Corporate responsibility towards community
Corporate responsibility towards community
Hendarsyah Tarmizi
The Jakarta Post
"We have done a lot of things to help the community but only
the bad things appear in the press," said a public relations
manager of a mining giant when asked about the company's
community development (CD) program.
Such a complaint is common among mining, oil and gas company
PR officials, and they are right. Most of the news about mining
concerns environmental damage and conflicts with locals.
Mining, oil and gas companies, which mostly operate in rural
areas, are more concerned about community development than are
companies outside the sector. They have to establish good
relations with village people, who are now more aware of their
rights.
Since the fall of authoritarian leader Soeharto in mid-1998,
protests against mining or oil companies have become common in
mineral-rich provinces such as Kalimantan, Sumatra and Sulawesi.
During Soeharto's era, protesting against large companies,
which mostly had strong backing from the local government and the
army, could risk being put into a jail. Sometimes, the
consequences could be worse.
It is understandable if distressed local people are more vocal
nowadays. They are now free to say "no" to things they don't
like. But the locals sometimes go too far, and are often
unrealistic in their demands.
Forcing a company to employ all the unemployed living near the
mining site is one such unrealistic demand. The locals also often
demand additional compensation for land used for mining years ago
on the grounds that they were forced to sell their land at low
prices under duress.
At present, most intimidation comes from the locals. The
community leaders often mobilize the residents to blockade mining
areas or oil wells if their demands are not met.
The resentment can be stronger, as some mining firms have
failed to implement rehabilitation projects after their contracts
have ended.
The stereotype that mining operations come purely to "steal"
natural resources and leave behind a wasteland surrounded by
devastated communities can actually occur.
Could CD programs eliminate conflicts between mining companies
and local inhabitants? The answer is yes.
But community development should be considered an integral
part of a mining operation, which should be pursued by all mining
companies whether at a time of conflict or peace. It should not
be used at all as a means of covering up local opposition to a
mining operation.
Former director general of general mining at the Ministry of
Energy and Mineral Resources Surna Tjahya acknowledges that,
besides uncertainty over the status of land used by mine
operators, conflicts can also result from their lack of attention
to the welfare of locals.
"A good CD program will help reduce the locals' resentment, as
long as it is designed and implemented in line with community
needs," Surna, who is now the head of the ministry's human
resource training center, told The Jakarta Post.
But he said that the source of conflicts was not merely due to
poor CD programs but more due to uncertainties over the status of
land used by mining companies.
State land is often disputed by local inhabitants, who claim
that the properties were owned by their ancestors, who had
obtained the undeveloped land from the Dutch government under hak
ulayat (traditional land rights).
He believes that the public resentment is part of the "reform
euphoria", which will eventually end with the return of proper
legal enforcement.
Oil, gas and mining companies in the country, especially the
multinationals, have, in fact, possessed a strong awareness of
their need to share their wealth with the locals.
A statement made by former president of Rio Tinto Indonesia
Noke Kiroyan at a recent mining seminar is quite inspiring.
He said the responsibility towards community development is a
working contract between mining companies with the community that
has permitted them to enter and to commence operations.
"The operations of mining companies may have fulfilled all
legal requirements, but without acceptance by the community the
fulfillment is only partial as it lacks legitimacy. Acceptance
can be achieved only if we are worthy of being trusted," said
Kiroyan, who is now president of the East Kalimantan-based coal
producer PT Kaltim Prima Coal.
In fact, most natural resources-based companies, such as
Caltex Pacific Indonesia (CPI), Newmont and Gulf Indonesia, also
share the view on the need to promote the welfare of the people
surrounding their mining areas.
Caltex, which operates massive oil fields in Riau, spends
between US$3.5 million to $4 million per year in pursuing its
CD programs.
Priority is placed on education, health and income generation,
in addition to the development of infrastructure, such as roads
and bridges.
"CPI is currently building a polytechnic school to prepare the
locals to take a lead in the company's oil operations," CPI's
Vice President Renville Almatsier said.
The school, which will cost the company about Rp 18.5 billion
($1.7 million) to build, will open in September this year. The
funds are not part of the budget allocated for the CD program.
Renville said that the company was also active in providing
financial aid to improve the quality of local technical school
universities so that local job seekers who were not yet qualified
to work in the oil company could improve their knowledge and
skills at such schools.
Vice president for corporate strategic development and
government relations at Gulf Indonesia Resources S.Santosa said
that community development was an integral part of a company's
operations.
The formal contribution, such as taxes and royalties, was not
enough on its own, he added. A company, he said, had also to be
seen to be useful and beneficial for residents living in the
vicinity.
"If we succeed in running businesses there, the villages
should have something too."
"We need their support, and they need us," Santosa said. "If,
for instance, the surrounding area where we work still has many
unemployed people, we cannot do business properly and safely.
Keep in mind that unemployment generates a lot of social tension
and other problems, which in the end will create disorder," he
explained.
For that reason, major companies should develop genuine
relations with local people, intellectuals, authorities and
community leaders. "We have to be seen to be a good corporate
citizen in the area."
One of the problems many companies have faced in implementing
CD programs is assessing what assistance the villagers really
need.
"This is the most difficult part, so we often ask local
university researchers to help us," Santosa added.
Many local residents and mining observers have often described
mining company community development as only good in theory.
"It is just a token gesture, "NATO", or "no action, talk
only," a mining observer said, describing how the local residents
near a coal mining company should stage a demonstration only to
get what the company had promised to give.
Jakarta-based mining advocacy network JATAM has also
highlighted some reservations about CD programs carried out by
the country's mining companies.
Chalid Muhammad, the coordinator of the advocacy group, said
that most of the CD programs of the mining companies were
formulated without the involvement of local residents.
"That's why many CD programs have failed to achieve their goal
in promoting the well-being of the locals," he told the Post.
The concept of community development should, therefore, be
streamlined to allow the participation of the locals in deciding
what kinds of programs can suit their needs, he added.
Community development programs that only favor the companies
often generate conflict among residents, instead of benefiting
them, he said.
"Those who benefit from the program and those who don't often
fight each other," he added.
Worse still, according to him, many CD programs were often
used only to eliminate the opposition against mining companies,
rather than being designed as long-term programs to promote the
welfare of the locals, who mostly remained in poverty.