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The Future Of EITI In The Asia Pacific Region

Global Banking And Finance 1 News

World Bank Managing Director, Sri Mulyani Indrawati

Heads of state and government, Excellencies, Chair and members of the EITI Board, Ladies and gentlemen:
On behalf of the World Bank Group, I want to thank all of you for the opportunity to be here today.  
I also want to thank the stakeholders from many EITI-implementing countries who have gathered here for this important event, especially the distinguished speakers on this panel. Your presence signals the value you attach to the EITI principles and the contribution these can make to the future of our region.
We are gathering here at a time when historic change is sweeping across the world, and fighting corruption and strengthening governance are central demands in this popular momentum for reform.
At this moment, then, let me stress that EITI and the principles of transparency and accountability play a central role in the World Bank’s governance and anti-corruption strategy.   
The World Bank has supported EITI from day one and will continue to do so.
Similarly, helping partner countries’ efforts to better manage the wealth from their natural resources is at the core of the investment and advisory work of the World Bank Group.   
It is this common priority that drives the sustained policy dialogue and technical assistance work by the WB, and the funding that WB channels towards more than 45 countries we work with—both currently EITI-implementing and those interested in adopting EITI.  
This WB effort has only been possible through the tremendous partnership with the thirteen contributors to the Multi-Donor Trust Fund administered by the World Bank’s Oil, Gas and Mining unit.
In East Asia and the Pacific, two countries have been particularly active in supporting EITI: Australia and the United Kingdom. On behalf of all EITI stakeholders, I wanted to expressly thank these donors for their continuing support.
So now let me turn to the topic at hand: The Future of the EITI in the Asia-Pacific Region. And in order to answer this I want to begin by asking a critical question:

why does the EITI matter for people living in the countries of Asia and the Pacific?
For many resource-rich countries, oil, gas, and minerals are a lifeline for the future security and wellbeing of their people.
It is therefore critical that oil revenues get used properly and sustainably; that people can see where the money from precious oil revenues is spent, and how it is managed.
This is what we mean when we talk about transparency.
I know from my own experiences that accountability and transparency are essential for establishing secure, economically viable nation-states, because it means we can build and strengthen institutions: institutions that people can believe in.
It means civil-society organizations, local communities, representatives of the poor and vulnerable, people in rural areas, people in urban areas, women, children and politicians can ask questions of their government, and find answers. In so doing, they can play a part in the future of their country, they can believe in their country, and their leaders, and have hopes for their children.
In Indonesia since reformasi 98/99, we signed more than a hundred laws, covering anti-corruption, media freedom, electoral protocol, new public-finance legislation, the independence of the central bank and establishing a strong anti-corruption commission.
This was because we knew that there was a need for reform, that corruption could undermine our democracy, corruption could delegitimize the state and take away this fundamental hope in the future of the country.
Accountability and transparency are  really the essential value of the EITI, and it goes beyond supporting an attractive climate for investment.
It is also a milestone in building strong, vibrant and economically resilient countries that can provide opportunities for their populations: that can educate their children, provide sustainable employment for their people and ensure they lead healthy, satisfied lives.
When we talk about the future of the EITI, then, I think the ultimate vision we really need to keep in mind is one of vibrant economies, resilient states, and inclusive growth: a vision that will truly support the countries and people of the Asia-Pacific region.
For me, there is no greater illustration of what the EITI means and can mean than in Timor-Leste, a country that, in only a decade since independence, has developed a world-class revenue management system, and achieved compliance to the EITI.
This is thanks to committed efforts from government, civil society and its development partners and for this, the government deserves heartfelt congratulations.
And we see that Timor-Leste – only the third country in the world to achieve compliance to EITI and the first in the Asia-Pacific – is now in a position to share its expertise with other countries.
It has developed a multi-pronged Transparency Model that is an inspiration for developing and developed countries alike.
First, Timor-Leste was an early supporter of the EITI agenda, and Timor-Leste became an active member of the EITI Council.
Second, Timor-Leste established a Petroleum Fund, to manage petroleum revenues and ensure that revenues from non-renewables could be managed to provide the country with a sustainable income into the future, benefitting not only today’s population but also generations to come.
Third, Timor-Leste has undertaken several initiatives which contribute to transparency and accountability: including a Transparency Portal that provides information on Government spending; and public broadcasting of Parliament’s budget debate.
I think Timor-Leste deserves to be congratulated for introducing these initiatives so quickly. The public is quite rightly interested to see that the revenues from petroleum are invested wisely in pursuit of the country’s long term economic and social development.
Open Budget initiatives of this kind are being considered by many countries in the region. Civil society organizations are urging more democratic accountability, and international investors are welcoming the increased transparency.
And now I come to my next point: I think the future of EITI must mean going beyond the issue of validation.
EITI compliance is not an end in itself. It is the beginning of a process to mainstream the principles of transparency, accountability and good governance to provide security, prosperity and opportunity for the good of entire populations.  
EITI has increasingly become an international “brand” that many countries aspire to.  And transparency is critical in allowing us to shine a light on problems, but – it must also translate into tangible benefits for resource rich countries and their people.  
Indeed the long-term test for the success of EITI will be the extent to which it meets expectations in contributing to good management of natural resources for the benefit of all citizens, today and generations to come.
We must make sure that we can demonstrate real impact on the ground.  

