Philippine President Benigno Aquino III asked Congress on Monday to support his proposed overhaul of the mining tax regime as he introduces reforms to sustain growth in the face of a global economic slowdown.
The government wants to raise its traditionally weak tax revenues to pay for the universal healthcare and free education it promised voters, and to support infrastructure spending that will create jobs and attract investment.
"We are hoping for the cooperation of Congress in passing a law that will ensure the protection of the environment and ensures that the public and private sectors receive just benefits from this (mining) industry," Aquino told a joint session of lawmakers.
Earlier this month, Aquino signed a new mining policy aimed at quelling concern over environmental damage and attempting to raise government revenues from mining, a move that could impact mineral projects expected to bring in up to $12 billion over the next five years.
Congress needs to approve Aquino's proposal to review mining revenues, possibly via the imposition of a 5-7 percent royalty on all mine ventures, before Manila resumes granting permits for new projects.
Weak revenues
The Philippines' current 12 percent tax-to-GDP ratio is one of the lowest among Southeast Asia's top five economies, a ratio Aquino wants to lift to 15 percent before he steps down in 2016.
The tax reforms are aimed at funding higher state spending on health services for the country's 94 million people.
Aquino said the country was attracting foreign investment after two years of anti-graft work by his government. He took office after the nine-year rule of Gloria Macapagal-Arroyo, who is now in detention at a state hospital and facing plunder, graft and election fraud charges.
"The former sick man of Asia is now full of energy," Aquino said. "Before, we would beg for investments. Now they are coming in droves."
Aquino said Morgan Stanley's Ruchir Sharma, who manages $25 billion in funds under the Emerging Market Equities and Global Macro, has invested $1 billion in Philippine assets.
The Philippine stock market has gained nearly 20 percent this year.
Aquino said he expects the construction of three new airports and the upgrade of 10 local and international airports under his term, part of a public-private partnership (PPP) program aimed at accelerating infrastructure development.
"These are all plans, my concern is really the execution of these programs, said Paul Joseph Garcia, chief investment officer at BPI Asset Management, which manages more than $16 billion in assets.
"Unfortunately there are leakages due to graft and corruption so delays in the planning and bidding, the bureaucracy, delays in the implementation, all these things, the government would need to address since they only have less than four years to go."
The economy grew 6.4 percent in the first quarter, its fastest annual pace since the third quarter of 2010. — Reuters
source: gmanetwork.com
