Vietnam feasibility study - EITI

10
exeCutIVe summARy
Vietnam has a variety of mineral resource with over 60 types of minerals in 5000 ore deposits. Some
are big reserves at the world and regional levels, such as bauxite, titanium, rare earth and limestone.
Some are potential reserves, like coal with over 210 billion tons and iron with 3.5 billon tons. Some
minerals have been exploited for a long time. For example, coal has been exploited for over 100 years.
Oil, gas and titanium have just been exploited over the last couple of decades. In recent years, the
extractive industry has grown sharply and significantly contributed to the state budget and socioeconomic
development. Its contribution accounts for 9-11% of total GDP since 2000.
The extractive industry of Vietnam rapidly grows in which the numbers of extractive companies increase
on average by about 22 % per year. Demands on mineral resources for domestic consumption and
export have been increasing in recent years and are looking to increase sharply in the coming years.
The extractive industry has substantially contributed to the state budget (the oil and gas industry
alone contributed about 1/3 of the state budget in recent years). The extractive industry does not
only contribute to the national income, but also it brings substantial amount of foreign currency that
is significant for stabilizing the national economy. By 2009, the extractive industry gained about 8.5
billion USD from export. Of these, crude oil was a major commodity generating 6.2 billion USD, as
well as creating a high number of jobs, assuring national energy security, and providing raw materials
for almost all other industrial sectors. The role of the extractive industry continues to grow in the
“industrialization and modernization” strategy of the country. Nevertheless, the extractive industry is
predicted to struggle with difficulties and challenges due to a rapid exhaustion of oil and coal in the
coming time. Moreover, Vietnam has some big reserve minerals at the world level, such as bauxite,
titanium and limestone, but these minerals are common throughout the world and current demand is
not high. Meanwhile, Vietnam either has few precious minerals, such as gold, lead and zinc that are in
high demand, or lacks them altogether, such as diamonds.
Throughout its development, the extractive industry has exposed many contradictions and has
developed unsustainably. Illegal mineral extraction is common in many areas, resulting in a high loss
of revenue for the state. Moreover, mining practices are wasteful, in which extractive companies often
avoid fully exploiting or processing the minerals when they face difficulties. Therefore, the benefits
of mineral resources are not maximized, resulting in a resource waste. The natural endowment is
sometimes given to vested interests instead of the people due to poor monitoring and evaluation
mechanisms. Mineral extraction also leaves many negative impacts to the natural environment and
local communities.
To assure benefits of natural resources for the development of the nation, harmoniously shared
amongst the State, the Extractive Company and the People, the transparency of revenue/payment in
the extractive industry is very necessary. In addition to recent efforts such as amending the Law on
Minerals, which has just been approved by the National Assembly, Vietnam also needs to consider
participating in the global initiatives, such as the implementation of Extractive Industries Transparency
Initiative (EITI).
The EITI is a volunteer coalition initiative amongst the government, companies, local civil society
organizations and international organizations aiming to enhance transparency and accountability in
the extractive industry. It provides a global standard for revenue transparency, comprising of two
mechanisms: (i) extractive companies disclose payments made to the government and vice versa;
and (ii) an independent administrative body is established to reconcile all received data, managed
and operated by multiple-stakeholders. To date, there are 35 EITI implementing countries around the
world. The EITI is also widely supported by extractive companies and the civil society organizations. So
The Extractive Industries Transparency Initiative and the Implementation Perspective of Vietnam