Extractive Industries Transparency Initiative (EITI) History 1 and implementation in Myanmar

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1 Extractive Industries Transparency Initiative (EITI) History 1 and implementation in Myanmar It has been controversial whether natural resources are a curse or a blessing. Although some resource rich countries benefit, others lose despite the richness of natural resources. Natural resources generally provide for economic growth and development in some countries such as Norway or Botswana, while many countries are cursed by natural resource wealth especially in developing countries. Consequently, the phenomenon of resource curse was becoming stronger and stronger. This phenomenon also entered into academic discussions. Many scholars argued that resource abundance combined with poor institutions leads to the resource curse, and socioeconomic development does not occur automatically although a country has an abundance of resources. The academic literature and research suggested that promoting the transparency in revenue in the resource sector is a starting point to overcoming the resource curse. Various nongovernmental organizations (NGOs) and civil society organizations (CSOs) stepped up a Publish What You Pay (PWYP) campaign, promoting the disclosure of the amount of payments made by extractive companies, including tax paid to the government. But extractive companies are concerned about the risk on competition among companies and investors, by disclosing data and information of their extractive operations. In September 2012, the UK Prime Minister, Tony Blair, initiated the idea of transparency in extractive industries in his speech at the World Summit on Sustainable Development in Johannesburg. Later, the UK government brought global stakeholders from civil society, companies and government representatives to discuss a reporting standard, to implement transparency in the extractive sector. Twelve EITI principles and criteria were agreed at a conference in London in June 2003 to increase transparency of payments and revenues in the extractive sector and to contribute to better natural resource governance. Accordingly, the EITI source book was produced in 2015, which provides the guidelines on how to produce the reports for transparency. Later, the international advisory introduced the EITI validation guide, which set out the indicators for EITI implementing countries, the EITI criteria and principles. In 2006, the EITI international secretariat was established to provide oversight and support to the EITI implementing countries. EITI implementation has two core components: 1

2 Transparency: oil, gas and mining companies disclose their payments to the government, and the government discloses its receipts. The figures are reconciled by an Independent Administrator, and published in annual EITI Reports alongside contextual and other information about the extractive sector. Accountability: a multi-stakeholder group (MSG) with representatives from government, companies and civil society is established to oversee the process and communicate the findings of the EITI Report, and promote the integration of EITI into broader transparency efforts in that country EITI aims to defeat the resource curse and bring benefits to the country for economic growth and poverty reduction through transparency and accountability. EITI implementing countries are needed to publish extractive companies payment to government and government s receipt from extractive companies, and identify the discrepancy between the revenue government received and the companies payments made to government, to ensure all revenue from the extractive sector goes to the national budget without any loss. In addition, the government needs to publish the contextual information of extractive industries along the value chain of extractive industries, in accordance with the EITI standard. In order to implement this, the collaboration of government, civil society and companies needs to be established, via a multi-stakeholders group (MSG), to oversee the implementation, through a dialogue process among stakeholders. The MSG dialog platform is where trust can be built among stakeholders for solutions, information shared and views/idea exchanged, and consensus-based decisions made. An EITI champion of the country is also needed to identify the support (especially political support) of the MSG for EITI implementation. Up to 2015, there are 48 EITI member countries, (16) candidate countries and (28) compliant countries. Three ASEAN countries have implemented EITI and Myanmar is one of them. In July 2012, in an interview with the UK Financial Times, President U Thein Sein stated We are preparing to be a signatory to the Extractive Industries Transparency Initiative to ensure that there is maximum transparency in these sectors and try to make sure the benefits go to the vast majority of the people and not to a small group. The most important thing is to have completely transparent financial accounting to ensure that everyone knows where the revenues from these extractive industries are going. During a visit by the EITI International Secretariat to Nay Pyi Taw on 16 July 2012, the government confirmed its intention to implement EITI. In December 2012, President Thein Sein issued Presidential Decree 99/2012 which formally established EITI and states the government s intention and commitment to implement EITI. In December 2013, President Thein Sein said we want to use the EITI to ensure that resources are developed

