BANGKOK (TrustLaw) - Come 2014, ordinary citizens in resource-rich but cash poor Southeast Asian countries such as Cambodia could, with a few mouse clicks, find out how much their governments has been raking in from selling natural resources thanks to the recent U.S. Securities and Exchange Commission ruling, a regional director with global aid agency Oxfam told TrustLaw.
“With a few clicking on the mouse (on the SEC website), you'll get the information about which company has paid Cambodian government at what point in time and at project levels,” said Solinn Lim, deputy regional director of East Asia for Oxfam America in a phone interview from Cambodia, where she is based.
“Then people could start questioning about what happened with that money, where it goes and how that revenue is re-invested back into society,” she said.
“It’s going to be a great turning point in our history of work on transparency.”
Groups such as Oxfam and the Cambodians for Resource Revenue Transparency are looking at developing a platform where the information - out-of-sight from public eyes so far - can be extracted and presented to communities in a way that is easy to access and understand, Lim said. The SEC ruling, made in August, requires oil, gas and mining companies listed in the United States to disclose payments to foreign governments in an effort to reduce corruption. Companies need to report annually to the SEC every payment of at least $100,000 paid to a government to exploit natural resources.
These payments would be reported by country and by project by 2014, Lim said.
With a committee of the European Parliament voting on Tuesday for a similarly tough anti-corruption law and Australia moving in the same direction, the call for transparency in extractive industries is becoming “a global movement,” she said.
Making companies disclose their payments would also force national governments to become more open and accountable as the spotlight would then be on how they make use of such payments, she added.
GREAT OPPORTUNITY FOR TRANSPARENCY
Extractive industries are rapidly emerging as a major sector in Southeast Asia - 80 percent of foreign direct investment in Laos in 2010 was in mining while Myanmar raked in $2.5 billion in 2010/2011 from gas exports alone - yet most countries in the region do not have a mechanism or commitment to disclose payments at a disaggregated level, said Lim.
“In Cambodia, for example, the affected communities and ordinary citizens have had no access to information related to the operations of the extractive industry, let alone payment,” she said.
All of this makes it difficult, if not impossible, for the public whose resources are being exploited to participate in decision-making of development projects to ensure the country’s development is inclusive, Lim said.
Despite boasting mineral resources such as iron ore, bauxite and gold as well as increased investor interest in oil, gas and mining projects, a third of Cambodia’s 14 million-odd population live below the national poverty line of $0.61 a day. Oxfam says more than half live on $2 a day.
While the Asian Development Bank said Cambodia is expected to grow at 6.5 percent in 2012, around the same rate as in 2011, more than one out of 10 Cambodian households suffer from food shortages.
Environmental groups such as Global Witness blame kleptocracy by the ruling elite, accusing them in a 2009 report of syphoning millions of dollars in payments by extractive companies. Cambodia is ranked 164 out of 182 countries in Transparency International’s latest Corruption Perception Index, below Zimbabwe.
“(The SEC rulings are) a great opportunity for the work in transparency (in Southeast Asia),” Lim said.
CIVIL SOCIETY AS CONDUIT
Despite the strict reporting requirements, Lim is not expecting companies to slow down their investment as a result of the rulings.
“A precedent has been set by some leading companies in the field. Any well-run company will already be collecting this information and accounting for it” so the regulations should not be an extra burden, she said.
Lim also suggested regional governments, including the Cambodian government which has been promoting its first stock exchange, adopt similar legislation to ensure transparency in the development and operation of extractive sectors.
That disclosure provoked discussions on the management of extractive revenues and the role of the national bank, the role of the Council of Ministers, and the role of regulatory ministries as well as parliament oversight.
She’s hoping that with the help of civil society who would ensure the public has access to and understand the disclosures, the SEC ruling will lead to more such disclosures and discussions and force governments to become more transparent.
“If there's no corruption, no issues of rent-seeking, if there is good governance in Cambodia at a country-level, you can imagine what an opportunity it would be to turn some of this money and invest it into poverty alleviation,” she said.