State of Extractive Industries Transparency In ASEAN:
Challenges and Opportunities for Sub-National
Fabby Tumiwa
Institute For Essential Services Reform
Compostela Valley - Bantay Kita - Article 33 Indonesia
SUBNATIONAL CONFERENCE ON
EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE
Davao City, The Philippines, August 22-23, 2013
ISYU TUNGKOL SA SEKSWLADIDA (ISSUE ABOUT SEXUALITY
Comval BK: State of EI Transparency in ASEAN
1. STATE OF EXTRACTIVE INDUSTRIES
TRANSPARENCY IN ASEAN: CHALLENGES
AND OPPORTUNITIES FOR SUB-NATIONAL
FABBY TUMIWA
INSTITUTE FOR ESSENTIAL SERVICES REFORM
SUBNATIONAL CONFERENCE ON EXTRACTIVE
INDUSTRY TRANSPARENCY INITIATIVE
Davao City, August 22-23, 2013
6. International Initiatives on Mineral commodities
Transparency
• Transparency of origin of mineral and supply chain
– Dodd-Frank Act section 1502 – SEC Rules on Conflict
Mineral
– Conflict-Free Smelter Program by Conflict Free-Sourcing
Initiative
• Companies disclose and communicate about smelters of their
supply chain
• 120 companies participates globally
• APEC Ministers Responsible for Mining (APRM),
• APEC Anti-Corruption and Transparency Working Group
(ACTWG) looking at the illicit trade (forest products and
minerals)
• Extractive Industries Transparency Initiative
8. Investment and Extraction Hot Spot
• Indonesia (cooper, gold, nickel, tin, coal) and Philippines
(gold, cooper, nickel) are leading mineral producer
countries in Southeast Asia and Pacific.
• Exploration budget for SEA and Pacific (excluding
Australia) in 2011 was about $1 billion, increased 39%
compared to 2010
– China maintained 4% of total exploration budget (excluded
government-owned mining co)
– Indonesia, Philippines, PNG together are accounted 80% of total
exploration budget, 68% of all exploration sites in the region.
• Southeast Asia/East Asia is important player in the global
supply chain, both as producer and consumer.
9.
10. Resource Governance Index of Asia & Pacific
Countries (2013)
RGI measured:
•Institutional and legal
setting
• Reporting practice
• Safeguard and quality
control
• Enabling environment.
11. Energy and Mineral Cooperation in ASEAN
• Energy and Mineral cooperation are
key cooperation under Economic
Community of ASEAN
• Key Cooperation:
– Vientiane Action Programme (2004 –
2010)
• ASEAN Minerals Cooperation Action
Plan (AMCAP 2005-2010, 2011-2015)
• ASEAN Plan of Action for Energy
Cooperation (1999-2004, 2004-2009,
2010-2015)
– Ministerial Bodies:
• ASEAN Ministerial Meeting on Minerals
(AMMin)
• ASEAN Ministerial Energy Meeting (AMEM)
12. ASEAN Minerals Cooperation:
Six Policy Direction
Manila Declaration on Intensifying ASEAN Minerals Cooperation Manila, 16 October
2008:
1. ENSURE continuous development and utilisation of the mineral resources of the ASEAN Member
States to enhance the sustainability of the resources and maximise the benefits to the community
and the national economy, providing the necessary safety net and shield from global financial and
economic turmoil;
2. ACCELERATE cooperation to work towards the facilitation and enhancement of trade and
investments in minerals through harmonisation of mineral policies, incentives and taxation,
standardisation of mineral resource information, and systematised flow and exchange of resource
and trade information;
3. ENCOURAGE cooperation to develop policy guidelines and standards for ASEAN Best Mining Practices
to promote environmentally and socially sustainable mineral development in the ASEAN region;
4. STRENGTHEN the development of institutional and human capacity building in the geological and
minerals sector to ensure and adequately address the current needs and future demands of the
ASEAN minerals industry and economy;
5. PROMOTE a platform for dialogue in which the private sector and ASEAN Dialogue Partners can more
effectively and efficiently collaborate in mutually beneficial minerals cooperation activities in support
of the building up of the ASEAN Community;
6. FOSTER concerted cooperation and joint approaches in international and regional fora in minerals
such as in Asia Pacific Economic Cooperation (APEC) activities and the forthcoming United Nations
Committee on Sustainable Development’s Meeting in 2010, among others;
13. Promoting Good Governance in Extractive
Industries in ASEAN
EITI was firstly introduced by Indonesia in the ASEAN
Senior Official Meeting on Energy in Brunei on May 2011.
In August 2011: First Government of Indonesia sponsored
Regional Workshop linking energy security and governance
standard such as EITI, attended by reps from ASEAN
countries, and ASEAN energy cooperation bodies
(ASCOPE).
Outcome of the Regional Workshop was reported to the
ASEAN Ministerial Meeting on Energy in Brunei, Sept 2011.
EITI was introduced to ASOMM and has been agreed by
ASEAN Ministerial Meeting on Mineral to be part of
Capacity Building Program of ASEAN Mineral Cooperation
Action Plan 2011-2015, in Hanoi Dec 2011.