3 and managed in a transparent manner for the sustainable benefit of our people. Becoming a member of EITI will be a tangible result from these reforms. 2 The first large multi-stakeholder meeting was held in December 2013, during a visit to Myanmar by Ms. Clare Short, Chair of the EITI international board, and the composition of MSG membership was agreed. In February 2014, the Myanmar Extractive Industries Transparency Initiative (MEITI) MSG was established officially according to the notification of the Myanmar EITI leading authority, chaired by a Union Minister of the President's Office. The MEITI-MSG is composed of 21 members, including 6 key government representatives, 9 CSOs representatives and 6 private sector representatives, and led by the Chair of MSG and Vice Chair of MSG (see below). 2 The World Bank. Sourced on 25 August 2015 from

4 Myanmar EITI key stakeholders Myanmar EITI MSG Chair: Deputy Minister, Ministry of Finance Vice Chair: Deputy Minister, Ministry of Energy Members: (6) government representatives (Ministry of Home Affair, Ministry of Environmental Conservation and Forestry, Ministry of Energy, Ministry of Mines, Ministry of Finance and Auditor General Office), 9 civil society representatives, 4 oil and gas companies representative and 2 mining companies representatives. National Coordinator Executive Director, the Centre for Economic and Social Development of the Myanmar Development Resource Institute (MDRI CESD) Myanmar EITI Secretariat / Coordination Office - MEITI Team, Fiscal Policy and EITI Division, Budget Department, Ministry of Finance - MEITI Team, The Centre for Economic and Social Development of the Myanmar Development Resource Institute

5 The MEITI- MSG approved the Myanmar EITI application and submitted it to the EITI international board on 7 May, On 2 July, 2014, at the EITI international board meeting, Myanmar was admitted as a candidate. According to EITI international board decisions, Myanmar needs to produce its first EITI report by January 2016 and to complete EITI validation processes by an independent validator by late Initially, MEITI MSG had agreed to look at the oil, gas sector and mining sectors for possible Myanmar EITI scope, and recruit an international independent administrator to define which companies and government entities should be included and disaggregate levels for payment streams. Milestones of EITI in Myanmar Year Month Activities 2012 December Presidential Decree 99/2012 established the Leading Authority and committed the government to working with the private sector and CSOs for implementation of EITI April The Leading Authority issued a letter committing the government to work with all stakeholders and establishing the government working committee for the purpose of EITI implementation. May MEITI team and stakeholders attended EITI Global Conference, Sydney May 2013 August The first meeting of CSOs and the government about EITI was held on 2 nd August at Myanmar Insurance Enterprise in Yangon. October The first meeting of the government and private sector at Myanmar Insurance Enterprise in Yangon. A wide range of private sector representatives attended, including representatives from both the international and national oil, gas and mining sectors (e.g. Wanbao, MFMA, Petronas, MPRL, Total, Chevron, Shell)

6 Year Month Activities November The first workshop bringing all stakeholders from every state and region in Myanmar, including representatives of CSOs, the government, parliaments, and the private sector, was held on November in Nay Pyi Taw. November On 18 November, a large multi-stakeholder meeting was held in Nay Pyi Taw at which Union Minister U Soe Thane, the champion of the EITI which Senior Minister U Soe Thane reconfirmed the government s commitment to work with CSOs and companies to implement EITI. December EITI Chair the Rt. Hon. Clare Short s visit on 9-10 December She also met the President U Thein Sein during her visit February The Leading Authority s formal notification establishing the MSG (18 February 2014) May Submission of Myanmar EITI Candidacy Application (7 May 2014) July Myanmar became an EITI Candidate Country (2 July 2014) October Myanmar hosts the 28 th EITI Board Meeting on October and the Natural Resource Governance was held after the Board Meeting in Nay Pyi Taw January The EITI Secretariat Unit was established under the Budget Department of Ministry of Finance. May Mandalay Region Sub-National Unit was successfully formed. July Magway Sub-National Unit was successfully formed. June current Scoping Study is being conducted to identify the scope for the Myanmar EITI 1 st Report.