MAC: Mines and Communities

Philippines warned not to amend mining law

Published by MAC on 2006-03-13

Philippines warned not to amend mining law

by Roel Landingin in Manila, - Financial Times

13th March 2006,s01=1.html

The Philippines government has been warned not to amend a mining law that was cleared by the Supreme Court little more than a year ago, amid fears this would create fresh uncertainty and delay investment plans for the sector.

Gloria Macapagal Arroyo, the country's president, called for more environmental safeguards to be built into the law when it is amended by Congress, which is reviewing the legislation in response to calls from influential Catholic bishops.

The Catholic Bishops Conference of the Philippines had urged a repeal of the law after an accidental mining waste spill in October, despite the sector being one of the few attracting large-scale investment.

Jose de Venecia, the speaker of the House of Representatives, announced an immediate review of the mining law to "incorporate the strongest possible safety and environmental standards" after a two-hour meeting between Mrs Macapagal and the bishops on Friday.

The move is seen as another case of regulatory uncertainty in the Philippines, where government policy can be held hostage by powerful lobby groups. Conditional support from the Catholic bishops has helped Mrs Macapagal fend off calls for her resignation over allegations of poll cheating.

She recently also declared a week-long state of emergency to quell alleged plots against her leadership.

The announcement on the mining law creates ambi-guity that could affect the pace of investment flows into the sector, warned Peter Wallace, a Manila-based business consultant who advises foreign companies. "It puts a question mark all over again on one of the economy's few bright spots," he said.

Eugene Mateo, president of the Philippine unit of Canada's TVI Pacific group, said: "Investors, wary of ultra-strict provisions that would be very costly tocomply with, may decide to wait and see for the changes in the mining law before putting in funds for new ventures."

Investment in mining has been rising again after the Supreme Court in December 2004 affirmed the country's 1995 law was constitutional, reversing an adverse ruling 10 months earlier. Investment in more than 20 big mining projects doubled to $107m (€90m, £62m) last year and is expected to rise to $350m this year and $1.5bn next year.

Roberto Herrera-Lim, Asia analyst at the Eurasia group, a New York-based political risk consultancy, said the threat of a drastic policy reversal was low. The move was meant "to hold off the bishops for the near term, as [Mrs Macapagal] tries to keep the bishops from becoming more critical of the administration in the face of recent political and military threats", he said.

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