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.