Tuesday, 8 March 2011

At the bottom of the list again

Business Mirror

The government “Speaks with forked tongue.”

According to one 1859 account, the Native American proverb that the “White man speaks with a forked tongue” originated as a result of the French tactic of the 1690s, in their war with the Iroquois, of inviting their enemies to attend a peace conference, only to be slaughtered or captured. Say one thing and do another.

One of the most important aspects of government policy and the perception of that policy is consistency.

During the protests and uprising in Egypt, the Obama administration bought new meaning to the concept of “forked tongue.” On Saturday, February 5, the Obama White House reversed itself no less than three times with regard to the official US government policy position on Egypt and Mubarak. At 3:45 a.m., “President Barack Obama said Egypt’s Hosni Mubarak should do the statesmanlike thing and make a quick handoff to a more representative government.” By 10:20 a.m., the policy had changed. “Egyptian President Hosni Mubarak must stay in power for now to steer the political transition, President Obama’s special envoy for Egypt told reporters.” But wait. The policy changed again that same evening when the White House repudiated its own special envoy’s statement. And by late night, Obama was calling for a clear timeline for Mubarak to step down.

No wonder a month later in Libya, Reuters was reporting, “‘Bring Bush! Make a no-fly zone, bomb the planes,’ shouted soldier-turned-rebel Nasr Ali, referring to a no-fly zone imposed on Iraq in 1991 by then-US President George H. W. Bush.”

Consistency of policy is crucial and one of the most important jobs that a government, through its leaders, must accomplish. One of the purposes for a government being made up of more than one branch is not only for a check and balance on power, but also for a check and balance on policy. A government ruled by a single voice, either by an individual dictator or an authoritarian committee, often changes policy on whimsy.

In 2008 Venezuelan dictator Hugo Chavez decided that a multimillion- dollar mall nearing completion and one of Caracas’s biggest investments should be stopped after passing by it in a car. After obtaining all the proper and necessary permits and totally complying with all regulations and laws, the mall was expropriated by the government. Some 3,000 workers lost their jobs. Venezuela is not high on the list of places private companies want to do business.

But then again, the Philippines ranks only slightly higher than Venezuela as being business-friendly.

The Fraser Institute is an independent Canadian public-policy research center that examines the relationships between government policy and economic success. Over 300 academics, policy analysts and economists contribute to the institute’s research and publications. Recently, Fraser published its “Survey of Mining Companies 2009/2010.” The results are not encouraging for the Philippines.

When it comes to mineral development, this is what Fraser discovered. “The bottom 10 scorers are Venezuela, Ecuador, the Philippines, Zimbabwe, the Democratic Republic of the Congo, Mongolia, Bolivia, Honduras, and Guatemala. Unfortunately, these are all developing nations which most need the new jobs and increased prosperity mining can produce.”

Here is the sad part. When it comes to “Current Mineral Potential assuming current regulations and land use restrictions” (meaning the laws and regulations on the books), the Philippines scores quite high, 38 out of 72. However, when it comes to “Policy Potential,” we score 70 out of 72. And what is “Policy Potential”? One word: uncertainty.

Here is the bottom line for those companies that are willing to spend literally billions of dollars investing in the Philippines: uncertainty over which areas will be protected as wilderness sites; uncertainty over the administration, interpretation, and enforcement of existing regulations, uncertainty about future trade barriers, and uncertainty of potential restrictions on profit repatriation.

The existing law, the Mining Act of 1995, spent 10 years before the Supreme Court. It has existed through four presidents and their administrations. At least 10 environment secretaries have had administrative control of the Act. Hundreds of members of Congress and the Senate have had the opportunity to review, amend and change the law.

After 16 years, successive Philippines governments have not been able to create a regulatory framework to develop the natural resources, the wealth of the Philippines, in a way that protects the interests of the indigenous peoples, the environment, the government and all the stakeholders involved.

For those who are “antimining,” their arguments are worthless unless and until they are willing to propose an alternative to the 1995 Act. Unless, of course, what they are actually saying is to do away with all products made of metals. In other words, to return to those happier times of nipa huts without electricity, running water and, of course, their cell phones and computers upon which they make statements to the press.

It is an absolute disgrace that the Philippines puts itself in the same sentence as Venezuela, Zimbabwe and the Congo. We should be up there with Mexico, Chile, Tanzania, Botswana and Mali, other developing countries that have met the challenge of sustainable economic development through proper mineral development, beneficial to all concerned. And what is different about those particular countries? They had leaders who led and took charge on this vital economic issue.

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