Tag Archives: Justin Kwan

The Trip to Ulaanbaatar: An Unforgettable Journey

Justin Kwan, MAAPPS // May 13, 2015

After 19,308km of traveling from Canada to Mongolia, the Asia Pacific Policy Project team has finally returned back to the University of British Columbia. The journey to Ulaanbaatar has been an amazing experience, to say the very least. Nine days in Mongolia’s capital city has created a fresh viewpoint not only on the way I view policy making, but the real struggles that occur between different interest groups in the negotiation process.

The beginning of the trip started with the participation in the Freedom Online Coalition (FOC) Conference, with a keynote opening speech by Tsakhiagiin Elbegdorj, the President of Mongolia. While freedom online and the EITI subnational reporting project may appear to be completely unrelated, President Elbedgdorj acknowledged that beyond mining, he wanted his country to expand its investments and businesses into the IT and software industry. Perhaps a subtle, but clear sign that that Mongolia is looking to diversify its investments, and perhaps has too heavily relied on the extractive industry to support its economy.

A reoccurring theme throughout the trip however has been the frequent discussion of the mismatch between our “words and deeds.” A FOC panel discussing future internet trends noted the question of double speak and the distance between practice and implementation in policy making. After team discussions and reflections upon our trip, we agreed that the coined term could most appropriately be used in our meetings with government and civil society organizations.

Throughout the trip, three perspectives about the future of subnational reporting emerged from out meetings. On one hand, I can see great optimism about Mongolia’s future and EITI subnational reporting. In our meeting with Mongolia’s EITI secretariat office, it was indicated that already, 19 out of 21 Aimags are reporting at the subnational level through electronic online surveys. This is something that we were pleasantly surprised to learn about and that future training workshops will be providing this upcoming year to help facilitate the transition.

On the other hand however, there is another perspective from other civil society groups that the EITI project has failed to reach out and properly inform citizens about transparency in the mining sector. According to them, there is no desire to make this information accessible to ordinary citizens, and the project has wasted millions of dollars. With the fact that EITI Mongolia is still in the process of securing donor funds for the next year, it would appear that the initiative may be in limbo for the upcoming months.

A third and final perspective from EITI civil society stakeholders reveals the passion and desire to create a robust civil society that will protect the country’s interests. There is a legitimate desire amongst these groups to encourage the population to become more involved, and there is a legitimate sense of frustration and debate as to how these ideas can be fully implemented. While many ideas were exchanged, it was surprising to note that a rather important voice remained silent throughout these discussions, perhaps one of the most important voices for inciting real change in Mongolia.

From this trip, we have realized that although our desires to encourage EITI policy recommendations have somewhat fallen on deaf ears, there is still hope. Indeed, there is a complete disconnect between policy theory and policy implementation, and the actors who can make the most difference prefer to keep the status quo. However, trips like this showed us some of the most real-time up-to-date information about subnational reporting that no literature was able to provide. The Ministry of Mining of Mongolia also revealed that the extractive industries transparency legislation has been drafted and is seeking approval from parliament. Although frequent election cycles have created a lack of continuity in policy making in Mongolia and perhaps a somewhat unstable political environment, I still look at this situation with a great sense of optimism because the hopes and aspirations of the people in Mongolia are strong. While I myself may be aspirational in my outlook, I look at the desire for change as one of the greatest motivators for continuing to strive for success.

Reading about Mongolia is one experience, living it and experiencing it first hand is completely different – something I truly believe everyone should try at least once in their lifetime.

On Our Way to Ulan Bator!

Justin Kwan, MAAPPS // May 3, 2015

Although the semester has just finished, a group of 6 students from the Asia Pacific Policy Class will have the opportunity to travel to Ulan Bator, the capital city of Mongolia to present the findings from two different projects we have been working on. The first team has been formulating policy solutions to help bring further awareness to subnational reporting and attempt to further enhance the usefulness of the data to the general public through various public institutions such as libraries, soum level government and banks. Meanwhile, the second team has formulated a paper, which analyzes the success of subnational reporting on different dimensions, which include democratic governance, rule of law, civil society participation and perception of corruption. Both teams are most definitely excited to share their findings in Mongolia and hope that our research on subnational reporting can not only inform EITI better of the unique experiences countries have faced in their attempts to implement local level reporting but how this information can be used to better civil societies around the world.

