Cambodian Revenue Watchdog Group Announces Landmark Business Survey

Tuesday, Feb. 08, 2011
Sun Herald (Biloxi, Mississippi, USA)

Survey reveals business owners' perspective on oil, gas and mining on Cambodian economy

PHNOM PENH, Cambodia -- Cambodians for Resource Revenue Transparency (CRRT) will announce results of its landmark business survey on the state of oil, gas and mining in Cambodia and its effects on the general business climate on Feb. 15, 2011 at the Hotel Cambodiana.

"This important survey will help all Cambodians better understand the level of knowledge about oil, gas and mining throughout the country," said Mam Sambath, CRRT chairman. "Because it is a scientific survey of the entire country, the survey will also help civil society and the Royal Government of Cambodia understand how business in Cambodia feels about these important sectors and their effects on business in general."

CRRT a coalition of civil society organizations with four members: API, DPA, NGO Forum and YRDP, is working to ensure that wealth generated from the extractive industries is managed in a socially responsible manner that is transparent, accountable, and participatory to equitably benefit all Cambodians.

Time Enough To Ensure Good Mining: Expert

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
07 April 2010

Editor’s note: Richard Thompson is an international mining expert from the United Kingdom who has been working in the mining sector for more than 40 years. Within the last 10 years, Thompson has been conducting research on mining resources in Cambodia for the Japanese International Cooperation Agency. He spoke to VOA Khmer recently in Phnom Penh, weighing in on the country’s mining industry, the mining market and the benefits that can come from mineral extraction.

Q. Cambodia’s government expects to see a third of 20 licensed companies begin mining extraction in 2015. Is this a realistic timeline?

A. The possibility of getting mineral resources during the next five years will depend entirely upon the market of those mineral resources. Although the 20 companies, or the third of those companies, expect to begin mineral extraction, if the market value of their product decreases, they won’t have a market and therefore they are not likely to begin extraction. Besides that, there are still many requirements of the company in terms of legislation that needs to be fulfilled for a good mining industry to emerge. So it is impossible to tell at this stage whether the third of the companies be able to achieve this.

Q. Based on your 10 years of research, can you weigh the potential of the country’s mining resources?

A. As there hasn’t been extensive exploration, nobody is quite sure what is here. It’s going to take several more years to probably evaluate the potential of deposits, because with a proper mine you really need a very intensive drilling program, maybe several thousand or a few tens of thousand of meters of drilling to establish the shape, the size, the depth and the stretch before the amount of deposited metal can be calculated. And then the economic study can be made to see if there are enough mining deposits. This is not a profitable exercise. They take the risk, they choose to spend their money, and the profit comes when they eventually find something worthwhile, or economically useful.

Q. What mineral resources have been discovered and what can be done with them?

A. Some of the deposits so far discovered include bauxite, gold, gemstones, dimension stones, which is stone for carving, granite, iron ore, and likely other metals. But whether this mineral deposit [yields] enough to be economically extracted is still not certain. The basic products would go into many areas of the modern economy. For example, a lot of steel is used for making motor cars, copper is used in the electronics industry, the iron ore can be used extensively in the construction industry, to make steel, nickel is also used in steel alloy, and the granite is used in making nice flooring material. These are important for the growth of the global economy.

Q. Where are the markets for mining resources in Cambodia?

A. I should point out that, at the moment, the requirement of the mineral law in Cambodia [is that] minerals are used in Cambodia. However, the place you would sell minerals, particularly metal minerals, is not in Cambodia, because Cambodia doesn’t have a downstream industry to process or manufacture from them, and therefore Cambodia, like many developing countries, will be reliant on external markets. There may be opportunity to negotiate special prices with neighboring countries. But really I am not in position to know whether there are such negotiations in progress.

Q. How can mining resources play a role in Cambodia’s economic development?

A. If there are economic deposit discoveries, and investment comes to exploit those deposits, it is possible that Cambodia could have reasonable income from royalties derived from mining, but at this stage it is impossible to predict that. There are many countries that have mineral deposits, but are not rich enough to exploit them. Adjacent to Cambodia, you have four countries Thailand, Myanmar, Laos and Vietnam, and each of those countries has more or larger mineral deposits, which are exploited. So it is likely that Cambodia will have some deposits which are economically exploitable, but not certainly. Mining will not bring many jobs. The mining industry will gradually increase in terms of the size of deposits that are found. What will be interesting is to see if an industry downstream using minerals is to develop.

