Category Archives: Economy

An Economy Built on Mining – Learning from South Africa

On 11 March 2017, President Rodrigo Duterte says he is willing to let go of the P70-billion earnings the government collects from mining operations. “We can live without it. I would rather follow Gina. Maghanap-buhay na lang tayo ng iba, get the P70 billion somewhere else and preserve the environment. ‘Wag na tayong magbolahan,” he said on Saturday.

P70-billion is no small amount. This is a substantial amount of money which can be used to develop areas and communities that are beyond the reach of the government. A substantial amount of money that can be utilized by the Filipino people whose battle-cry has long been ‘inclusive growth’.

Based on the World Bank for the current 2017 fiscal year, and calculated using the World Bank Atlas method:

Low-income economies are defined as those with a GNI per capita of $1,025 or less.

Lower middle-income economies are those with a GNI per capita between $1,026 and $4,035. Fifty-two (52) countries including the Philippines are in this bracket.

Upper middle-income economies are those with a GNI per capita between $4,036 and $12,475. Fifty-six (56) countries including South Africa are in this bracket.

While High-income economies are those with a GNI per capita of $12,476 or more. Seventy-nine (79) countries such as Australia, Canada, and the United States are included in this list.

How can a country such as the Philippines move from a low-income economy to a high-income one? The best way is to take a long hard look at its neighbors.

Though jumping from a low-income economy to a high-income one may be a tall order, and the Philippines using the mining models of Australia, Canada and the US are too idealistic, it would be to the country’s best interest to redirect its gaze to a country with similar trades, businesses and the challenges that go with it. When it comes to minerals development, South Africa is the country closest to the Philippines.

The billion dollar question (no pun intended) which begs to be answered: Can an economy be built on mining?

South African Ambassador to the Philippines, His Excellency Martin Slabber shares with us his insights on what Africa was, to what it is now because of mining. A privileged discussion, this story was crafted in the hopes of giving the Philippine government a glimpse of “what our economy could be” if ethical and responsible mining practices were done in the Philippines.  

For the full story, refer to page 38 of the Philippine Resources Journal with the subject – An economy that was built on mining: How the Philippines can learn from South Africa by Maria Paula Tolentino

For more information about this story, contact its author:
MissTolentino  
Twitter – @misstolentino22  
Facebook – www.facebook.com/misstolentino22/

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A throwback to Rio Tuba Nickel Mine

Midst all the controversy the mining industry is going through, I couldn’t help but look back on the stories I’ve done for the industry as a whole.

Nickel Asia Corporation was my first mine. It was also what set the benchmark earlier on in my profession as a Journalist, what an ethically-run mine looked like.

Once you’ve seen the best, it would be beneath anyone to look for anything less. The standards they’ve set up for their employees, adopted communities and IPs, operations, health and safety are extremely hard to live up to.

Allow me to get this out: This is by no means a paid ad. I am only showing you, my dear reader, what it was like for me when I took the plane there and saw for myself how professional mines are run. Together with Diwata & Atty. Patricia Bunye, I am glad I took that trip years ago.


The night of 16 July 2014, typhoon Glenda  with international name Rammasun, struck the country with ferocity. My colleagues from Diwata waited restlessly for the airline companies to cancel flights. No announcement came.

First thing on the morning of 17 July, we all flew to Puerto Princesa, Palawan to visit nickel mining company Rio Tuba Nickel Mining Corporation at their mine site in Bataraza.

The 1 hour flight was uneventful. The road trip was a different story. The party I was with were going topsy-turvy in their seats because of the rough road with bags flying everywhere. It was a hilarious and glorious 4 hours of rough road!

What awaited us when we arrived at the hotel was a quick break and a shower. Eventually we all had to head out to explore the mine site, the communities and learn what mining has really done for that small patch of Palawan.

Below are  memories captured in photographs.

 

 

I apologize if these photos don’t do much justice for the experience, but this is as far as I can share: You have to go there and see for yourself.

Ask a geologist, engineer or someone from the academe. Ask them what makes a responsible mine. Do your own research.

It’s not enough that you read it on the news or watch it on TV or the internet. Ignorance is dangerous and we cannot afford ignorance right now especially if millions of lives hang on the balance.

