Impact of the Philippines’ elections on the mining sector - part two

Allan and Associates, a security risk management consultancy based in Hong Kong, has assessed the implications for the mining industry based on the known policies and priorities of an administration led respectively by any one of the three leading contenders.

To read the first part of this report click here.

Estrada presidency
Joseph Estrada, 72, is a popular movie actor whose political career began with his election as the mayor of San Juan before becoming a senator, vice president and finally national president.
As senator Estrada opposed the presence of US military bases in the Philippines, while as vice-president he served as chairman of the Presidential Anti-Crime Commission (PACC). During his short tenure as president (1998-2001) Estrada sought, and failed, to inflict a military defeat on the Moro Islamic Liberation Front (MILF) in Mindanao.
After being accused of involvement in an illegal gambling scandal, he was toppled from power by a further display of ‘people power’ in 2001 and detained until his trial in 2007, when he was sentenced to life imprisonment – only to be pardoned by President Arroyo a few days after being convicted.
Estrada claims adherence to the political, economic and social platforms of his political party, which emphasises social and economic policies intended to benefit the poor majority and bring peace and stability to country. An election victory by Estrada could represent the beginning of a new wave of populist and nationalistic sentiment.
This would almost certainly have a negative impact on foreign mining interests as it would represent a radical realignment of political forces and increase the political, regulatory, social and environmental risks for companies looking to explore, invest and operate in the Philippines.
Although Estrada did not respond to the GEI survey, while president in 1999 he began the process of cancelling 1995 Mining Act and recalling the Presidential Administrative Orders that had permitted mining firms to operate in tribal domains. As Estrada was ousted from office before any attempt to reverse mining legislation was brought before parliament, it is unclear whether his moves represented a determined effort to curtail the country’s mining industry or was political theatre intended to boost popular support when under growing pressure from his opponents.

Villar presidency
Born in Manila’s working-class district of Tondo, self-made billionaire Manuel Villar, 61, made his fortune in property development and his company, Vista Land, is one of the country’s leading home builders.
Villar was elected to Congress in 1992 as representative for Las Pinas City and Muntinlupa and served for three consecutive three-year terms. In 1998, he was chosen to become the Speaker of the House of Representatives and had a major role in the impeachment of President Joseph Estrada on corruption allegations in November 2000. In July 2006, he was chosen to become Senate President, a position he held until November 2008 when he resigned after having been accused of involvement in an alleged fraudulent land scheme.
Villar’s impressive track record as a legislator, business manager, political pragmatist and alliance builder – he has brought together individuals from the left and right of the political spectrum on to his ticket - makes him the most tested pro-business candidate among the three leading presidential contenders.
Villar’s political programs to promote poverty alleviation and entrepreneurship - and such radical advocacies as support for the re-opening of the mothballed Bataan Nuclear Power Plant, could provide a dynamic economic boost to business, including the extractive sector.
However, Villar’s extensive business interests and involvement in alleged legal anomalies could present conflicts of interest. Some observers are also concerned that he may choose to use his presidential powers in support of his own commercial advantage or that of his allies and supporters. Although Villar is independently wealthy, he has spent heavily on the elections and has developed extensive and high-maintenance commercial and political alliances.
A Senate Committee Report that claims Villar had failed to avoid conflict-of-interest accusations by not divesting himself of his shareholdings or interest in Adelfa Properties Inc adds to this perception.
According to the GEI survey on mining led by EcoWaste Coalition and Greenpeace in February 2010, Villar Aquino was quoted as saying:
“It is imperative to review the present legislation on the mining industry and fine-tune contentious provisions to put in place a mining policy that is pro-people, ensures the protection of the environment and promotes national growth.”

If the political risks associated with mining in the Philippines are unlikely to alter much under the next president, the security threat remains more problematical. To read Allan and Associates’ assessment of security threats see next week’s AJM newswire.

CBCP (Catholic Bishops' Conference of the Philippines) Matrix of Presidentiables on key environmental issues - released May 2010