So, how best to leverage EITI for both advancing sustainable growth, and achieving poverty reduction?   
There is no single “formula” for this.  But from working with policy-makers around the world, three fundamental objectives emerge.  

First, we need to protect the gains of the EITIEITI countries have to sustain their political commitment and ensure that the EITI is financially self-sufficient, therefore guaranteeing national ownership.  This panel contains excellent examples of such national commitment. 
Secondly, the “beyond EITI” agenda necessarily involves sound government policies and good governance, as well as civil society empowerment.  This empowerment is nurtured and built on the participatory strengths of the EITI process.

And thirdly, experience has shown that EITI and revenue transparency provide an excellent platform for implementing further reforms and strengthening broader public financial management.

There are a number of other steps that may support further successes alongside and through the EITI.
We believe that transparent, fair, and credible contracts in the extractive industries are an important area for improvements.   
Under initiatives such as that targeting Stolen Asset Recovery, the Bank has joined other partners to address the challenge of “looted” assets, many derived from extractive industries.

At a more local level, the World Bank along with the IMF must redouble efforts to strengthen public financial management, so that revenues can be translated into concrete development outcomes for people in developing countries: improved infrastructure, access to schools, health, and water.  
We are starting to amplify our focus on the quality of investment spending in resource-rich countries.  
We are ramping up support for civil society through direct capacity building activities related to EITI implementation and accountability.
And bold steps are needed in countries to build institutions and tackle the barriers—from corruption to illegitimate or weak institutions—which prevent continued reform: steps which mean the EITI can help realize a long-term vision for the Asia-Pacific, of vibrant economies, resilient states, and inclusive growth.  
I want to conclude by saying that the EITI has come a long way in less than 10 years and is making very real progress in the Asia-Pacific.
In the last year Timor-Leste and Mongolia both achieved EITI compliant status; Indonesia became an EITI candidate country. Papua New Guinea and Solomon Islands made formal announcements to adopt EITI and dialogue on EITI is ongoing in many other countries, including the Philippines, Cambodia and Lao PDR.
But there is now the momentum and the opportunity to extend the reach of the EITI process and address a more ambitious agenda.
Transparency is about sound revenue management, but it is also about inclusive revenue sharing – revenue sharing to provide security, prosperity and opportunity for the benefit of whole populations.
We at the World Bank Group are confident that countries and stakeholders will seize this momentum and continue to build upon the successes of the EITI.  The WB will support your efforts.
Resource-rich countries who have yet to join the EITI should do so as soon as possible – not only because transparency matters,  but more importantly because the potential for transparency is always there, and only needs to be unlocked by our voices, and our actions.  
The various voices supporting transparency, gathered in this conference and beyond are just a token of the efforts needed to consolidate and move the EITI forward, and represent an inspiration for others to follow.   
We can then continue pushing for that vision: a vision of vibrant economies, resilient states, and inclusive growth.

Global Banking & Finance Review


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