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Extractive Industries

UNDP's role in Extractive Industries

UNDP is the United Nations' global development network, supporting governments and communities to find solutions to their particular development challenges. In Cambodia's Extractive Industries (EI) sectors, which include oil, gas and mining, UNDP supports the government and partners to develop these areas in a way that will bring economic and social benefits to the country, for example by generating and disseminating knowledge that guides decision making.

Why is UNDP involved in extractive industries sector?

the pace of extractive industries development will directly affect Cambodia's ability to meet its Millennium Development Goals, of which UNDP is custodian;
UNDP can provide a balanced platform for dialogue and debate on sometimes challenging extractive industries policy issues; and
Through UNDP's core capacity development strength, it can help improve governance and transparency, which will in part determine how Cambodia maximizes the benefits of EI and minimizes the risks.

UNDP, in close cooperation with government, bilateral and multilateral development partners, and civil society, focuses on capacity development, policy dialogue and knowledge sharing, and strengthening partnerships in the extractive industries sector.

What do Extractive Industries mean to Cambodia?

The economic and human development gains that could come if Cambodia's extractive industries (oil and gas and mining) sector is managed well stand to be considerable. This potential should be reflected in Cambodia's overall socio-economic structure and plans.

The Royal Government of Cambodia has indentified the energy sector as a priority in the current National Strategic Development Plan (NSDP). Oil and gas development, has the potential to improve domestic social and economic development by increasing job opportunities and incomes which contribute to poverty reduction and more importantly help to improve the well-being of Cambodians.

For mineral resources, Cambodia offers one of the few remaining under-explored (greenfields) areas in the world. Since the beginning of the decade, the interest in Cambodian mineral exploration has grown substantially, in particular from international investors from Australian, China, South Korea and Vietnam. The country's mineral resources represent a natural asset that can be transformed into the source of substantial new wealth and improved quality of life for all Cambodians by generating well-paying and skilled employment, both directly and indirectly through a spin-off industries.

Socio-Economic Challenges

The following sections focus on socio-economic issues relating to extractive industries. Most links provided below were presentations to the March 2008 co-sponsored conference "Fuelling Poverty Reduction with Oil and Gas Revenues: Comparative Country Experiences". Policy research on the mining sector will be added as it is completed.

Opportunities and Challenges Facing Developing Countries

For developing countries, a critical success factor in natural resource development is ensuring there is a strong macroeconomic policy in place that encourages price stability. In addition, there should also be a robust fiscal policy to stimulate productive public and private investments. Notably, other countries that have successfully managed their natural resources have clear and consistent resource policies and decision-making structures that enable sound resource management and good governance.

The global petroleum context:

Paper (100 KB)Slides (1,269 KB)

Preparing to Develop

Prior to each of the exploration and development phases of resource extraction, a good understanding of challenging tasks ahead in different stages is necessary. This is to ensure that appropriate policies and strategies are in place to maximize the social and economic benefit to the country.

Extractive Industries Policy Frameworks

Countries developing their extractive industries normally have policy frameworks to manage their natural resources. Typically, these policies take into account optimal sector growth, environmental and social issues and long-term capacity development.

Legal frameworks used to foster petroleum development:

Paper (74 KB)Slides (2,578 KB)

Fiscal arrangements:

Paper (226 KB)Slides (3,419 KB)

Negotiating contracts:

Paper (86 KB)Slides (5,389 KB)

Transparency

Cambodia's mineral and oil & gas resources are publicly owned by the people of Cambodia. Public knowledge of the legal and financial arrangements for these resources contributes to informed choices about how the sector is developed. Transparency and accountability are common features of global best practice, as embodied for example in the Extractive Industries Transparency Initiative (EITI).

Revenue Transparency and Accountability:

Paper (310 KB)Slides (1,276 KB)

Environmental impact and Corporate Social Responsibility

Environmental and social issues are central to non-renewable resource sector development. With the right policies and systems in place, extractive industries can be managed safely and cleanly. However, there have been too many cases, especially in developing countries, of poor environmental performance, or weak engagement with local communities. Cambodia does not want to repeat these mistakes. Effective public sector oversights, combined with good Corporate Social Responsibility (CSR) practice, are a proven means to achieve social, economic and environmental sustainability.

Environmental and social challenges in oil sector management:

Paper (114 KB)Slides (999 KB)

Human Development

Through job opportunities and skills development, non-renewable industries can contribute specifically to poverty reduction and the increased development of the country. For example, this means revenues from EI sectors should be invested wisely on education and skill development to meet current and future market demands. Local benefits often arise from partnerships among the private sectors, educational institutions and government.

International experience in turning black gold into human gold:

Paper (315 KB)Slides (2,218 KB)

Bringing Gender on Board in Extractive Industries

With exciting new potential opportunities from extractive industries, women can expect benefits from the sector in terms of social and economic empowerment. Extractive industries can open up employment opportunities, improve the education system and help build new infrastructures such as hospitals and transportation. Women should also be included in the EI project lifecycle to ensure that burdens will not heavily fall on them in particular. These empowerments can be seen as a step upwards toward economic well-being and independence. This means women have greater choice beyond their traditional roles as caretakers to breadwinners in the family. The contribution of women's wages each month to the family is considered to be crucial for family welfare, especially for those who find it hard to meet their daily needs.

It is timely to focus on ensuring that the expected benefits from developing EI in Cambodia are shared equally among citizens including women, children and vulnerable populations, and that risks are minimized. The policy brief “Mainstreaming Gender in Extractive Industries” attempts to shed light on the potential social, economic and environmental ramifications on gender when developing the EI sector.

Policy Highlight

The latest highlight

The Foundations for Responsible Mining in Cambodia – Suggested Approaches

This brief poses the following question: ‘What are the institutional, structural and ethical considerations for the achievement of responsible mining in Cambodia’. The brief does not assume how such overarching intentions should be implemented. Instead it focuses more on establishing a critical framework for drafting policies and laws, and guiding administration and management to achieve responsible minerals development in Cambodia.

Policy Brief - English (2.18 MB)Policy Brief - Khmer (1.79 MB)

Previous highlights:

- "Mainstreaming Gender in Extractive Industries" .

Paper (3,630 KB)

- "Corporate Social Responsibility in Cambodia: Issues and Challenges in Developing Cambodia's Extractive Industries".

Policy brief (41 KB)

Last updated: 03 August 2011