According to Dr. Paglomutan, Chile made its mining industry a catalyst by attracting foreign investors and technology.
Paglomutan, a former Department of Environment and Natural Resource (DENR) assistant secretary and deputy national treasurer and who is now the chief finance officer of Brass Chile S.A., said that even Canada and Australia started their march towards economic prosperity through mining.
Because of its mining-driven growth, Chile is now ahead of several developing countries including Malaysia, Thailand, Mexico, Brazil, Argentina, Indonesia and the Philippines, Dr. Paglomutan said.
"In 2005, Chile’s economy posted an economic growth rate (GDP) of 6.1 percent, an inflation rate of 3.7 percent, a fiscal surplus of $5.4 billion (4.8 percent of GDP), a trade surplus of $9.2 billion (exports of $39.5 billion and imports of $30.3 billion), and mineral exports of $21.6 billion (twice the Philippines’ OFW remittances), of which 80 percent is copper exports," Dr. Paglomutan said.
He continues that Chile’s fiscal revenues from copper (from the state copper company and taxation of private mining companies) account for 20 percent of total government revenues.
Chile’s economy, thus, Dr. Paglomutan pointed out, is primarily driven by its mining industry which accounts for eight percent of GDP and 55 percent of exports.
The multiplier effects of the mining industry, Dr. Paglomutan further cited, led to lower unemployment, reduced poverty/social tensions, and growth and development of other sectors and industries, a 12 percent currency appreciation from a year ago, and low corporate tax rate of 17 percent for Chile.
Dr. Paglomutan added that with sufficient fiscal revenues derived from mining, Chile modernized its roads, highways and national railways; extended its underground 4 LRT lines (metro subways); improved its social programs; reduced its government debt; and recently acquired 10 advanced F-16 fighter jets, navy vessels, and a military submarine.
"Sales of brand-new vehicles in Chile last year reached 185,000 units versus 97,000 units in the Philippines, an indication that the purchasing power of the middle class has improved considerably (considering a population of only 16.2 million with a land area 2.5 times larger than the Philippines)," Dr. Paglomutan further cited.
"Houses of the low-income class in Chile are already the houses of lower middle-income class in the Philippines. (Chile has long abandoned the rent control law which has contributed to shortages of housing and urban blight in certain countries, particularly in the Philippines)," Dr. Paglomutan said.
Like Chile, the Philippines has substantial deposits of gold, copper, nickel and chromite and is ranked as the world’s fifth largest in terms of mineral deposits.
Chile’s mining industry started with the high economic growth of China in the second half of the 1990s.
Dr. Paglomutan said the Philippines could still catch up, and should now take advantage of high mineral prices and high economic growths of China and India in the next 20 years.
China has expressed its willingness to buy iron ore from the Philippines for its steel industry because of the lower transport costs.
China is forecast to be the world’s biggest economy by 2020.