Government urged to join EITI

For many reasons, it is currently difficult for Vietnam to control the mining industry, which has led to the big losses of national resources. Therefore, the government has been urged to join the Extractive Industries Transparency Initiative (EITI), because EITI is believed to be helpful to stop the situation.

It’s impossible to control the exploited output

Vietnam is considered a rich country in natural resources, with more than 60 kinds of minerals with big reserves, including bauxite, titan, rare earths. Especially, oil and gas has the total estimated reserves of 4.3 billion tons.

The mining industry’s contribution to the national economy has been increasing year after year, from 4.81 percent of GDP in 1995 to 9.5-10.59 percent in the years from 2000 to 2008. In 2008, the oil and gas industry made up 24.37 percent of the state budget, while in 2009, the industry brought 8.5 billion dollar from exports.

However, Thoi bao Kinh te Saigon has quoted the Development Research Institute as saying that “the percentage of coal lost in the process of pit mining is very high at 40-60 percent. This has been attributed to the backward mining technology.” However, experts say there are many other reasons behind the high loss percentage.

Under the current laws, the State’s main source of collection from mining activities comes from the natural resource tax. Currently, mining enterprises declare the exploited output themselves to the state management agencies which then calculate the tax sums enterprises have to pay.

“The problem is that except the oil and gas exploited output, it is now impossible to supervise and control the actual exploited volumes of enterprises,” said Lai Hong Thanh, Deputy Chief Inspector of the Ministry of Natural Resources and the Environment.

Thanh said that “in reality, for many reasons, the declared figures, based on which taxation agencies calculate the tax sums enterprises have to pay, are not the actual figures.”

“This is one of the main reasons which leads to the loss in tax collection. It is necessary to apply a mechanism which allows making information transparent,” Thanh said.

EITI the solution

Experts believe that in order to settle the current problem, Vietnam should join EITI.

The Extractive Industries Transparency Initiative (EITI) increases transparency in overpayments by companies to governments, and to government-linked entities, as well as transparency over revenues by those host country governments.

There are two main rules in EITI: 1) requiring mining companies to expose the information relating to the expenses to the governments and vice versa, requiring governments to expose the information relating to the receipts they get from mining companies; and 2) there must be an independent governance unit which is in charge of checking the collected figures. The unit must be supervised by a committee with the members from different sectors.

By October 2010, 31 countries in the world have joined EITI, while more than 50 leading oil and gas and mining companies in the world, including Alcoa, BHP Billiton have made the commitments at the international level and industrial associations.

A survey has found out that 66.7 percent of enterprises have got ready to join EITI.

“The transparency will help attract long term investors and avoid the investors, who just want to earn money quickly and then leave away,” said Tran Huu Huynh, Deputy Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI).

Pham Quang Tu, Deputy Head of the Development Consultancy Institute, stressed that the transparency in the mining industry is a very important factor to manage and use the natural resources in the most effective way for the development of a nation.

Experts say they do not see any obstacles to the implementation of EITI. “There is no risk in joining EITI,” Huynh said. – Vietnamnet

Tags: Extractive Industries Transparency Initiative