Ernesto M. Pernia
Socioeconomic Planning Secretary
National Economic and Development Authority
Dissemination Forum on the Mineral Asset Accounts of the Philippines
Crowne Plaza Manila, Quezon City
November 28, 2016
National Statistician Lisa Bersales;
Ms. Maya Villaluz of the World Bank;
Other colleagues from the NEDA;
Colleagues in government, development partners, representatives from the civil society organizations, the private sector, and the media;
Ladies and gentlemen. Good morning!
As we’ve noted from the previous presentation, the Philippines, despite its relatively small land area, is one of the world’s most well-endowed countries in terms of mineral resources. In fact, according to the Mines and Geosciences Bureau (MGB), about 30 percent or 9 million hectares of the country’s total land area have a high mineral potential. In addition, from 2011 to 2015 the mining sector has been able to generate an average of 236,400 jobs annually. Unfortunately, despite all this, the mining sector’s contribution in terms of gross value added still remains relatively low at an average of 0.7 percent of the country’s Gross Domestic Product (GDP) and 5.6 percent of the total exports.
Considering its small contribution to the economy and the contentious debate on mining and its links with issues on land-use, environment and social acceptability, the question for us is: How can we harness the full potential of the country’s mineral resources to contribute to economic economic growth, generate employment, and reduce poverty.
We laud the Department of Environment and Natural Resources’ (DENR) efforts towards truly responsible mining in the country through its ongoing mining audits. The mining sector has been plagued by various issues and challenges for decades. These include the proliferation of illegal small-scale mining activities that adopt destructive mining practices and standards, the limited number of processing plants to create added value to our mineral products, and the lack of an efficient revenue collection and distribution that will ensure the equitable and timely distribution of the mining income to legitimate beneficiaries.  We in NEDA believe that it is necessary to implement further policy reforms to enable the mining sector realize its full potential and increase its role in nation building.
However, developing sound and effective policies entail the use of quality data that are not usually easy to obtain, especially in the environmental sector. This is where the Philippines Wealth Accounting and Valuation of Ecosystem Services (Phil-WAVES) comes in.
As many of you may be aware, Phil-WAVES began its implementation in the latter part of 2013. Its main outputs are the estimation of macroeconomic indicators, and the development of national accounts and ecosystem accounts, which aim to assist in evidence-based decision making.
As it nears its completion in the first quarter of 2017, we are pleased that the project progressed and delivered its expected outputs through partnership and collaboration among the World Bank, the Philippine Statistical Authority (PSA), DENR, Palawan Council for Sustainable Development (PCSD), and Laguna Lake Development Authority (LLDA).
Today, I would like to commend the PSA for the launch of the physical and monetary asset accounts for the four metallic minerals, namely Gold, Copper, Nickel, and Chromite. These accounts are not merely a set of numbers, but are relevant inputs in the assessment and development of policies for the mining sector.
One critical use of the mineral accounts is in the analysis for an appropriate fiscal regime. However, the bill on fiscal regime and revenue sharing arrangement was not enacted in the 16th Congress. Thus, this is a great opportunity to revisit and put forward new calculations for an appropriate tax rate that will be levied on mining companies using the resource rents estimated from the mineral accounts.
Additionally, the mineral accounts can also help assess the sustainability of the country’s economic growth performance. These, coupled with the enhanced macroeconomic indicators, we can analyze how the mining revenue figures in the sector’s total contribution to GDP compared with investments in other sectors of the economy.
Moreover, the results of the mineral accounts project could not have come at a better time, as we are now in the process of formulating our Philippine Development Plan 2017-2022. The mineral accounts will guide us in the identification of the strategies for the mining sector.
However, the physical and monetary mineral accounts alone would not be enough to address a wider range of policy questions in the mining sector, since it needs to be supplemented by additional data or information.
For example, data on the actual expenditure of mining revenues from the Extractive Industry Transparency Initiative (EITI), led by the Department of Finance (DOF), can complement the monetary accounts in analyzing the optimal geographic and sectoral distribution of mining revenues. Also, the input-output table can provide information on the possible impacts of changes in mineral stock on other industries.
Similarly, results of programs and projects of the DENR and the Department of Interior and Local Government (DILG) on the assessment of spending of mining revenues are also useful in assessing the benefits from mining activities.
Altogether, if properly utilized, these will be useful in formulating policy recommendations on how to operationalize responsible mining in the country. These are just some of the possible policy implications that highlight the significance of developing the mineral accounts as well as similar efforts that aim to enhance the country’s data collection and management.
The accounts are now in our hands, let us utilize them to develop and implement policies that will enable the Philippines to maximize the potential benefits of the mining sector for the present and future generations.
Thank you, and good morning once more!