Q. Which countries receive large benefits from mining, and what do they do to manage the revenue?

A. Mining is a major contributor to Australia’s economy, the same as Brazil, where there are many and large mines. In Africa, countries like Zambia and South Africa. What they have developed is a framework for management of a mining industry, and most of them have adopted full transparency. And they also have a lot of governance within the industry to make sure the companies have to carry out specific reporting, and there is a lot of legislation to make sure mining is done ethically [and] to ensure environmental and social protections.

Q. What should Cambodia do to effectively spend the revenue and protect the environment?

A: Cambodia has moved toward developing the framework of its law, policy, strategy and regulation. There will be three or four more years before Cambodia has all these regulations in place. Good mining companies do not set up to damage the environment. But there are some mining companies that are not so good, and they try to keep their costs as low as possible, and in doing that they ignore the environmental regulations. So it is not a good idea to encourage those companies, mostly small companies, to come, but to attract good and big companies. And in order to do that, it is important to have good laws, good legislations and a good business environment.

Cambodia Urged To Join Transparency Initiative

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
06 April 2010

International mining experts have called on Cambodia to join an organization to promote transparency in the extractive industries to help prevent a resource curse as it moves toward oil and mineral exploitation.

Under the Extractive Industries Transparency Initiative, resource-rich countries work to ensure the revenue from their natural resources go toward improving the lives of its citizens.

“Now is the best time for Cambodia to actually join the EITI and prepare itself for those future revenue flows, since it is much more difficult to join the EITI once you already have extractive activities in place and huge revenues are flowing in,” Radhik Sarin, international coordinator of Publish What You Pay, said in an interview.

The appeal came during a three-day workshop among mineral experts from 15 countries in Phnom Penh to pave the way for a better mineral resource management and as Cambodia’s government says it could begin mineral resource extraction in the next two to five years.

“[EITI] is basically a tool for getting a clear understanding of all the financial resources to make sure that the revenue are properly spend for development issues,” said Sarin, who also serves on the board at EITI.

Cambodia expects to extract oil and gas in 2012 and mineral resources in 2015. The International Monetary Fund has estimated revenue of $172 million in the first stage of oil and gas extraction, with the amount increasing to $1.7 billion by 2021.

But experts worry that money could end up in the pockets of corrupt officials. Cambodia was listed as one of the most corrupt countries in 2009 by Transparency International.

Fabby Tumiwa, director of the Institute for Essential Service Reforms, which is based in Indonesia, said EITI could help.

“By implementing EITI, a country can avoid the resource curse,” he said. “So Cambodia has to avoid that scrape. EITI will help the country in their economic development, in particular investment in extractive industries, because investors will think that the risk of investment will be lower, [and it can help] reduce corruption and provide transparency on revenue management.”

To become a member of EITI, a country must publish on a regular basis all material from its oil, gas and mining payments and all revenues received from them, as well as performing independent audits and engaging civil society.

By implementing EITI, a country can improve its investment climate as well as promote greater economic and political stability, proponents of the initiative say.

Timor Leste, which produces 100,000 barrels of oil per day and receives an annual revenue of $1 billion, is an example.

“Before EITI, there is no information from governments and companies to us and to the public,” said Mericio Akara, director of the Luta Hamutuk institute. “We have no control of the budget. So 30 percent of the money was missing. But when we joined EITI, we controled every single revenue from the oil and gas sector.”

Indonesia, one of the largest oil producers in Southeast Asia with a total of annual revenue of $20 billion, is now applying to become a member of EITI.

“We’ve already produced oil and mining for more than 20 years,” said Muhammed Husen, deputy coordinating minister at Indonesia’s Ministry of Economic Affairs for Energy, Mineral Resources and Forestry. “Finally now our production is already half less than 20 years ago, but we have nothing. That is our mistake, because…corruption ocurred in all sectors.”

“EITI is one of the tools to attract more investors to come to Indonesia and learn how to manage the money,” Husen told VOA Khmer in an interview. “By learning from Indonesia, Cambodia should try its best to become an EITI’s member.”

