Behind the Veil of Conflict
Box 4.5 Benefit-sharing in the mining industry: Can it work? The two most important pieces of national legislation on benefit sharing in mining are the Indigenous People’s Rights Act (1997) and the Philippine Mining Act of 1995. These laws prescribe the following benefits: •
Payments to the national government include: 2 percent excise tax on gross output, contractors’ income tax of 35 percent of taxable income, royalties on mineral reservations of 5 percent of gross output.
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Payments to LGUs include: local business tax of 37.5 percent of 1 percent of gross sales, occupational fees of PHP 75–100 per hectare, and a community tax of PHP 10,500 per year.
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Payment to private land title and claim owners of approximately 1 percent of gross output.
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Payment to informal land and claim owners (without land titles) of 0.5 percent of gross output.
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Payment to indigenous communities with a Certificate of Ancestral Domain Title of at least 1 percent of gross output.
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Compensation for damages in case of destruction of burial grounds and cultural resources in indigenous cultural communities.
A clear and consistent policy framework for resource extraction and management in ancestral domain claims can be complemented by local development plans and policies. For example, the municipality of T’boli and the province of South Cotabato have started to strengthen regulation of small-scale mining operations by taking over some of the regulatory functions of the national government— thereby facilitating efficient local solutions. The Provincial Mining and Regulatory Board is being considered as the appropriate unit to regulate small-scale mining, serve as the environmental monitoring arm of the local government, keep records of small-scale mining operations, and pave the way for sharing information with all stakeholders, especially the local communities that can take a more active role in decisionmaking.
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Other nonmonetary benefits cover a wide variety of activities and inputs, such as community organizing, formulation of the Social Development and Management Plan, housing, infrastructure, livelihood programs, and scholarships. Mining companies typically employ residents of host communities in lowpaying jobs and recruit highly skilled workers from outside the host communities. Electricity, emergency response, and medical care are also frequently subsidized by the mining companies. Actual implementation of benefit sharing arrangements is less than ideal because of insufficient clarity and inconsistent interpretation of such aspects as the timing of royalties, eligible items that can be deducted from royalties due, and how royalties are to be divided if a mining operation covers more than one Indigenous Peoples community. Given the weak institutional structures and low literacy among elders in the most isolated Indigenous Peoples communities, mining firms get the upper hand in interpreting and applying relevant rules. Problems have also arisen after royalties were handed over to the communities that did not have prior experience in or working arrangements for transparent handling of funds. Another problem has been establishing the financial liability of mining firms that take over the operations of other firms originally given clearance for exploration and mining. Source: Mindanao study team.
When the Indigenous Peoples community begins to trust state structures—beginning with the LGUs— it can gradually become a more active player in governance and development planning for regional integration at a pace that is comfortable for all.
Developing credit markets to reduce financial constraints caused by conflict and poverty In Mindanao, violent conflict and poverty can be binding constraints on the island’s economic integration. Even if there is good connective infrastructure, political and social instability prevents entrepreneurs from executing their investment and trading plans. Risk-averse people