Philippines

EITI Status Satisfactory progress
Joined EITI in 2013
Latest Data From 2016
Latest Validation 2016
Last updated 8 June 2020

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. According to the latest EITI report (FY 2017), the Malampaya gas field - which provides about 40% of the power supply needs of Luzon, which island group generates around 72% of national GDP - is expected to drop to one-third of its current output in 2024 and to stop by 2029.

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. Several milestones of the Roadmap have been accomplished by the end of 2019, including the integration of BO in the mainstreaming efforts of PH-EITI and the increased coordination with the SEC.

Securities Exchange Commission (SEC)  Memorandum Circular (MC) No. 15 (issued in July 2019) enhanced the BO Declaration form. The revised General Information Sheet (GIS) under MC No. 15 mandates corporations to fill out a beneficial information declaration form that asks for nine categories of beneficial owners and their information, including complete name, residential address, nationality, tax identification number, and percentage of ownership or voting rights.

While there is currently no public register of beneficial owners, work has begun to ensure that BO information, contracts and extractives information is integrated into one publicly-available portal.

 

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 is only behind Indoneisa as the world's leading produder of nickel. 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 is one of the most highly mineralized countries in the world with vast reserves of gold, silver, copper, nickel, and chromite. In 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  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

In order to improve reporting of subnational data, the PH-EITI has 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. With the implementation of Local Government Unit (LGU) online reporting, reported LGU reconciled amount increased from PHP 452 million in 2014 to PHP 626 million in 2016 and PHP 1 million in 2017.

The PH-EITI MSG has agreed to implement mainstreaming, and has taken steps to ensure further mainstreaming of its EITI implementation. The PH-EITI has initiated the Systematic Electronic Extractives Disclosure or SEED initiative, which is a package of innovations developed by PH-EITI and/or its partner agencies and organizations to mainstream extractives transparency in the Philippines.

The 2020 workplan includes several steps on advancing mainstreaming further, including:

  • Implementation of a scoping study on mainstreaiming
  • Review of the MSGs roles and responsibilities in light of PH-EITI moving towards mainstreaming

In 2019, the MSG agreed that mainstreamed EITI implementation in the Philippines would have a central portal and could potentially involve other interconnected, uniform, and standardized portals of implementing government agencies and companies.
It was also decided that thier forthcoming 6th EITI report (FY 2018) will be produced as a transitional report for mainstreaming. Data will be collected through the Online Reporting in the Extractives tool (ORE) and published on the PH-EITI website. 

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 used an Online Reporting in the Extractives (ORE) tool that has been developed to make reporting of companies and national government agencies more efficient and cost-effective. The ORE tool continues to be enhanced with a view to possibly making it the official central data collection and disclosure system among reporting entities.
  • The 2017  Report also 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 Government of the Philippines committed to implementing EITI on 6 July 2012, through  Executive Order No. 79. The following year, in 2013, the Philippines officially became an EITI candidate country. The MSG’s Terms of Reference notes the roles and responsibilities of MSG members.

The PH-EITI work plan, agreed by the MSG, contains the following five objectives for EITI implementation in 2020-2022, reflecting on national priorities in the extractive sector:

1. Improve the platform of commitment for transparency and create a safe space for dialogue and debate on natural resource governance.
2. Maintain an impartial and verified database on the extractives sector.
3. Develop capacities to effectively participate in natural resource governance.
4. Strengthen and expand the linkages of EITI.
5. Formulate and propose policy reforms, including processes and mechanisms of natural resource governance.

An Open Data Policy was agreed in 2016. 

Governance 

PH-EITI is administered by the Multi-stakeholder Group or MSG chaired by the Department of Finance, and composed of representatives of government, industry, and civil society.

  • The government is represented by the Department of Finance, Department of Environment and Natural Resources-Mines and Geosciences Bureau, Department of Energy, Department of the Interior and Local Government, and the Union of Local Authorities of the Philippines.
  • The industry or business sector is represented by the Chamber of Mines of the Philippines, and the Petroleum Association of the Philippines.
  • Civil society is represented by Bantay Kita-Publish What You Pay Philippines.

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

The EITI has helped create opportunities for dialogue and constructive engagement on issues of extractive industries management, helping to start building trust and reduce conflict between the three constituencies.The PH-EITI Secretariat and MSG have been proactive in ensuring the public accessibility of EITI information both through online channels, in hard copy through dissemination and outreach events and through several ‘use of data’ events.

 

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' Second Validation will commence in October 2020. 

The Philippines's progress by requirement

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