AEC Blueprint 2025 Analysis: Paper 24 | An Analysis of the ASEAN Cooperation in Minerals
The ASEAN region is endowed with many mineral and energy resources and intensive economic activities in the region have increased the demand for these resources encouraging member states to work together to invest, exploit and trade them. While ASEAN cooperation in the mineral resources sector dates back to 1996, governance in the sector has remained an issue, hampering greater trade and investment in minerals within the region. Additionally, the environmental sustainability of the sector has to be urgently prioritised. To further develop the sector and reap the benefits from its potential, ASEAN needs to improve the quality of governance (institutions and human resource), transparency, and consultations with relevant stakeholders, including the private sector.
The following report is part of a series which attempts to provide a detailed analysis on the ASEAN Economic Community (AEC) Blueprint 2025. Each report will cover a single element of the blueprint, providing a comprehensive look at past achievements, present problems, and the future plans of the AEC. Special attention will be placed upon the strategic measures outlined in the AEC Blueprint 2025. This report aims to provide insight into the viability surrounding regional economic integration under the AEC.
ASEAN Cooperation in Minerals
Today’s modern life is greatly supported by minerals. The ASEAN region is endowed with many mineral and energy resources. It is also home to a large share of world reserve of certain minerals. The most important mineral resources produced in ASEAN in large volumes include nickel, copper, tin and bauxite. Those that are produced in smaller volume are gold, lead, zinc, iron ore and gemstones. Table 1 describes the reserves of mineral substances in each member state. More intensive economic activities and cooperation in the region have pushed up the demand for mineral resources, encouraging member states to work together to invest, exploit and trade their mineral reserves. The ASEAN cooperation in minerals began when ASEAN had the first formal meeting of Senior Officials in charge of mineral resources in 1996 in Bali, Indonesia. It was further strengthened when the ASEAN Leaders endorsed the Vientiane Action Programme (VAP) 2004-2010, which called for enhanced trade and investment in the minerals sector and greater cooperation in the utilisation of mineral resources. To guide the cooperation, ASEAN adopted the first ASEAN Minerals Cooperation Action Plan (AMCAP) 2005-2010.
In the previous AEC Blueprint 2009-2015, the minerals (mining) cooperation was put under the larger scope of infrastructure sector. Since the very beginning, ASEAN has put a priority on the environmental impacts of intensifying cooperation in the sector, ensuring the sustainability of economic development in the region. This report aims at reviewing the progress made thus far, analysing the measures under the new AEC Blueprint 2025, and proposing some recommendations that could improve upon the implementation during the first AEC period.
A. Targets under the AEC 2015 Blueprint
As mentioned above, under the AEC Blueprint 2015, ASEAN cooperation in minerals is categorised under infrastructure, which also covers many other sectors such as transportation and energy. The main objectives in the previous AEC period of 2009-2015 include enhancing trade and investment, and strengthening cooperation and capacity in geological and mineral sector for sustainable mineral development in the ASEAN region.
The strategic actions identified included:
- Facilitate and enhance trade and investment in minerals.
- Intensify institutional and human capacity building in ASEAN geological and mineral sector.
- Promote environmentally and socially sustainable mineral development.
- Encourage the participation of the private sector in mineral development.
More detailed measures and timelines of the above strategic actions are prescribed in the ASEAN Minerals Cooperation Action Plan (AMCAP) 2005-2010. However, it covers only strategic actions 1-3. The fourth strategy on cooperation with the private sector is not elaborated upon in the AMCAP.
B. Significant Achievements To Date
The table below explains about the current progress made under each of the strategic action under
the AEC Blueprint 2015.
of trade and
of the private
sector in mineral
C. Current Issues and Challenges
A report on the ASEAN extractive industries2 has identified several challenges in developing and integrating the regional market of minerals. The first main problem for ASEAN is governance in the sector. This includes weak rule of law, lack of transparency and accountability mechanisms, and unpredictability of public institutions, and absence of effective participation of citizens. The report explains good governance is essential in the extractive industries to ensure an effective value chain. The value chain includes the extraction, processing and sale of the natural resources of raw resources as well as the utilisation of revenues from those sequence of activities. The rank of countries in ASEAN resource governance is given in Table 2. It is based on the Resource Governance Index (RGI) that measures the quality of governance in the oil, gas and mining sectors of 58 countries3. Indonesia is the highest ranked ASEAN country, which was still not able
to achieve a satisfactory composite score.
The second challenge refers to the sector specific issues, which cover uncertainties about investment and licensing process, problems regarding access to land, and particularly uncertainties in regulatory frameworks. These have led to corruption cases in some countries as the uncertainties may provide some room for rent seeking activities.
From the market perspective, the highly volatile prices of commodities and fierce competition
among producers of minerals in ASEAN markets hampers the potential contribution of the sector to the growth of ASEAN economies and structured. This has hampered the potential contribution that this sector could make as an engine of growth in the ASEAN economies.
