Major oil, gas and mining companies in Cambodia to disclose payments to the government
Phnom Penh - International development organization Oxfam America commends the US Congress for making disclosure of payments from oil, gas and mining companies to governments around the world a legal requirement. According to the law, many major oil, gas and mining companies listed on US stock exchanges, including those operating in Cambodia, will have to disclose their payments to governments as part of their annual filings to the US Securities and Exchange Commission (SEC). This historic measure will increase financial transparency in the industry and help resource-rich countries around the world reduce mistrust, mismanagement, and conflicts that are too often associated with natural resource booms.
'Public disclosure of revenues and how they flow from industry to government is fundamental to improving governance, helping any government's efforts to prevent and curb corruption, and improve revenue management,' said Mona Laczo, Deputy Regional Director of Oxfam America in East Asia.
Included as part of the financial reform legislation passed by the US Senate on 15 July, 2010, the law creates a low-cost, uniform transparency method for all oil, gas, and mining companies registered with the SEC, which covers more than 90 percent of world's largest internationally operating oil companies and eight out of the world's 10 largest mining companies. In Cambodia, several publically traded major oil, gas and mining companies which are registered with the US stock exchanges, will be required by 2012 to disclose payments for the extraction of oil, gas, and hard minerals in the country as part of their financial statements that are already required by the SEC.
'The law is timely as it provides Cambodians with much needed information to participate meaningfully in development projects vital to their lives,' Laczo said. 'This information will allow people to analyze the levels of public revenues and spending on economic development, environmental protection, health, and human services.'
For the purpose of commercial development of oil, gas or minerals, companies will have to include in their annual reports filed with the SEC (1) the type and total amount of payments made for each project and (2) the type and total amount of payments made to each government. The payments they will be required to report are taxes, royalties, fees (including license fees), production entitlements, and bonuses.
Inevitably, not only Cambodian people, but also private companies and the government will benefit from this legislation. Opaque governance is a threat to investment and because extractive industries are capital-intensive and dependent on long-term stability to generate returns, transparency of payments can help mitigate political and reputational risks. It also allows companies to make better informed assessment of opportunity costs and threats to corporate reputation, and a company's dependence on such ventures. This may result in significant contribution to the improvement of Cambodia's competitiveness and investment climate as well as stable economic growth, which are key elements of the government's rectangular strategy.
