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 Yep 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.”