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Should Political Violence Interfere With Investment In The Philippines? I Don't Think So.

By Rhonda Bennetto, TVI Pacific Exec. Dir, IR (see my profile)

Despite recent violence and political turmoil, the Philippines is, for the most part, a safe place to travel and invest. 


Having just returned from our Canatuan copper mine on the island of Mindanao in the Philippines, I was going to post my TVI On The Fly blog on current mining activity in the Philippines and the timely demand for the commodity from China, India, Korea and other SE Asia locations.


But after learning of the recent massacre of 57 people, including 30 journalists in the Province of Maguindanao, on the island of Mindanao, writing about anything to do with capital markets, emerging markets, commodities or supply and demand all seemed trivial.  It is more important people understand the positive impact that industry, especially mining, has on the Philippine economy and the communities.


The current situation is localized and confined to the province of Maguindanao on the island of Mindanao, 650 kms southeast of TVI’s Canatuan copper mine.  It is political in nature involving members of two families from the same group indigenous to the province.  Interactive map and timeline here


My trip to the mine was uneventful.  After flying from Manila to Zamboanga City on the southern tip of the Zamboanga Peninsula on the island of Mindanao, we began the 3 hour drive northwest to Canatuan.  Standard security was in place and when I spoke to our head of security, he confirmed that the situation was normal and expected no disruptions in operations.  Our movements were not constricted and I felt completely safe the entire trip. TVI’s operations have significantly contributed to the peace and order that Canatuan and surrounding communities have been enjoying for the last six years with no recorded incidents of major crimes or security events. This reflects/represents the peace and order situation in the area.


Local support for mining in the Philippines is generally thriving in spite of this political unrest. The communities surrounding TVI’s operation in particular (roughly half of our workforce at the site are members of the host indigenous tribe) are hardy, gentle, generous and dedicated, and are thriving with the help of some amazing sustainability programs.  I invite you to visit our web site at to read some uplifting success stories about our indigenous employees. 


I can only speak for our host and local communities when I say TVI’s investment in the mining industry has garnered tremendous support from the surrounding barangays (counties).  We give priority employment to residents of these communities along with a number of other health, education and training programs.  At the Canatuan mine site, we have reached nearly 2 million man hours without any lost time incidents and it’s our belief that a safe work environment is indicative of a happy, supportive work place and professional management. 


All our managers have intern or mentorship programs in place and work closely with the local communities to educate.  Where there were no schools just a few years ago, we have built 16 classrooms and helped finance construction of another 8 classrooms in 6 schools in and around our host community.  We now have over 600 students and 56 graduates.  Unquestionable support was shown by our community residents a short time ago when a Non-Governmental Organization (NYSEMKT:NGO) tried to block our trucks and the local women came out, without shoes, and blocked the NGO’s from blocking the road. It was a powerful statement of commitment from our community.


In the words of Dr. Robert Armstrong, TVI’s Lead Director, “What a tremendous story this tells. In a nutshell, it says that mining development can bring security and prosperity to the nation. Canatuan is the microcosm of what the Philippines can become with good mine development.  What politician wouldn’t want to have this kind of phenomenal success in their portfolio”?


Confirming the commitment to the communities by the mining companies is the more than US$10 million spent on livelihood, educational and health programs in more than 500 barangays in the country.  Also noteworthy is that indigenous peoples hosting mining operations have received almost US$20 million in royalty shares.


The country is rich with minerals. Gold, nickel, copper and chromite deposits are among the largest in the world. Other important minerals include silver, coal, gypsum, and sulfur. About 60% of total mining production is accounted for by non-metallic minerals, which contributed substantially to the industry's steady output growth between 1993 and 1996.  Mineral exports generally slowed between 1996 and 2004 due to low metal prices, high production costs, lack of investment in infrastructure, and a challenge to a new mining law.  The industry went on a rebound starting in late 2004 when the Supreme Court deemed constitutional, the new mining law permitting foreign ownership of Philippine mining companies.


In 2007 the International Monetary Fund recognized the Philippines as being the 37th largest economy in the world. Its growth rate in 2007 was 7.3%, the best the country has had thirty years.


Comparisons are starting to be made with India, in particular because of the growth of the Philippine outsourcing business, in IT and particularly in call centers and business process outsourcing (NYSE:BPO). Low wages, a Philippino-speaking populace, and one of the highest literacy rates in Asia should drive this boom, with planners aiming to capture 10% of the $130 billion outsourcing industry by 2010.

In addition to services, growth is also boosted by higher government spending and larger remittances from overseas foreign workers.  Economic growth has averaged 5% since 2001, and recent years have been marked by a reduction in national debt and debt service ratios and increased investment in infrastructure and social services.


My personal conclusion is that travel and investment in the Philippines, in mining or any other industry, is a safe bet.  


Disclosure: Insider of TVI Pacific