Before flying off this past week, some further research for the trip to Mongolia has taught me a few interesting facts. Most fascinatingly, I discovered that after Russian, German is one of the most widely spoken foreign languages in Mongolia, due to the country’s special historical relationship with East Germany. Although, though this trend is slowly giving way to English, the Korean language is also gaining momentum due to the large population of Mongolians working in South Korea. From this, we can see Mongolia as the intersections of various histories; from the historical legacies of socialism to the ways even the Korean Wave has also made an impact on Mongolian society and youth culture. While in Ulan Bator, I am curious to know what influences have impacted the city the most, visually through its architecture but also through the collective public memory in various institutions such as museums, statues and other public places.

In reflection upon the course this year, I realized that a concept like subnational reporting, although now a common word in our team’s vocabulary is still a relatively new concept to most of our EITI candidate and compliant countries. In a country like Canada, interprovincial government transfers and the coordination amongst our federal and provincial governments represent a complicated but relatively effective process that regulates provincial level coordination with our own federal government. In my case study country of Indonesia, the Presidential Regulation RI No.26 2010 which although regulates and legally enforces subnational reporting, the enforcement of such policies have not been as easy. Indonesia is still trying to test out how it is best equipped to deal with the task of subnational reporting implementation, although its initial plans of decentralization and the issuing of local mining permits has somewhat slowed down the process due to the lack of local of coordination amongst local governments to issues licenses. Rather than looking at this as a failure, I see this as one of the many projects that are part of the testing period that will eventually help subnational reporting projects to be successful. It will be interesting to see how our meetings in Mongolia will represent the ways in which the people view and regard subnational reporting within their own country and abroad.

For now however, the land of blue skies awaits the team in Mongolia!

EITI Report: Chinese companies reporting in Mongolia and other EITI Implementing Countries

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.

The Role of Civil Society Groups in Subnational Reporting

Justin Kwan, MAAPPS // April 2, 2015

The last few weeks have been dedicated towards two different projects our Asia Pacific Policy Project team has been working on. Our team of five students has selected to write a paper, which will address the prospects for sub-national reporting in the 13 countries we have selected as our case studies.

Our entire team has looked at a variety of factors that may influence the prospects of subnational reporting (SNR). Thus, our goal is to determine which political, economic and societal conditions are most conducive to effective sub-national reporting. Our preliminary findings suggest that countries that uphold the rule of law, have stronger democratic institutions, and predominantly operate in mineral-based extractive industries are more likely to produce effective outcomes through sub-national reporting.

To supplement our own research, we look at a variety of indicators to help us draw our conclusions. Some indices include: Global Democracy Ranking, World Justice Project Rule of Law score, BTI Civil Society Participation Score, Transparency International Corruption Perceptions Index and GDP per Capita.

In particular however, I would like to focus our analysis on the potential connection between civil society participation and the potential outcomes for subnational reporting. In Indonesia, several civil society groups have expressed interest in subnational reporting and have been a vital part of helping collect data for SNR trial testing. For instance, Publish What You Pay (PWYP) Indonesia has conducted training sessions on EITI reporting and revenue sharing calculations. These civil society groups have also teamed up with EITI during Indonesia’s Anti-Corruption Day. In further personal correspondence, Indonesia’s civil society groups have also indicated that they are helping beta-test subnational reporting in certain areas.

