SC RULE ON MINING ACT SEEN TO AFFECT FOREIGN INVESTMENTS
MANILA, February 10, 2004 (STAR) By Marianne V. Go - Employers Confederation of the Philippines (ECOP) president Rene Y. Soriano warned yesterday that the recent decision of the Supreme Court declaring as unconstitutional and void certain provisions of the Mining Act of 1995, including the Financial and Technical Assistance Agreement (FTAA), "put into peril quite a number of ongoing mining, oil and gas exploration projects funded by foreign investors."
Soriano agreed with the Chamber of Mines’ apprehension that the SC decision would have a "wide-ranging backlash to the economy in terms of lost investments, employment and government revenues."
According to Soriano "such strained interpretation of the Constitution would have the effect of dissuading foreign corporations from investing in any-large scale mining activity.
Soriano added that large-scale mining, because of its scope and breadth, normally requires huge amounts of capital expenditures which few, if any, domestic corporations can match.
Soriano pointed out that in order to protect their investments and to prevent any undue wastage of the resources they provide, it is but normal and proper for foreign investors to retain some management and supervisory controls.
The SC had recently ruled that FTAAs partake the nature of a service contract as understood under the Mining Act of 1995, and is therefore unconstitutional.
The net decision of the SC, Soriano said, limits the participation of foreign corporations in mining activities to the mere provision of financial and technical assistance.
Consequently, any activity that would not strictly conform to the provision of financial and technical assistance, such as management contracts or supervisory activities, would no longer be allowed.
Reported by: Sol Jose Vanzi
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