A good deal of secrecy is still prevalent in how natural resources are managed by countries in the Asia Pacific (Apac) region, according to the Resource Governance Index released by the Revenue Watch Institute. The Index measures transparency and accountability in the oil, gas and mining industries in 58 countries worldwide, including 12 in Asia-Pacific where these industries play an important role.
While none of the Apac dozen made it into the top “Satisfactory” segment, India, Timor-Leste and Indonesia made up the top three in the “Partial” segment. The Philippines and Mongolia were a little further back, but nonetheless showing progress toward a well-governed and accountable resource sector.
The rest, however, were ranked as either “Weak” or – in the case of Afghanistan, Cambodia and bottom-placed Myanmar – “Failing”. In these nations, opacity, corruption and weak processes keep citizens from fully benefiting from their countries’ resource wealth, revealing a significant ‘governance deficit’.
To determine how each country performs, the Index looks at four key areas of transparency and accountability:
- Institutional and Legal Setting: the degree to which laws, regulations and institutional arrangements facilitate transparency, accountability and open, fair competition.
- Reporting Practices: government disclosure of information.
- Safeguards and Quality Controls: the presence and quality of checks and oversight mechanisms that encourage integrity and guard against conflicts of interest.
- Enabling Environment: the broader governance environment, based on more than 30 external measures of accountability, government effectiveness, rule of law, corruption and democracy.
While no country in the region received an overall satisfactory rating, the three leaders were all given satisfactory ratings in two of the four Index components.
India, which made the list because of its significant petroleum reserves, earned an overall score of 70 with a satisfactory rating (above 70) for reporting practices thanks to its freedom of information law, and was also deemed to have satisfactory safeguards and quality controls.
Timor-Leste, the baby of the bunch and one of the world’s newest countries, scored 68 overall but shone in reporting practices with a very credible score of 82 since it is the only country in the region to publish contracts with companies, though these disclosures are not routine. It also does well in terms of its institutional and legal setting. Neighboring Indonesia was also given a satisfactory score on this count, together with its safeguards and quality control, giving it a composite score of 66.
Behind the Apac top three the Philippines makes the top half of the index with an overall score of 54, being relatively strong (Partial) in terms of it institutional and legal setting and also its reporting practices. Mongolia’s standout was for its institutional and legal setting which, at 80, is satisfactory but was deemed to be weak by other measures, resulting in an overall score or 51.
While Mongolia, together with Timor Leste and Indonesia can boast comprehensive oil, gas and mining legislation, including an independent licensing process and clear frameworks for resource revenue collection, the same cannot be said of Apac’s bottom seven.
With the exception of Malaysia (46), regulating authorities do not publish environmental impact assessments or consult with communities prior to awarding extractive rights, giving a passable 60 for its enabling environment. While information on exploration and production is generally available, China (43), Papua New Guinea (43), Vietnam (41), Afghanistan (33), Cambodia (29) and Myanmar (4) publish very little information on resource revenues.
It is worth noting that while Afghanistan was judged to be failing, it did receive a decent score of 63 on its institutional and legal setting, reflecting a growing body of law to govern its mining industry, which is expected to grow considerably.
If Apac countries want to do better in terms of natural resource governance they should look to Norway as an example. The Scandinavian country topped the Resource Governance Index with a composite score of 98 and received the only perfect score (100) of any country in any aspect for its institutional and legal setting.
