Attacking the social risks before they attack you

Attacking the social risks before they attack you

This article, taken from the Clive Aspinall Report, highlights
the different perspectives of community development in Indonesia.
The writer, Clive Aspinall, is a geologist consultant with years
of experience in the Indonesian mining industry.

Why is community development now a catchword among resource
companies in Indonesia, and yet is so little understood by
international corporate management?

Well for one thing, there is an ageless Indonesian tradition
of mutual assistance, mutual caring and mutual relationships.

It touches most Indonesian social cultures, especially in
isolated and remote communities. This Indonesian tradition is
called gotong-royong. It follows the Indonesian principle of
working together for the "common good".

Since the end of the iron-fisted rule of president Soeharto in
1998, foreign resource companies operating in remote areas across
the Indonesian archipelago are beginning to take notice that
community development is not only desirable for project security,
but also because it is a corporate responsibility for their
operations across Indonesia.

During this time of "reformasi", the transition from a virtual
dictatorship to a democracy, from a centrally controlled
government to decentralized and autonomous government, rural
Indonesia is a land without effective controls.

Big business in Indonesia, that is mining, oil and gas
projects in remote areas, face a higher degree of social risks
and threat to security than pre-1998 days.

The projects attract poor and unemployed Indonesians from
hundreds of miles away looking for potential work. They form
communities around resource projects.

Like bees around honey, they set up their wooden shacks and
warung (Indonesian food kiosks) around company project sites over
night. Some of these shacks may extend from already preexisting
villages, for indeed, indigenous peoples may have been the first
to arrive, generations before the project.

Often their wooden shacks or villages are right alongside the
companies' fenced-off modern compounds. This is where company
crews live in comfort with modern air-conditioned accommodation,
hot and cold showers, five-star hotel-style cafeterias,
telephone, fax, e-mail and, of course, satellite piped-in BBC,
Fox News and CNN.

Too many indigenous people and those who come to company
project sites seeking opportunities see the resource projects in
different ways.

Speaking figuratively, they see it as we Westerners would see
a beautiful modern ship first appearing on the horizon and then
sailing across pristine blue waters in front of our eyes, so
close yet untouchable.

To Indonesians living in remote areas, a new resource project
represents a thrilling opportunity, and one that possibly can be
touched. How, the people wonder, can they climb aboard and better
their lives?

The potential opportunities associated with this "ship" could
mean the difference in having or not having: money, a house,
motorbike, wife, children, access to public health facilities and
in some cases the difference between having three meals a day or
one. In some cases, even the difference between life and death
for family members.

Unfortunately, the majority of the indigenous people or
opportunity seekers do not have the expertise or education to
work with a modern resource project. Optimistic and happy people,
they may turn to farming or driving a minibus or even open a
local warung.

In true Indonesian custom, these people put a good face to
their everyday struggle for survival, while living next door to a
"very rich company". In their eyes, the resource project
represents riches beyond imagination. Is there any chance of a
bit of gotong-royong, they wonder?

The resource project, if it is foreign, will have its sights
set on managing its investment, and if lucky enough to make a
resource discovery, to manage the discovery for a profit.

Profit after all is their prime business concern and the
reason they came to Indonesia. Like all good corporate citizens
they have signed a Contract of Work (CoW) or a Production Sharing
Contract (PSC) with the government or Pertamina, and follow the
rules of the contract to the last letter.

Indeed, the terms of the contract will keep the company busy
indeed. While under contract there is not much time for anything
else.

Foreign companies pay taxes to the Indonesian government,
train Indonesian employees and instill safety into their way of
thinking.

Natural resource companies try and follow all existing
legislation on pollution and hazardous waste, forestry laws,
royalty payments, land rights, etc. Companies perform drilling,
mapping, seismic surveys, or mining, building camps and plants,
producing oil and gas, or minerals, in addition to building
roads, harbors, shipping terminals, electrical terminals,
pipelines, gas lines and more. By Western standards, these
companies are perfect corporate citizens.

For a Western corporation, the term "gotong-royong" is not in
the dictionary. Community development is a government
responsibility, and not for public or private enterprises. In
this Western way of thinking, they are right. However, here we
are talking about Indonesia.

Community development programs means socialization and
empowerment. Also educating, communication and innovative ideas.
Companies in Indonesia should be thinking, "We will attack these
social risks before the social risks attack us." This is where
community development programs come in.

Community development programs organized by companies
generally involve a wide range of assistance to neighboring
communities, whether indigenous or those of opportunity seekers.

These range from agricultural assistance, medical assistance
and university scholarship assistance, to road building and clean
water programs, and more. This assistance costs money. Individual
natural resource companies in Indonesia now fund community
development programs in amounts ranging from US$50,000 to more
than US$2 million per year.

Unless managed by an experienced, focused and a dedicated
team, these efforts can backfire on a company, and all community
development money spent could be wasted.

Something more is needed than just methodical giving or
providing. Getting to know the communities firsthand and becoming
friends pays much bigger dividends. This is friendship coming
from the heart, and no money is needed. Trust and respect by both
sides are essential, and only happen over time. A sense of
willingness to help, not an obligation, is important. Promises to
communities should be avoided at all costs.

Socialization is indeed probably the most effective form of
community development for the money spent. It costs only the time
spent by community development workers, or company staff, making
an effort to get to know groups and/or individuals in the
surrounding community, as well as officials in the regional
government.

What is meant by empowerment is giving power to the
communities. For instance, by forming farmers groups in selected
communities, and assisting these groups with agricultural
materials to improve their own crop production, the community
development program is assisting the farmers attain a sustainable
farming business.

A well-managed community development program will ensure ghost
towns and dying communities are not the footprint of a once
dynamic oil, gas and mining complex. A community development
program is about setting the foundation for building a new and
sustainable farming industry, one that will outlive the
geological resources of the area.

Educating and communicating to the local communities can be
done by way of talking to farmer groups and their families,
student in schools, at mosque meetings after evening prayers or
in social visits, about the company resource project.

Regional and local governments and universities should also be
included in this educating and communication process. After all,
the community, local government administrations and students have
little to no idea about project finances and international
business issues.

Companies like innovative ideas that are effective, while
minimizing company expenditures. As an example, companies may
draw on outside expertise to develop community development
programs.

For example, in Jakarta there is a medical research unit
working with the Ministry of Health. Tapping into this research
base can immediately bring support to eradicating tropical
diseases, or provide warnings of pending diseases in remote parts
of Indonesia.

In this case, the natural resource company simply supports
medical research in offering the use and comforts of their remote
but modern logistics and camps, while these government-sponsored
medical research teams seek the eradication of tropical diseases,
(malaria and dengue fever, for instance) among indigenous groups.
This is just one example of an innovative idea put into practice,
and a "win-win" solution for a community development program in
Indonesia.

Community development workers need to relax and listen to the
needs and wishes of the community, and avoid the interpretations
of what the company or third parties perceives them to be. The
company and the community can then work together to design basic
solutions to help the community attain its perceived needs and
wishes.

The final analysis: From the company perspective community
development is about attacking the social risks facing the
company's remote project site in present-day Indonesia. It is
about building company security. It is about protecting the
company's investment.

From the Indonesian perspective community development is about
helping for the common good. It is about assisting local
communities become independent and sustainable, ensuring the
communities' development and continuity long after the mineral,
oil and gas resources of the region have expired.

In Indonesia, a little bit of gotong-royong can go a long way.