D. Plans under the AEC 2025 Blueprint5
For the next period of AEC, the minerals cooperation in ASEAN continues with the previous strategic actions, with more emphasis put on partnership and cooperation with the main stakeholders. The new AEC Blueprint 2025 focuses on the following strategic measures:
- Facilitate and enhance trade and investment in minerals;
- Promote environmentally and socially sustainable mineral development;
- Strengthen institutional and human capacities in the ASEAN minerals sector; and
- Maintain an efficient and up-to-date ASEAN Minerals Database, including its
infrastructure towards achieving deeper integration in the mineral sector
In addition, partnership in policy development and programme implementation will be continued through the following key measures:
- Exchange information and develop the ASEAN Mineral Database;
- Promote and facilitate intra- and extra-ASEAN trade and investment;
- Promote environmentally and socially responsible mineral resources
- Intensify private sector participation and public-private sector collaboration in ASEAN mineral cooperation programmes and activities;
- Foster cooperation with Dialogue Partners and relevant international and regional organisations in the promotion of scientific and technological R&D in mineral resources development and geosciences, as well as cooperative programmes on technology transfer;
- Coordinate and harmonise development policies and programmes on mineral resources;
- Strengthen cooperation and joint approaches in addressing international and regional issues and concerns of common interest
E. AEC 2025 Blueprint Analysis
The new blueprint has outlined what needs to be done to further develop and integrate the ASEAN healthcare sector, covering areas such as public and private roles, harmonisation of standards, health tourism, health insurance, and mobility of health practitioners. The table below provides some analysis on the progress on each measure in the blueprint.
|Issue||Current Status and Development|
|1. Trade and investment in minerals|
|a. Promotion and
intra- and extra-
ASEAN trade and
|2. Sustainable mineral development|
|a. Promotion of
|3. Institutional and human capacities in the minerals sector|
of private sector
|4. ASEAN minerals database|
|a. Exchange of technical information, experience and good practices
b. Development of
c. Greater cooperation with Dialogue Partners and relevant
F. Conclusion: Moving Forward with the AEC 2025 Plans
To address the problem of weak governance in the sector8, ASEAN should consider a more robust regional policy framework that will (i) improve the legal, regulatory and institutional frameworks to pursue economic, social and environmental objectives, (ii) enhance accountability, transparency, and stakeholder consultation, and (iii) develop systems to deliver tangible benefits to the people. Such governance framework must serve to address the development divide and accelerate the economic integration of the less developed ASEAN member countries.
The framework mentioned above should also put a strong priority and ensure the implementation of environmental friendly way of mining practices, as encouraged by the Ministers. Development of an ASEAN directive on minerals extraction could be the answer as it will provide standardised safe methods of doing business.
Stronger dialogue and cooperation between the private sector and regulators will greatly improve how the sector is developed and further promote trade and investment of mineral resources across the region. These resources are very important in supporting the economic and industrial activities, and therefore greater involvement of the market participants in the development of any ASEAN framework could significantly accelerate the implementation of the measures under the AEC blueprint and AMCAP.
1 Jane Mélanie, Marina Kim, Sam Hester, Peter Berry, Allison Ball and Karen Schneider, Enhancing ASEAN Minerals, Trade and Investment, REPSF Project No. 04/009b, December 2005, p.36
2 The Framework for Extractive Industries Governance in ASEAN, Institute for Essential Services Reform (IESR), November 2014
3 The list of 58 countries do not include Brunei Darussalam, Lao PDR, Singapore, and Thailand.
4 The rank is based on Resource Governance Index (RGI) by the Natural Resource Governance Institute.
5 The content under this section is taken directly from the AEC Blueprint 2025 (ASEAN Secretariat, 2015).
6 Joint Press Statement of the Fifth ASEAN Ministerial Meeting on Mineral (5th AMMIN), September 2015
7 Okubo, Ohno, Bandibas, Wakita, Oki, Takahashi, ASEAN Mineral Database and Information System (AMDIS), December 2014
8 Fabby Tumiwa, ASEAN Framework on Extractive Industries Governance, Institute for Essential Services Reform, August 2014
ASEAN Secretariat (2008). ASEAN Economic Community Blueprint
ASEAN Secretariat (2015). ASEAN 2025: Forging Ahead Together
ASEAN Secretariat (2015). A Blueprint for Growth ASEAN Economic Community 2015: Progress and Key Achievements
ASEAN Business Club (ABC) Forum. Lifting the Barriers Report 2015.
Institute for Essential Services Reform (IESR), The Framework for Extractive Industries Governance in ASEAN, November 2014
Joint Press Statement of the Fifth ASEAN Ministerial Meeting on Mineral (5th AMMIN), September 2015
Lifting-the-Barriers Reports, CIMB ASEAN Research Institute, 2015
Fabby Tumiwa, ASEAN Framework on Extractive Industries Governance, Institute for Essential Services Reform, August 2014
Jane Mélanie, Marina Kim, Sam Hester, Peter Berry, Allison Ball and Karen Schneider, Enhancing ASEAN Minerals, Trade and Investment, REPSF Project No. 04/009b, December 2005
Okubo, Ohno, Bandibas, Wakita, Oki, Takahashi, ASEAN Mineral Database and Information System (AMDIS), December 2014