14. EITI under the ASEAN Energy & Mineral
Cooperation
ASEAN Ministerial Energy Meeting (AMEM, Brunei Sept 2011)
• “Indonesia proposed to include the Extractive Industry
Transparency Initiative (EITI) in the mainstream work of EAS
energy cooperation to promote transparency in the
extractive industries, building on the excellent foundations of
the EITI works. While concurring on the importance of
promoting transparency, the Meeting tasked the ASEAN
SOME and EAS ECTF to discuss this proposal and submit
appropriate recommendations for consideration at the next
EAS EMM meeting.“
ASEAN Mineral Cooperation (Hanoi, Dec 2011)
• “The Ministers noted the Extractive Industries Transparency
Initiative (EITI) that is knows as international quality
standard on revenue collection in mineral sector and agreed
to the proposal to include capacity building on revenue
collection in mineral sector, and agreed to the proposal to
include capacity building on EITI in ASEAN Mineral
Cooperation Action Plan (AMCAP) 2011-2015.”
15. State of EITI in ASEAN Countries
Philippines:
Candidate country
to implement EITI
Indonesia:
EITI Implementing
country
Myanmar:
Candidate country
to implement EITI
Vietnam:
Gov Study and
study the adoption
of EITI
Cambodia:
Considered to
implement EITI
principles
16. The case for Sub-National Extractive Industries
Transparency Initiative
• Decision to implement EITI in national level is usually
complex – both political and process wise.
• National process usually involve less participation
from local government and local communities.
• Sub-national EITI could be seen as “pilot” or “exercise”
process for country to adopt full EITI implementation.
• Sub-national EITI could capture local dynamics and
adopt more measures beyond “transparency”
indicators.
18. • Irreversibility: how to make non-renewable
resources an asset that benefits all.
• Legacy: how to overcome the enclave nature of
industry.
• Creating wealth with equity: avoid “Race to the
Bottom” – investing and distributing fairly
• Diversifying economy: escape from “Dutch
Disease”
• Governance deficits: corruption, rent-seeking,
poor participation
19. Thinking Beyond Transparency
• Transforming the way ASEAN countries do mining
• New Mining Framework:
– RESPECT Human Rights
– PROTECT Environment, Land and Water
– MAXIMIZE Local economy and benefits for local
communities
– TRANSPARENT Revenues Collection and Management
– ENSURE Sustainable Mining Practices (Artisanal, Small
Scale and Large Mining)
In November 2012, FoE UK launched a new report that reveal how smartphones producers like Apple and Samsung used tin from Bangka and Belitung. Indonesia is the world largest exporter of tin, and about 70% of Indonesia’s tin comes from Bangka and Belitung islands.
Bangka and Belitung islands are located in south coast of Sumatra island. Bangka soil is rich with tin ore called Cassiterite. It has been mined for century.
It’s not only Apple, other electronic manufactures such as LG Electronics, Nokia, Sony, Blackberry and Motorola have released statements reaffirming their commitments to tackling illegal tin mining in Indonesia.
East Asia and Pacific produces 70% of raw mineral globally and consumes/use 60% of them. As important part of global value chain, demand for metallic and non-metallic mineral increase rapidly, as well as demand for investment.
Most ASEAN member countries performs poorly in the index. However, management of these resources in ASEAN are still weak and poor (RGI, 2013) where law and regulation are not coherent and integrated, regulatory body is not working independently and access of information for resources management are quite limited, revenues from these resources are not managed transparently and accountable, and most importantly there is no a grand strategy for energy and minerals sovereignty managed by leaders of ASEAN countries, including investing plan for the future generation. As the results of this poor governance, several challenges are facing as such corruption and illegal mining which do not pay attention on sustainability of mining development. These challenges will only give benefits to certain people especially the miners (not people living on mining areas), drive consumptive behavior (not for saving or investment) and surely create environmental degradation. Poor governance also will lead ASEAN countries into phenomena of “resource curse” as revenues or mining activities will not be enough support for long term development, source of minerals only leads to conflicts (between governments, companies and civil society) poverty and environmental degradation. While in same time, the world keeps working on developing standards of good governance of mining practices to improve competitive advantages in mining sectors and ensuring that these non-renewable resource will give more benefits to many people, as such Kimberly Principles, Equator Principles, Dodd Frank Act, EITI etc.
VAP signed in 29 November 2004 on the 10th ASEAN Summit in Vientiane Lao PDR. The VPA is a six-year plan (2004-2010) which is the successor of the Hanoi Plan of Action to realize the end goal of the ASEAN Vision and the Declaration of ASEAN Concord II. It focuses on deepening regional integration and narrowing the development gap within ASEAN, particularly the least developed member countries. Summit leaders call it a “vehicle to building an ASEAN community through realizing comprehensive integration.”
These policy direction reaffirmed by ASEAN ministers on the Hanoi Declaration on Sustainable ASEAN Connectivity in Mineral, December 2011.
Sub-National: State, provincial and/or district level. Combine mineral and petroleum and natural gas producers.