Even before the term ‘responsible mining’ was trendy, Rio Tuba was already at the forefront. It may have been my first mine, but it certainly won’t be my last.

 

Liked this story? please contact the Author:
MARIA PAULA TOLENTINO
mpatolentino at gmail dot com

 

 

 

PH Senator pushes for Energy R&D

senate-bill-1290-win-gatchalian

In a bid to bring the Philippine energy sector up to speed with innovative international technologies and make the industry more responsive to the demands of consumers and sector players, Senator Win Gatchalian has filed Senate Bill No. 1290, which proposes the establishment of a Philippine Energy Research and Policy Development Institute (PERPDI) in the School of Economics of the University of the Philippines in Diliman.

“The energy sector is naturally characterized by rapidly changing technologies. Unfortunately, most of the country’s policy instruments cannot keep up due to limitations in local research and technical capacity. This bill seeks to address these limitations by establishing an institution which will bridge research and policy gaps in pursuit of Philippine energy security, affordability, and sustainability,” said Gatchalian, the Chairman of the Senate Committee on Energy.

In executing its mandate, the PERPDI will also be charged with ensuring that the results of energy research and policy development activities are utilized to improve the energy sector, the economy, and the lives of the people.”

Through the PERPDI, Gatchalian said the government will be armed with the capacity to formulate multidisciplinary research-based policies and strategies for the cost-effective use of energy resources towards environmentally-sound energy development.

“Formulating and executing a concrete blueprint for the future of the energy sector is critical to fostering inclusive long-term growth and development for our country. The creation of PERPDI will be an important milestone in our quest to achieve these ambitious socio-economic goals,” said Gatchalian.

For the complete press release, refer to this link: PH Senator pushes for Energy R&D

Better broadband service means more business for PH

February 24 2016, AIM Conference Center, Makati City Philippines – As a prelude to #‎ArangkadaPH2016‬, the Joint Foreign Chambers of the Philippines composed of American Chamber (AMCHAM), Australian-New Zealand Chamber (ANZCHAM), Canadian Chamber (CANCHAM), European Chamber (ECCP), Japanese Chamber, Korean Chamber and other distinguished Philippine Business Groups discussed the necessity of developing telecommunications and broadband internet services with the intent of improving the ease of doing business in the country.

JFC
Joint Foreign Chambers of the Philippines composed of American Chamber (AMCHAM), Australian-New Zealand Chamber (ANZCHAM), Canadian Chamber (CANCHAM), European Chamber (ECCP), Japanese Chamber, Korean Chamber and other distinguished Philippine Business Groups discuss the necessity of developing telecommunications and broadband internet services with the intent of improving the ease of doing business in the country.

Broadband internet access has been widely considered as a tool that can help achieve development and accelerate economic growth. World Bank estimates that a 10% increase in broadband penetration can lead to a 1.38% increase in the country’s GDP. An entry level connection of 0.5 Megabits per second (Mbps) has been found to increase the household income by $800 per year.

Trade Secretary Greg Domingo highlighted the need for the government to promote micro, small and medium-sized enterprises (MSMEs) and to help make them “go global”. Reliable broadband connectivity is an essential tool for making businesses, especially MSMEs, competitive in the global arena. It helps improve their processes and allows them to expand their marketing clientele. As MSMEs comprise a majority of businesses in the country, the broadband initiative becomes a part of building an inclusive economy. Expanding and improving broadband connection also helps address the problem of increasingly congested cities, as it enables telecommuting or working remotely.

Telecommunications is a capital-intensive and technology-driven sector. The problem? The law bars foreign players from fully participating even in wholesale segments (e.g., cable landing station and back haul), which effectively limits the presence of companies that can inject fresh new capital, bring in state-of-the-art technology, and compete in the market.

Challenges:
Philippine broadband penetration is limited, quality is poor, and access is expensive. It has one of the slowest average connection speeds in the Asia Pacific and is the costliest in the world. Major problems identified include the presence of barriers to entry, anti-competitive practices, inadequate infrastructure, weak and ineffective regulation, prohibitive bureaucratic requirements in infrastructure build-out and the lack of interconnection.