Cambodian lawmaker Cheam Yeap said the government recognizes the benefit of EITI and wants to join, but he was not sure when.

“We need to have a petroleum law, a law on taxation, on human resource development, and to well prepare business contracts to make sure that investors can’t cheat us and that government officials must not practice corruption,” he said. “As soon as we have these things, we will join EITI.”

Laos' battle with poverty

02 April 2008, Wednesday
Syed Nazakat
Merinews (India)

Laos, better known for it’s tragic history, is now reeling under abject poverty, as two out of three people living under poverty line. People in extreme poverty without electricity or access to basic facilities of life like clean drinking water.

LAOS REMAINS one of the poorest countries in Asia, where two out of three people live in abject poverty. Now the country is opening up to the outside world, after years of political seclusion – but is the government ready to uplift its poor people?

Lao farmers like Pheng Tanisay are struggling to make a living

It was still mid-morning in Vientiane when we arrived at a small village, Dongsavath, just about half an hour drive outside the city. We came over dusty and pot-holed roads, passing women and children walking barefoot with water jugs. In this rice-growing region of a poor, landlocked country in Laos, families cling to life on an unforgiving terrain. This year has been a lot more difficult than usual because the rains have failed.

One man we met at the front of his hut had nine children. His small farm plot, not quite half a hectare in all, would be too small to feed his family even if the rains had been plentiful. This year, because of the little rain, he would get almost nothing. But Pheng Tanisay, 62, is not an ordinary man. He is the village president of the Lao Front for National Construction (LFNC), a mass organisation, which oversees religious policy and helps in the developmental work in Laos. I asked him about how he was doing. He said when he looked around, he felt happy and satisfied. “At least I am earning something. There are people out here who have nothing,” said Tanisay.

He crouched on a stool, close to the small fire being tended by his wife. She reached into her apron and pulls out a handful of semi-rotten millets, which was the basis for the gruel that she prepared for the meal that evening. It was one of the meals children had that day.

Like its neighbour, Cambodia, Laos is known for its tragic past. During the Vietnam War in 1975, it became the most bombed country in history and that has left a legacy of poverty and underdevelopment. Even though Laos has been a one-party state since 1975, but the Lao people have not flourished. The plight of Laos has been rightly described by the Asian Development Bank (ADB) in its latest report, which says that nearly six million people in Laos, two out of three live in abject poverty, living on less than two dollars a day. Laos remains a country with a primitive infrastructure. It has no railroads, a rudimentary road system, and limited telecommunications, though the government is sponsoring major improvements in the road system with possible support from Japan. Outside the capital, many people live without electricity or access to basic facilities of life like clean drinking water. Agriculture, dominated by rice, accounts for about half of Gross Domestic Product (GDP) and provides 80 per cent of total employment.

On the streets of what remains is one of Asia’s sleepiest capitals, it’s hard to detect immediate pressure for change. But long-time Laos observer, senior Thai journalist, Kavi Chongkittavorn said that the Lao government was beginning to open up and trying to work closely with ASEAN countries. “The Lao has ended its isolation when it joined the alliance of Southeast countries, ASEAN and now the biggest challenge for the Lao government is to work more closely and openly with the rest of region and world,” said Chongkittavorn while adding that the Lao government had benefited from regional cooperation.

In some respects, that seems true. At UNDP Human Development Index (HDI), Lao has shown consistent improvement being ranked 141 out of 173 in 1993 and climbing to 133 by 2007. And the World Bank in its Global Economic Prospects 2008 estimated that Laos’ gross domestic product (GDP) was expected to see growth of 7.9 per cent in the year 2008, which was higher than Indonesia (6.3 per cent) and Philippines (6.2 per cent). National Socio-Economic Development Plan (NSEDP) predicts that the country could achieve the MDG target of reducing the proportion of people living below the poverty line by 2015.

According to the Ministry of Planning and Foreign Investment of Laos, the foreign investments in the country has now passed six billion dollar mark, with Thailand leading the way by investing more than 1,355 million dollars in 169 projects, followed by China with 1,138 million dollars in 237 projects and Vietnam with 535 million dollars in 120 projects. However, China is expected to surpass Thailand in 2008, becoming number one investor in Laos.

