Justin Kwan, MAAPPS // April 13, 2015
While researching about sub-national reporting the other day, a re-tweet from EITI’s official Twitter account caught my eye. The retweet came from Lizzie Parsons Senior Advisor in China for Global Witness, an organization which attempts to “break links between natural resources, conflict and corruption.” Her tweet linked to a recent March 2015 EITI report which discusses the transparency of Chinese organizations in the extractive industry. In one sense, China’s growing economic presence around the world warrants a rightful investigation into its business practices, since corruption as a whole appears to be a large problem in the country. One does not have to look too far to see that Xi Jinping recently launched one of the nation’s largest Chinese anti-corruption campaigns. However, there is a lack of context as to why EITI launched such a report, its origins, and why other countries have not received similar audits. These questions remained unanswered.
The findings of the report are especially interesting since it states not only that “there does not appear to be any cases in which a company based in China has refused to collaborate with a host country implementing the EITI” but rather there is an “increasing number of Chinese companies are disclosing information in EITI countries where they are required to report.” In fact, the companies that were based in Western countries were seen as equally contributing to delays compared to Chinese companies. Furthermore, Chinese companies were reported to have been involved in the extractives industries of at least 23 of the 38 EITI implementing countries which published reports. Here, I would like to highlight the results of two Asia Pacific countries.
In Mongolia, our main case study, it was interesting to see that there are at least ten Chinese companies active in Mongolia as well as two joint venture projects. On the whole, the information that Chinese companies disclosed went “beyond financial disclosure” although ironically, the largest Chinese Company, PetroChina Dachin Tamsag, and the Chinese-Mongolian joint venture Chinhua MAK Nariin Sukhait both did not disclosure their financial information. While Chinese companies continued to grow within the Mongolian market, the 2012 Strategic Entities Foreign Investment Law passed in Mongolia prevented foreign companies from obtaining more than 49% of shares of a company until it was reversed in 2013 when overseas investment dropped by 43%. While Mongolia may not necessarily want Chinese investments entering into the company, the opposite has happened. But when given the choice between protecting national interests or increasing economic prosperity, a difficult choice must be made. This is extremely problematic for Mongolia given the fact that the country is heavily reliant on Chinese transit routes for exporting its extractive resources.
Mongolia however is not the only country to have raised concerns about Chinese investments. Myanmar, another EITI candidate country has also express public concern with Chinese operations in the Shwe Myanmar-China gas pipeline project which is operated by Chinese company CNPC. The focus however in Myanmar has centred upon environmental degradation and land use by Chinese companies, despite the fact that “Chinese companies [are trying] to gain a more positive image by investing in environment and corporate CSR projects.” Quite interestingly, with the opening up of the country, Myanmar’s civil society has continued to protest the pipeline project as well as the Letpadaung copper mine (which has Chinese company Wanbao as one of the two sponsors in the joint-venture). This suggests not only the potential for civil society to also become involved in the process of subnational reporting when more formal initiatives become active in the country, but also that Myanmar’s civil society continues to grow and is becoming a strong and active voice in discussions. While Myanmar may not be as developed as Indonesia or the Philippines in its timeline for subnational reporting implementation, these points do however suggest great hope for increasing transparency in Myanmar’s extractive resource sector.