**5. Results**

The results of the indicators GT, GTi, and FLI are presented in Table 7. The table shows that different indicators have different results for ranking the attractiveness of the fiscal terms. According to the GT, without considering the time value of money, the attractiveness of the eight countries' fiscal terms is ranked in descending order as Cambodia, Australia, Indonesia, Mozambique, Vietnam, Canada, Myanmar, and U.S. However, in terms of GTi, which is calculated with consideration of the time value of money, the attractiveness of the fiscal regimes of eight countries is ranked in descending order as Australia, Mozambique, Cambodia, Canada, Myanmar, Indonesia, Vietnam, and U.S. If sorted by FLI, the attractiveness of eight countries' fiscal terms is ranked in descending order as Indonesia, Cambodia, Vietnam, U.S., Myanmar, Mozambique, Australia, and Canada.


**Table 7.** Results of GT, GTi, and FLI.

In accordance with the results in Table 7, it can be found that calculating with different indicators makes the ranks different. Hence, the comprehensive indicator (composite score—CS) is used to fully reflect the level of attractiveness. In order to compare the attractiveness rank of the eight countries, GT and FLI are considered comprehensively in the calculation of CS10. According to the data collected through survey technique in a previous study (Thiri Swe and Vincent Emodi), the decision makers determine weights of GT and FLI as 42% and 58%, respectively. Based on the weights of decisions makers, CS is calculated by the Equation (19)11. The result of CS value is provided in Table 8. The attractiveness rank of eight countries' fiscal regimes in descending order is Cambodia, Indonesia, Australia, Vietnam, Mozambique, Myanmar, Canada, and U.S.

<sup>8</sup> Attitudes of the decision makers for the weights regarding the indicators GT and FLI were explained in Section 3 in detail.

<sup>9</sup> Can be provided at a request to the authors.

<sup>10</sup> Luo and Yan (2010).

<sup>11</sup> CS = W1 × GT + W2 × FLI.


**Table 8.** CS Value and Attractiveness Rank of Eight Countries.

### *5.1. Analysis of Results in GT and GTi*

In terms of the definition of GT and GTi, the attractiveness ranks of eight countries are depicted in Figures 2 and 3, respectively. According to the attractiveness rank of GT without time consideration (Figure 2) and GTi considering (Figure 3) the time value of money, almost all countries have different ranks except the U.S. which has an obvious disadvantage in terms of fiscal regime. Concerning four countries' (Australia, Canada, Mozambique, U.S.) concessionary fiscal regimes12, the combination of royalty 20% and tax 35% of U.S., 55%, is the highest rate. Thus, the highest rate (55%) of royalty and tax makes the attractiveness rank of the U.S. low both in GT and GTi.


**Figure 2.** Attractiveness Rank of Eight Countries by GT.

Unsurprisingly, tax and royalty affect the attractiveness level of the fiscal regimes. The host governmen<sup>t</sup> attempts to capture as much rent as possible through taxes and royalties according to the nature of economic rent (Johnston 1994). Likewise, in GTi, since the combination of royalty 6% and tax 55% of Vietnam, 61%, is the highest rate in PSC countries, Vietnam holds the second lowest attractiveness rank after the U.S. and conversely, the lowest combination rate 36.25% of Australia gets the highest attractiveness rank. Hence, the high royalty can make the attractiveness rank low in GTi.

<sup>12</sup> In FLI in Table 7, the three highest attractiveness rank countries adopt the PSC system while the three lowest attractiveness rank countries practice the concessionary system. Likewise, In CS in Table 8, the two highest attractiveness rank countries adopt PSC while the two lowest rank countries use concessionary. Hence, it is better to analyze separately for PSC and concessionary.


**Figure 3.** Attractiveness Rank of Eight Countries by GTi.

In GT, the pattern of the ranks of countries in the concessionary system is the same as in GTi, in line with royalty and tax regimes (Figure 2). As with GTi, the higher the royalty/tax, the lower the attractiveness rank in GT. Royalty and tax affect the fiscal regime attractiveness rank both in GT and GTi for the concessionary system. However, regarding the countries adopting the PSC system, the pattern of the attractiveness ranks of countries in the PSC system (Cambodia, Indonesia, Myanmar, and Vietnam) in GT is not the same as in GTi13. In particular, the third lowest rank of Indonesia in GTi jumps to the third highest rank in GT due to its 100% cost recovery incentive and conversely, the attractiveness rank of Myanmar decreases from the fifth rank in GTi to the seventh attractiveness rank in GT (Figures 2 and 3) due to its low-cost recovery limit of 60%. Similarly, since the cost recovery of Vietnam (70%) is higher than cost recovery of Myanmar (50%), the ranking of Vietnam is higher than that of Myanmar in GT, opposing to the rank in GTi. Therefore, in GT, cost recovery also affects the attractiveness level of the fiscal terms for the countries practicing the PSC system.

Normally, the PSC system and the Concessionary system can be distinguished by cost recovery, and its range is typically 30% to 60%. Moreover, Johnston (2008) pointed out that cost recovery can make a difference in cash flow calculations. As such, the finding in this study shows that the highest cost recovery (100%) in Indonesia makes an obvious difference between cash flows by DCF and NDCF so that the attractiveness levels of Indonesia in DCF and NDCF vary dramatically. Moreover, Cambodia's attractiveness rank increases from the third rank in the calculation of DCF<sup>14</sup> to the first attractiveness rank in the calculation of NDCF<sup>15</sup> due to its high incentive cost recovery (90%).
