HANOI: Commenting on the draft Law on Geology and Minerals, the Chamber of Commerce and Industry of Vietnam (VCCI) has proposed implementing auctions for mineral mining rights.

The VCCI has just sent a document to the National Assembly’s Committee on Science, Technology and Environment, commenting on the draft Law on Geology and Minerals.

In the written comments, VCCI said it is concerned that the regulation on areas where mineral mining rights are not auctioned will create room for improper or inefficient distribution of such rights.

The chamber cited a report which summed up 10 years of implementation of the 2010 Mineral Law by the Natural Resources and Environment Ministry, indicating that out of a total of 421 mineral exploitation licences issued by this ministry, only six licences, accounting for just 1.4%, were granted through auction.

For licences issued by provincial people’s committees, 394 out of a total of 4,279 licences were granted through auction, accounting for 9.2%.

This low percentage indicates that the majority of mineral are still licensed through “asking-giving” procedures.

The draft also stipulates areas where mineral mining rights will not be auctioned.

This regulation has large implications, covering many important minerals, especially metallic minerals such as bauxite, titanium and iron ores, says VCCI in the comments. All of them are minerals with great commercial value.

Meanwhile, the effectiveness of an auction had been recorded in practice. The winning auction price of six licences issued by the Natural Resources and Environment Ministry was 76% higher than the starting price.

VCCI said it believes that the benefits for the budget will be huge if the use of auctions is expanded, while creating a transparent and healthy environment for businesses.

The chamber has requested that the drafting committee research and consider regulations that all mineral exploitation rights must be granted through auctions or bidding.

Vietnam’s mineral sector has been unable to attract large investment projects in recent times, said VCCI.

The law does not have an appropriate protection mechanism for enterprises investing in large-scale projects, with long capital recovery times.

According to businesses, one of the biggest reasons limiting large investments in the mineral sector is policy risk.

Frequent and continuous policy changes in an unfavourable direction for mineral projects already in operation have had a negative impacts on the Vietnamese business and investment environment.

“There are businesses reporting that their financial obligations to the budget have increased nearly three times compared to the regulations at the time of granting mineral exploitation licences, such as resource tax, mineral extraction rights fees, environmental protection fees for mineral extraction and mineral export taxes,” VCCI said.

 - ANN