Can EITI membership make resource revenues transparent?

It can be easy joining groups: The challenge is in seeing the membership through.

Myanmar signed up to the Extractive Industries Transparency Initiative (EITI) on July 2. The agreement promotes openness and accountable management of revenues from natural resources, requiring annual disclosure of taxes and other payments by oil, gas and mining companies to governments. It’s a worthwhile group to join, and Myanmar should be proud it’s made it this far.

But the tough part is just beginning. Myanmar is the 45th country in the world to become a candidate for EITI, and just the third ASEAN country after Indonesia and the Philippines. Yet neither Indonesia nor Philippines have progressed past the candidate stage to be declared EITI compliant. Indeed, from Nay Pyi Taw one must travel to Mongolia or Kyrgyzstan to land in the nearest EITI-compliant country.

The standards are tough, as they should be. To meet them, Myanmar must change the way it handles resources.

The next meeting of the Multi Stakeholder Group (MGS) – the organisation charged with spearheading meeting the EITI reporting requirements – is in Yangon on July 18. Members from civil society, private companies, the union government and local authorities will cloister and begin the tough slog to meeting the disclosure requirements.

Myanmar now has 18 months to submit its first report or risk being suspended from the group. The report requires extensive information on public accounts, resource licence holders, production data, state-owned enterprises and allocation of natural resources, according to civil society organisation MATA. Myanmar will also have to identify the ultimate beneficial owners of resource companies, and disclose details of the 2013-14 oil and gas bidding rounds. All this is due on January 2, 2016.

It also remains to be seen how much grassroots support EITI really receives. Joining has been a priority of the government leadership, but most resource extraction is smaller-scale and often unregulated. How will the smaller players be brought into the process? As well, how will the larger companies – which have operated so long in the dark – react to the sudden scrutiny? Certainly many will rise with the occasion, but others will likely resist change.

Much of the onus then will inevitably fall to the government. To see the process through, the government will need to respond firmly to any violence or threats to protect the integrity of the process.

“Civil society groups should be protected by the government, and have more freedom, not only for the EITI but any activity,” said U Tun Myint Aung, a member of the MSG.

“Also, the representatives of the Multi Stakeholder Group must be united. If not, the process of the EITI report could face difficulties,” he said.

Yet the basic principle in joining the EITI is sound. Myanmar’s natural resources should be used for the peoples’ benefit, and this will take genuine commitment for stakeholders.

Signing up to the EITI has been a centerpiece of Myanmar’s reform process. So far, so good, but the real challenge will be overcoming objections and installing a measure of transparency in a notoriously opaque sector. The EITI is one agrreement that after joining, should be seen all the way through.


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