Mining Laws and Transparency in Extractive Industries: International Experience and Vietnam’s Perspectives Agenda 8:30-9:00: The Value Chain 9:30-10:30: Issues and International Best Practice in Formulating the Mining Laws 10:30-11:00: Questions and Discussion 11:00-11:15: Coffee Break 11:15-11:45: EITI and the Natural Resource Charter 11:45-12:30: Questions and Discussion

Introduction to the Extractive Industries Transparency Initiative (EITI) Hanoi, Vietnam 12 October 2009

What does EITI stand for?

EITI in the ‘Value-Chain’ The basic EITI focuses only on one aspect of extractive industries governance: revenue transparency Spending the money Selecting Companies Long-term Planning Collecting Revenues Deciding To Extract Monitoring Service delivery Creating A budget Negotiating A Contract EITI

EITI involves multiple stakeholders National Multi-stakeholder Group (MSG) Civil Society Companies Government MSG

EITI Minimum Standards: Each country creates its own EITI EITI involves the reconciliation of company payments with government receipts by an independent administrator and disclosure of that information to the public. The objective of the EITI is to identify potential discrepancies between payments and receipts and investigate and address the underlying causes. Source: EITI factsheet

The EITI Criteria In Theory The EITI criteria set the minimum standards of EITI implementation

Benefits of the EITI for the Government Demonstrate a commitment to transparency and fight against corruption Improve revenue collection and management processes: – increased transparency and scrutiny over payments will make it easier to detect corruption + recommendations of the Administrator will help identify management systems’ weaknesses and initiate reforms. Improve sovereign ratings: – a country’s ability to raise funds on the international markets (e.g. through loans) is based on ratings provided by international companies – these ratings depend also on the quality of national governance Improve a government’s national or international reputation with its citizens and the international community

Benefits of the EITI for Civil Society Open a space for dialogue by engaging multiple stakeholders Increase government accountability by increasing the amount of information in the public domain about those revenues that governments manage on behalf of citizens Give a voice to civil society in a permanent consultation and participation framework that allows an ongoing discussion with government and companies under internationally agreed rules and monitoring

Growth of EITI Source: EITI website (June 2009)  30 EITI implementing countries (29 candidate and 1 compliant) and several others such as Afghanistan, Indonesia, Iraq and Ukraine have expressed their intention to sign-up.

The EITI International Governance The EITI International Board consists of representatives from EITI implementing country governments, extractive companies, civil society groups, investors, and supporting country governments. There is a small Secretariat in Oslo The highest governing body is the Members Meting at the EITI International Conference. The last EITI Conference took place in Doha in February 2009.

The EITI International Secretariat Responsible for turning policy decisions of the EITI Board into action and coordinating worldwide efforts in implementing the EITI. Support to implementation including coordination between supporting countries and assistance providers Specific roles include: – Outreach & advocacy – Communicating & sharing lessons learned with stakeholders – Managing a resource center on revenue management & transparency – Oversight of the validation process

Useful Sources of Information The EITI website has general information and access to many useful publications The RWI website has lots of information on the EITI and other extractive industry transparency topics The PWYP network website has useful information targeted specifically for civil society organizations and particularly coalitions working on EITI and related initiatives and campaigns

Key Publications EITI Rules including the Validation Guide – Brings together the EITI’s requirements for implementing the EITI (EITI Secretariat, 2009) Implementing the EITI – Builds on lessons learned by the countries who led the way on EITI implementation (World Bank & EITI, 2008) Drilling Down: The Civil Society Guide to Extractive Industry Revenues and the EITI – Comprehensive guide to EITI issues and the challenges of extractive industry accounting for civil society audience (RWI, 2008) EITI Beyond the Basics – Examines some of the best innovative implementation examples from EITI countries going beyond basic EITI (RWI, 2009)

Introduction to the Natural Resource Charter Hanoi, Vietnam 12 October 2009

From Oil, Minerals, and Gas to Better Development

Current transparency efforts in the ‘Value-Chain’ Prior and informed Consent Accounting Standards Budget Monitoring Freedom to Information Act Contract Transparency PWYP EITI Discovery and Decision To Extract Actual Expenditures and Development Revenue Distribution And Management Revenue Collection Awards and Negotiation of Contracts

Why a Resource Charter? Need to: – Go beyond transparency to other management policies – Link and addresses the economic decisions necessary in different areas of the value chain – Tie academic research with practical experiences – Capture best practice and our evolving knowledge

Natural Resource Charter Creating a guide for citizens and governments of resource rich countries to use the opportunities created by natural resource effectively.

What’s in the Natural Resource Charter? Preamble 12 Precepts Detailed descriptions of each precept Technical recommendations on achieving these objectives To be updated and reviewed annually

The Precepts 1.The development of natural resources should be designed to secure the maximum benefit for the citizens of the host country. 2.Extractive resources are public assets and decisions around their exploitation should be transparent and subject to informed public oversight. 3.Competition is a critical mechanism to secure value and integrity. 4.Fiscal terms must be robust to changing circumstances and ensure the country gets the full value from its resources. 5.National resource companies should be competitive and commercial operations. They should avoid conducting regulatory functions or other activities. 6.Resource projects may have serious environmental and social effects which must be accounted for and mitigated at all stages of the project cycle. 7.Resource revenues should be used primarily to promote sustained inclusive growth through enabling and maintaining high levels of domestic investment. 8.Effective utilization of resource revenues requires that domestic expenditure be built up gradually and be smoothed to take account of revenue volatility. 9.Government should use resource wealth as an opportunity to secure effective public expenditure and to increase the efficiency of public spending. 10.Governments should invest in a manner that enables the private sector to respond to structural changes in the economy. 11.The home governments of extractive companies and international capital centers should require and enforce best practice. 12.All extraction companies should follow best practice in contracting, operations and payments.

Next Steps Consultation phase – comments and suggestions welcome (particularly precepts #2 and #12) Suggest additions to oversight board Identify target countries for initial implementation Brainstorm means to use this as a monitoring/advocacy tool