Given Indonesia’s robust civil society, the country ranked fairly high within our case study countries with a score of 7 on BTI’s civil society participation score. I have advocated for our team to examine each country’s civil society participation with regards subnational reporting. While I find the BTI civil society participation score useful, in some ways, it is also problematic for our research. This is mainly because the score does not reveal the direct linkage between a country’s civil society and its engagement in projects related to subnational reporting. As such, the BTI score can only capture a general relationship between society and how they may initiate or help create the potential for reforms. Since there are different levels of civil society participation based upon different interests, it is rather important to examine the linkages between SNR and civil society groups. Currently, each member of our team will be asked to evaluate the formal conditions for SNR in their researched country, looking for the presence of subnational reporting in the stated EITI working plan, training sessions and/or workshops as well as formal reports issued by the member/candidate countries. After much debate, we will further look at civil society participation as a surrogate indicator for successful subnational reporting. Since civil society groups have played a fairly large role in helping implement subnational reporting in Indonesia, it will be interesting to see what influences civil society has on subnational reporting in other countries and whether or not any general trends can be concluded from the data we collected. Perhaps Indonesia is a unique case study when it comes to the relationship between civil society groups and subnational reporting. However, it is this particular specificity that makes the Indonesian story an important case study for other countries to learn how to engage with resource-revenue transparency issues.

The EITI Journey in Indonesia – Part 2: Challenges to Subnational Reporting

Justin Kwan, MAAPPS // Feb 23, 2015

Despite the fact Indonesia only recently achieved EITI compliant status in October 2014, the country has actually implemented since 2010, laws which regulate the transparency of national and local extractive industry revenues.Subnational reporting in the case of Indonesia has been met with positive responses but has experienced difficulty in its practical implementation. ThePresidential Regulation Republic of Indonesia, Number 26, Year 2010guarantees the need for establishing the Transparency of National/Local Extractive Industry Revenues. For instance, it regulates the the creation of an Implementation Team (Tim Pelaksana), which is comprised of three seats for subnational government officials on the EITI Indonesia multi-stakeholder working group as well as three regional secretaries. The produced framework here shows strong a commitment to EITI transparency principles and the appropriate context for subnational reporting to operate.

Despite this, the practical implementation of subnational reporting has been met with unexpected results. One of the largest issues that has surfaced is the topic of district-licenced mining permits. Indonesia’s 2000 decentralization law allows for local districts to issue licence permits. Regional autonomy was seen as the next logical reform in Indonesia, which came about during the increasing democratic reforms that were being put into place after the end of the Suharto regime. While the Ministry of Energy and Minerals was aware that 10,500 district licences were issued in 2011, the government only had adequate levels of information for only 4000 of them. Given Indonesia’s population size and the geographical area of the archipelago, the decision to decentralize is logical, as more individualized attention could be given by local governments. The unintended consequence is that tracking at the national level is extremely difficult.

In conversation with Indonesian civil society organizations, I received responses from different groups which were located across the country. What appears to be evident is the increasingly strong push for civil society engagement in Jakarta, in which detailed plans for subnational reporting and beta testing are already occurring. Meanwhile, in the province of Riau, discussions of subnational reporting had been made at the local level, but were not being discussed at the national level, according to my correspondence with their civil society groups. With EITI compliance stronger in some areas more than others, there must become a way to identify which regions are priorities for subnational reporting. Then, EITI can have a strong impact on improving the transparency of the extractive industry.

So what are the next steps for Indonesia? The EITI Implementation Team Meeting on September 9, 2014 agreed upon the upcoming working plan for the 2014-2015 year. In regards to subnational reporting, the team is looking at three important areas: (1) regularly publishing the Revenue Sharing Fund (DBH) per District Per Company/Unit Production (2) involving Regional Governments in the extractive industries transparency process and (3) having Regional governments push companies to open up their tax data. The two largest obstacles cited in this implementation plan include the fact there are limited human resources needed to handle the revenue calculations as well as a lack of understanding by regional governments of the importance of EITI.

Clearly, Indonesian stakeholders and EITI must work together to identify the most lucrative extractive resource industry areas of the country and create a targeted plan to ensure that subnational reporting is operating in these target areas. While the “One Map Policy” appears to be one response to the problem, the government must also find a way to engage with local governments in a meaningful way to further the transparency process. In a large country like Indonesia, a targeted and refined plan is needed in priority areas before focusing on widespread implementation across the country.