Savankhone Razmountry is the editor-in-chief of Vientiane Times, a government owned newspaper. He said, “Despite the government’s efforts and commitment to the development of the country and social upliftment of its people, the foreign media is still giving negative coverage to Lao, which is unfortunate.”

“It is not good that we should criticise all the time. Rather, we should encourage change and try to help each other onto the ladder of development,” Razmountry further added.

Today Laos is banking on the rich natural resource like water to boost its economy and infrastructure. Already under construction, the Nam Theun 2 dam is one of the biggest projects in the region. Located in the central Lao provinces of Khammuane and Bolikhamzy, the $1.45 billion project will get completed at the end of 2009. The World Bank sees this as a model project, and it said that the money earned from this dam would help Lao to alleviate poverty. Thailand alone plans to import more than 90 per cent of the power from the dam, earning the Lao government about 1.9 billion dollars over the next 25 years.

“For Laos, hydro-electric power is a highly lucrative venture. It is going to bring lot of development and prosperity in our country. The money generated from this could be used to alleviate poverty,” said Razmountry.

But there are serious questions as to whether hydroelectric power projects will truly benefit the locals, or simply help make their government richer. For decades, the Lao government with socialist ideology threw money on poverty - only to find that much of it was wasted through corruption and mismanagement. A foreign businessman in Vientiane put it like this: “The problem in Laos is not lack of money and foreign investment, but mismanagement and corruption.”

Many local entrepreneurs are not satisfied with the government. Taikeo Sayavongkeokhamdy, who owns Taikeo Textiles Gallery in Vientiane, spoke with dignity and elegance about her predicament. “I want to spread my business outside Lao and involve more people into it. There is a good market for our handcrafts. But we need more help and support from the government,” she said without criticising the government.

We left the Textiles Gallery and proceeded through the city. The streets are abuzz with people, energy and bad driving. There is a new openness to life, as the government is bringing much-needed revenue into the country’s fledgling economy, after years of political seclusion. Now, the challenge before the government is that it has to make sure that the common people of Laos are not left behind in the development. If the country’s leaders can’t provide prosperity, then people like Pheng Tanisay, know better than to complain.

“We want our country to develop like Thailand and our other neighbours,” Pheng said as he rose from his knees. “I don’t want my children or grandchildren to face the same hardships and difficulties, which I faced in my life. They should have good career and life,” he added.

EU delegation doubts land concession policy of Cambodia [-It took all this time for the EU to understand that it has been fooled?]

PHNOM PENH, Feb. 8 (Xinhua) -- A European Union (EU) delegation here on Friday expressed doubt about the land concession policy of the Cambodian government and also provided ways to address its negative effect.

Some companies with land concessions from the government have been exploiting the soil and the people originally living there, said Harmurt Nassauer, chairman of the delegation of the European Parliament, the executive body of EU, for relations with the countries of the Association of the Southeast Asia Nations (ASEAN).

Their exploitation has led to confrontation and deprived the country of chances for sustainable development, he said at a press conference held upon the delegation's conclusion of its five-day visit to the kingdom.

"Field trips to some provinces told us that the land concession policy has become nightmare for the forestry-dependent communities," he said.

However, he added, the tension can be removed if both sides have good will and the companies do more good things to benefit the local communities.

Meanwhile, vice chairwoman Giovanna Corda told the press conference that some companies with land concessions have been exploiting the land through logging, which is negative for Cambodia.

The government must not allow them to ruin the country and proper management should be in place to protect these precious assets for all of us, she said.

The companies should help the local communities, like building schools and health care centers, but not destroy the nature and the people's living environment without thinking about the future, she added.

During its visit, the delegation respectively met Prime Minister Hun Sen, Deputy Prime Minister Sok An, Minister of Commerce Cham Prasidh and other government and parliamentary leaders.

It also traveled to Kampong Chhnang and Pursat provinces and visited some EU-funded forestry projects, according to the release.

Cambodia has more than 200 kinds of trees, but the tree coverage rate has decrease from 70 percent to the current 35 percent due to lack of protection and over logging.

Major developer can have hundreds of hectares of land for development if the government approves his plan. Concession period used to reach 99 years for such developers.