Recommendations:
Key recommendations include (1) adopting an open access model, where segments of the internet infrastructure will be opened up to more and different players both local and foreign; (2) updating an upgrading laws and policies, which includes amendments to the Public Telecommunications Policy Act and the enactment of the bill creating a Department of ICT; (3) leveling the playing field by promoting open and neutral internet exchange points (IXPs) and encouraging infrastructure sharing; (5) improving spectrum management; and (6) ensuring and protecting the competitiveness of the telecommunications industry.

The Top Players in the Country:
Two telcos dominate the market: the Philippine Long Distance Telephone (PLDT) company (with 70% market share) and Globe Telecom, Inc. (28%). The incumbent operator, PLDT,and main competitor, Globe, are the major providers of fixed and mobile broadband services nationwide. The two incumbents have some of the highest earnings before interest, tax, depreciation, and amortization (EBITDA) margins compared to other telcos globally. In 2010, PLDT and Globe were enjoying between 60% and 70% EBITDA margins despite very low average revenue per user (ARPU). Over the past few years, PLDT and Globe have recorded EBITDA margins of 40-45%.

PLDT and Globe, the country’s largest internet service providers (ISPs), own and control most of the existing internet infrastructure – from the submarine cables, the landing stations, the back haul network (“middle mile”), up to the last mile. As such, the dominant telcos also dictate access to and the cost and quality of internet and broadband service in the Philippines, both fixed and mobile.

The Philippines recorded the second slowest average download speed (at 2.8 Mbps) in the Asia Pacific, besting only India. The country has been constantly outperformed by its ASEAN counterparts such as Indonesia (3.0Mbps), Vietnam (3.4Mbps), Malaysia (4.9Mbps), and Thailand (8.2Mbps).

In Q4 2014, the Philippines offered the second most expensive retail internet service out of 62 countries that were ranked. Philippine ISPs offered the lowest value for money – in terms of actual download speed experienced by customers vis-a-vis the cost of a monthly data plan – compared to their counterparts in South and Southeast Asia.

What Philippine Law states about Telecommunications:
By virtue of Commonwealth Act (CA) 146 or the Public Service Act of 1936, telecommunications – defined as “wire or wireless communication” and “wire or wireless broadcasting” – is considered a public service offered by a public utility.

JFC_2
Ms. Mary Grace Mirandilla-Santos, Author of ArangkadaPH2016’s Broadband Policy Brief. With a personal advocacy to promote better internet service in the country, Santos is currently an ICT (Information/Communications Technology) consultant at Asian Development Bank.

A Stop to Duopoly and Encouraging Entry of Industry Players:
Key stakeholders agree that the Philippine telecoms sector will benefit from the entry of new players, both domestic and foreign, and effective competition. Past reforms that introduced liberalization and competition have proven that the entry of new players can reinvigorate the market, promote better services, and lower prices due to competing providers that ultimately benefit consumers.

The Philippine telecoms market has been tagged as “less competitive” and “effectively a duopoly” by various analyses. It lags behind in terms of contestability or freedom of market entry and exit. Contestability is important as studies have shown that even the threat of a new entrant will improve the quality of service and pricing of current market players. Market entry in the Philippine telecoms is hampered by several major barriers.

Limitation on foreign ownership is a major issue that affects telecommunications. PLDT and Globe have been said to have major foreign equities that are technically accepted as compliant due to layers upon layers of holding companies that mask these ownerships. This is cumbersome but effective way of circumventing the law. The constitutional provision has given rise to workarounds that encourage non-transparent and scheming business practices. Meanwhile, other legitimate foreign telcoms are discouraged from entering and competing in the market by the company-layering and even political lobbying that are necessarily to work around the law.

The current structure makes smaller telcos and ISPs prone to anti-competitive practices by the large telcos who not only control the infrastructure and wholesale pricing, but are also allowed to compete in the same retail market as their client ISPs. As a result and end-users have to contend with high wholesale and retail costs.

How This Affects YOU:
The internet is an information and communications tool that is increasingly changing the way people live. Connectivity can improve the quality of life by the sheer reduction of time and distance in carrying out tasks related to education, health and livelihood. It can increase a country’s competitiveness, promote inclusive growth and development, and spur investment directly by the emergence of internet-related businesses and indirectly by improving the ease of doing business. The internet has also been known to help promote good governance by increasing transparency and aiding in initiatives such as open data.

