With proper linkages programs created by the government coupled with transparency in tax collections and disbursements, the Philippine mining industry can go a long way in helping deal with poverty and be an example of inclusive growth.
International Finance Corp (IFC) resident representative in the Philippines, Jesse O Ang, expressed this in the recent Mining Philippines conference organized by the Chamber of Mines of the Philippines (COMP), adding that mining “can be a strong catalyst” for the country if managed properly.
“With a proper linkages program, with proper transparency - you know where the (tax) payments are going - to make sure that money goes to the communities, I think it can go a long way,” Jesse Ang said.
The IFC official also said mining as an industry can help government drive infrastructure projects to greater levels so the Philippines could move up to the next stage of economic growth beyond that driven by consumption. “If you do it right though, and you have the proper economic linkages, then you can be a Canada, you can be an Australia, you can be a Chile (which are progressive mining countries).”
A linkage program connects an industry with its upstream and downstream businesses, thus enhancing its total impact on the economy, its multiplier effect, in terms of increasing direct employment, compensation, household income and consumption, and fiscal spending. Jesse Ang noted that in an industry like mining, “there are significant revenues from the economic linkages that can go to the national and local government.”
His statements dovetailed with that of Dr Michael Stanley, the sector lead for mining of the World Bank Group, who said at the same conference that the government should now concentrate on using mining operations to create a domino effect in rural economic activity.
In explaining how government can maximize economic linkages from mining so it will contribute to national development, Michael Stanley said: “What government should focus on is on a more robust curve. It actually becomes a better curve than the mine tax curve itself. Revenue comes not only from the mine itself but from other services it creates.”
In terms of transparency, IFC’s Jesse Ang said the inclusion of the Philippines as a candidate for the Extractive Industries Transparency Initiative (EITI) is a big step in the right direction.
The World Bank, of which the IFC is a member, is already engaging with the government on the EITI initiative, he noted. Joining the transparency movement, he added, “would really help, because when you become an EITI, you are basically committing to make sure all the payments that are taken from companies by the government are clearly going to be made available.
“Mining can really help bring a lot of revenues to the government, to which they, whether it’s the local government or national government, can use it to do what they need to do,” he said.