Vietnam needs to dig deep to meet mining initiative

illustration photo - source: vcci

Deputy head of the Vietnam Chamber of Commerce and Industry’s (VCCI) Legislation Department Dau Anh Tuan said lack of licensing process clarity had undermined transparency and this could not be ironed out overnight when Vietnam joins EITI. The EITI is an internationally developed standard that promotes oil, gas and mining revenue transparency at a national level.

“Increased transparency under EITI scheme will help the country raise the state budget while reducing financial losses and taking a better care of natural resources, from there capturing investors’ confidence and luring in foreign investment,” Tuan said.

However, in Vietnam industry experts suggest to first apply EITI in key mining fields with big contributions to state coffers such as petroleum, iron ore, coal and titanium and towards state-owned and foreign-invested enterprises only.

Just 56 per cent of local mining businesses reportedly support participating in the EITI scheme.

Reality shows that lack of transparency in collection and expenditure activities in the mining industry incurs big losses to the state budget.

For example, part of the state budget was earmarked to exploring mining capacity in particular areas which must later be refunded. However, the state budget almost never received refunds, according to deputy head of the Consultancy on Development Institute (CODE) Pham Quang Tu.

Tu ascribed unclear responsibilities between the Ministry of Natural Resources and Environment and local governments as well as lax law enforcement at local level as key reasons.

* EITI is a globally recognised standard on income sources transparency which consists of two main mechanisms: (i) requiring mining firms to make public their expenses to the government and requiring the government to publicise income sources they received from mining firms, (ii) EITI mandates the presence of an independent governance body to make comparison of the data collected.

* As of March 2011, 35 countries have taken part in EITI.

* Fifty of the world’s leading petroleum and mining firms such as Chevron, Alcoa, BHP Billiton, and hundreds of civic and social organisations and mining associations got involved in EITI.