In the coming months, the Filipino nation will elect a new leadership. This is a good opportunity to design and implement another cycle of major reforms. It is hoped that broadband connectivity would be one of the key focus areas not just as an issue of infrastructure, but that of competitiveness, innovation, development and consumer welfare. The challenge for the next administration is whether it has the vision and informed appreciation for how broadband technology could influence a country’s development path.

Source:
Mirandilla-Santos, Mary Grace. Broadband. Policy Brief No.4, February 2016. The Arangkada Philippines Project (TAPP). American Chamber of Commerce of the Philippines.

Celebrating Diversity

Judging people by physical appearances distracts us from serious issues. As one politician put it, physical appearances can be used as a sign of solidarity with those who share it. By ridiculing politicians for their physical appearance, we elevate them to a moral high ground, even as physical similarities can mask glaring differences between politicians and their constituents. Finally, and more importantly, this kind of “bullying” reinforces a culture that overvalues physical appearance.1

With the 2016 elections less than a year from now, we need to desist from attacks on the physical appearance of politicians. Journalists in particular should be mindful of their power to dignify certain discourses. We cannot be distracted from the more relevant parameters with which to hold politicians to account. We cannot gift them with ‘persecution’ that gives them a moral high ground while it conceals and absolves their moral and legal failings. More importantly, by casting politicians physical features in a negative light, we are perpetuating a culture that over values physical appearance, upholds certain standards of beauty and renders harm to our countrymen who share these features. Indeed, if we are to elevate Philippine politics to a certain measure of dignity, if we are to make people proud and respectful of the ways people look, we must spare the physical appearance of our politicians from ridicule and verbal abuse.1

**Though the piece above is angled on Philippine politics, the typical Filipino’s tendency to judge people by physical appearances goes beyond our politicians. Our intolerance for those who don’t share the same physical qualities (skin color, height, etc.) are monstrously contributory to our stunted growth as a nation. If we want to be more and do more for this country, its high time to put an end to these destructive prejudices.

On culture:
I cannot celebrate independence when I can be so casually told in public that I am less of a Filipino or a person solely because my grandparents were (Chinese) immigrants. Do we subconsciously insist on defining patriotism as an accident of birth instead of a lifetime’s conviction? How can we continually decry mistreatment of Filipinos overseas yet tolerate such vitriol at home?2

**If we want our OFWs to be treated well abroad, don’t you think it’s only fair for us Filipinos to treat expats and Chinese immigrants with the same decency and respect we ardently expect? I would like to live in a country where everyone is welcome. Where there is a sense of community and where an expat can call my country his home. Families, economies and countries thrive because its foreigners (as well as its residents) are able to work together and make their country of residence more prosperous since they first arrived.

On social status:
I’ve also been quite vocal about this with friends: You’re poor? I don’t take it against you You’re rich? I don’t take it against you either. Bottom line, does it really matter? In the grander scheme of things, it’s the heart of the person that counts.

Too idealistic? Not at all. On the contrary, a realist clearly sees what needs to be improved in order to make communication lines easier and effortless, thus laying the ground work for straightforward and uncomplicated relationships (business or otherwise) for us to live better and to a greater degree, thrive.

For quite sometime now, I’ve been practicing going beyond what my eyes can see, and rigidly looking at the character of the person. So far, this methodology of making friends has opened doors for me that I couldn’t have possibly imagined.

I encourage you to be more accepting/tolerant/forgiving of people’s differences, may they be physical appearances, race, culture, religion, social background, etc. In the digital age, the world has become smaller and our neighbors more accessible than ever. As a nation, we have more to gain if we embrace, rather than shun, this reality. There is strength in diversity, if only the Filipino can look beyond himself.

“I can imagine nothing more terrifying than an eternity filled with men who were all the same. The only thing which has made life bearable…has been the diversity of creatures on the surface of the globe.”
― T.H. White

References:
1 Philippine Daily Inquirer. ‘The politics of physical appearance’. Gideon Lasco, June 15 2015.
2 Philippine Daily Inquirer, Opinion. Sisyphus’ Lament, ‘Anti-Chinese-Filipino slurs are visible’. Oscar Franklin Tan. @oscarfbtan