WASHINGTON DC - A US regulatory agency has approved a section of a new law that transparency advocates say could help with resource revenue in Cambodia.
On Aug. 22, the US Securities and Exchange Commission approved a section of the law meant to protect consumers and improve financial transparency in the wake of the 2008 financial meltdown.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the disclosure of payments by US stock exchange-listed companies to foreign governments for exploration and production of oil, gas and minerals. The disclosures must also be made available online to the public, according to the law.
That means a company doing business with Cambodia will have to report any payment, which includes “taxes, royalties, fees (including license fees), production entitlements, bonuses, and other material benefits,” the law states.
Transparency International called the Aug. 22 passage of section 1504 of the law “a milestone in the long campaign for transparency in the extractive industry” that “sets a global benchmark.”
Cambodia expects to see oil revenue from offshore reserves by 2016, well after the law comes into effect, Sarath Chhay, executive director of the watchdog group Cambodians for Resource Revenue Transparency, told VOA Khmer in a recent interview.
By then, US companies will have to publicize their payments to the Cambodian government, he said. “Then, if people know how much we get from oil and gas, they can keep the government accountable,” he said.
International and local groups say they fear Cambodia lacks the transparency and rule of law to responsibility use its resource revenues. Critics point to the luxury timber trade, which is rife with corruption and has stripped Cambodia of much of its forest cover, enriching only an elite class in the process.
And the Dodd-Frank law is not a cure-all. Under the law, only US-listed companies will have to report. Currently, the US-listed oil giant Chevron is investing in offshore oil extraction in Cambodia, through a locally registered company. It has invested $160 million so far in the endeavor, Oilprice.com reported earlier this year.
But there are companies from Europe, Asia and the Middle East all with interests in Cambodia’s oil, gas and minerals.
Sarath Chhay said the US law is being used as an example by the European Union, which could pass similar legislation to improve transparency in global finance, including in the extractive industries, he said.
The US law should be an example to Cambodia, too, he said. “If our government pays attention to this law, it would prove to the world and potential investors that Cambodia is on the right track, and they would be confident to come and invest in Cambodia.”
Sarath Chhay said his group wants to see the EU pass its law as soon as possible. He also encouraged Cambodia to sign onto an international agreement called the Extractive Industries Transparency Initiative, which would improve disclosures in the extractive industry.
“Being a member of EITI benefits the country a great deal, because it helps the effectiveness of collecting resource revenue and attracts potential investors to Cambodia,” he said. “Socially responsible companies can only invest in countries with the rule of law.”