almost 90% of these revenues come from oil and gas, with the rest from mining,including coal. 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 and excise tax on minerals (each 27% of total mining revenues). Revisions to the Mining Law were proposed in Congress in 2015 and include amended levies.
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, DBM will disclose local governments’ share from extractive industry revenues to enable them to see how much they are receiving from each company. DBM will also implement a system of direct transfers of shares from the Bureau of Treasury to the LGUs, effectively speeding up subnational transfers.
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 hte 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. In 2016, the Department of Finance also required local treasurers to report grants and donations they receive from extractive companies.
The 2012 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 the 2013 EITI Report. PH- EITI also worked with NCIP in developing a monitoring tool for IP royalties.
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.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
- The 2014 EITI Report includes information on Mining Forestry Programmes as well as a list of environmental projects and expenditures of mining companies
- The 2012 Report includes 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.
- A contracts portal was launched in October 2015, extracting contract information from PDF and allowing more interactive use.
- The 2013 Report includes two scoping studies on small-scale metallic mining and large-scale non-metallic mining.
The most recent 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.
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.
This is the Philippines EITI 2014-2015 Annual Progress Report (in accordance with Requirements 7.4 and 8.4).
This is the Philippines EITI 2016 work plan (in accordance with Requirement 1.5).
EITI responsibilities: Support to EITI implementation and outreach in Asia.
Prior to joining the EITI in 2009, Dyveke worked for Xstrata Nickel in the Dominican Republic and at the Center for Development Studies at the University of Agder.
EITI responsibilities: Provide support and coordinate EITI activities by the Secretariat and through partners in Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Mongolia and Ukraine.