POTENTIAL British investors in the mining and oil industries are on wait-and-see mode while the Philippine government scrambles to come out with an equitable revenue-sharing scheme covering extractive sectors.
As for existing UK companies doing business in the country, their expansion activities are being put on hold as the interpretation of various policies, especially on taxation, differs from one agency or local government to another, lamented Asif Ahmad, British Ambassador to the Philippines.
“There are projects that are frozen, where they simply said ‘we are not going to touch them until the rules are clear.’ There are others where they have already made an investment, ready to extract and suddenly the rules have changed,” Ahmad told reporters on the sidelines of last week’s signing of a P5-million grant agreement between the British Embassy in Manila and civil society group Bantay Kita in support of the Department of Finance-led Extractive Industries Transparency Initiative or EITI.
Ahmad pointed out that mining and oil projects followed a longer timetable from exploration until extraction, hence a more predictable regulatory environment augurs well for firms engaged in the extractive business.
The UK envoy added that such investments entailed huge capital, so any delay in their entry or implementation would result in lost opportunities, not only for the company but also for the country.
“If it is a very expensive extractive investment where there’s downstream investment as well, you can’t suddenly change the rules because these are global industries—they will simply decide that they have got other places to invest in,” he said.
Ahmad cited as one concern the issue with the Bureau of Internal Revenue on refunding the value-added tax on imported capital equipment, even as the tax perk had been clearly dangled by the Board of Investments and the Philippine Economic Zone Authority under their investment promotion and generation blueprint.
“There is disconnect in the policies of one government agency to another,” he noted.
“It’s not that British companies do not want to pay their taxes; it’s just that they want to pay when they are correctly and clearly negotiated,” he added.
As for the pending mining revenue-sharing scheme, Ahmad said that while British firms understand that the government was carefully weighing options so that gains trickle down to host communities, the policy should come out as soon as possible.
“They can’t afford to wait any longer… They have to immediately make a decision if this is the place where they will place their investment or not,” he said. Ben O. de Vera