The government has issued an inter-ministerial prakas to regulate the exploitation of mineral resources used as construction materials in state infrastructure projects.
It was signed by Minister of Economy and Finance Aun Pornmoniroth and Minister of Mines and Energy Suy Sem on June 23 and released to the public last week.
The prakas said it aims to improve the supervision of the aggregate – such as stone, gravel, sand, laterite and excavated soil – used in the projects, and enhance the collection of royalties in a more transparent, accountable and effective manner.
It covers such publicly-owned projects including, inter alia, roads, bridges, dams and hydropower stations.
It intends to “streamline mineral licensing procedures, facilitate granting exemptions from public service fees, and establish the procedures for the collection of royalties and applicable regulations in the event of royalty exemptions”, it added.
The ministry’s General Department of Mineral Resources director-general Yos Monirath said the prakas was written to collect more clear-cut data on the use of mineral resources as construction materials.
He noted that the state is liable for royalty payments for materials used in publicly-owned infrastructure projects.
“We want to know how much aggregate is supplied to the market for government infrastructure projects and how much the state will have to pay in royalties.
“In the past, high levels of material consumption had been observed, with people wondering why on earth revenue collection figures had been so low.
“These numbers record the revenue generated from mineral resources used in private sector ventures and do not account for the state’s burden,” said Monirath.
The prakas said all entities involved in state-owned infrastructure projects that directly use aggregate, whether public or private, must have a mineral resource licence as stipulated by the Law on Mineral Resource Management and Exploitation. They must apply for the licence within 45 days of receiving a contract.
Royalty liabilities and income from royalties must be declared to the state in accordance with applicable laws and legal instruments, it said.
Whether declaring royalties to the general department or purchasing aggregate on the market, it said, eligible entities may apply for a royalty waiver at the finance ministry.
Monirath said the Kingdom collected about $21 million in non-tax revenue from the mining sector last year, up five per cent from $20 million in 2018.
Late in April, he told a press briefing on the ministry’s progress, goal setting and action plans held at the Council of Ministers that the government’s policy encourages people to look into and invest in the sector.
He said the sector not only creates more job opportunities, but also contributes to revenue for national development.
The ministry is currently implementing a number of measures to curtail illegal mining and formalise informal mining to collect additional non-tax revenue, he said.
Monirath defined non-tax revenue as recurring income obtained by the ministry through sources other than taxes such as licensing fees, land leases, royalties and penalties.
Although mining receives lower non-tax revenue compared to other sectors, there is no regulatory framework in place to encourage the export of raw mineral resources, he said. “Investors are forced to build mineral processing plants which add value . . . to Cambodia’s exports.”
