Gaining mutual trust through community development

Gaining mutual trust through community development

Several oil and gas companies operating in remote areas in
Indonesia have given assurances regarding their commitment to
assisting the government to improve the welfare of the people
through community development programs.

"We always involve the stakeholders in designing and
implementing our community development projects because it is the
local people who know exactly what they really need," said US-
based oil company PT Caltex Pacific Indonesia's (CPI) corporate
communications manager Harry Bustaman.

Caltex and several other oil and gas companies, including BP
Indonesia, PT Exspan Nusantara, state-owned PT Perusahaan Gas
Negara (PGN) and PT Unocal Indonesia consider partnerships in
carrying out community development projects the key to success of
their programs because through partnership all the parties
involved can gain mutual trust.

For some long-term projects, community involvement starts with
activities at the planning stage, such as conducting surveys, and
ensuring that the planned programs can run effectively and meet
the right targets.

Caltex, for instance, involved several students of the Bandung
Institute of Technology (ITB) and Riau University (UNRI) in
conducting a survey on the livelihoods of people living in
densely-packed slum areas in Meranti Pandak village, located not
far from Caltex's operating site before the company started its
Meranti Pandak housing project.

Based on the survey, Caltex renovated many houses there and
transformed each of them into two-story homes after learning that
most of the people in the village earned additional income by
renting out rooms. "Now, they (the householders) can use their
homes not only as their residences but also for earning a
living," he said.

Even though natural resource-based companies all are
determined to grow together with local communities, they differ
in the CD activities, depending on where the interests of the
respective company and the community interact.

Since its operations in Riau province began in the 1950s,
Caltex has designed and implemented lots of CD projects, with the
construction of schools, roads and bridges being the top priority
in the earlier years of its presence. "Local people's need for a
senior high school was met by Caltex in 1956 when it built the
Pekanbaru Senior High School (SMA)," Harry of Caltex said.

In cooperation with the local administration, Caltex has also
built a polytechnic college in Riau to help produce graduates who
are ready to work. "Since Riau has evolved into an industrial
area, the demand for graduates who are ready to work has been on
the rise," he noted.

Other Caltex's projects that benefit local people include
providing training on agriculture and agribusiness, cattle
breeding, fishing and weaving. "Thus, by raising local people's
standards of living, including their education, health and
welfare levels through CD programs, Caltex gains the trust of the
local community," he added.

Like Caltex, PGN and PT Unocal Indonesia also see the
involvement of stakeholders and local administrations as playing
an important role in running CD projects successfully.

PGN's community development program dates back to 1996 when
the company started to construct a natural gas transmission
pipeline in Grissik, South Sumatera.

The company faces a great challenge as it has to serve lots of
villages affected by its pipelines, which run for many
kilometers. For instance, its Grissik-Sakernan-Batam-Singapore
international gas transmission pipeline, which was completed in
August of this year, is 470 kilometers in length and affects
nearly 50 villages.

Despite the challenge, the PGN community development team has
managed to run its programs well. The success of its programs is
primarily due to the fact that the company allows representatives
of the local community in each of the affected village to propose
programs based on their real needs, according to PGN's senior
community development advisor Liza Soenar Windarti.

Liza said that PGN provides funds or grants to finance the
proposed projects. However, the affected villages are required to
set up teams before starting out on any PGN-financed programs.

"These teams are responsible for managing the funds for the
community project," she said.

The team members are entitled to be paid monthly honoraria in
return for their time and service. "And this has turned out to be
an effective means of implementing projects financed by PGN," she
said, adding that six-months was the average length of a
community development project.

Among the public facilities constructed under PGN's CD
programs in different villages are irrigation networks, schools,
mosques, village auditoriums and public health centers.

In its efforts to strengthen the economies of local
communities, PGN also provides small enterprises in the affected
villages with access to low-interest loans through its small
enterprise and cooperatives development (PUKK) program.

Liza said that many people running small businesses had taken
advantage of these loans since 1995 to develop their businesses.
As of 2003, PGN has channeled some Rp 41 billion (about US$4.8
million) in loans, she said.

People (villagers) from the affected villages voluntarily take
part in guarding the constructed pipelines thanks to the CD
programs, Liza remarked.

Meanwhile, PT Unocal Indonesia said that its corporate social
responsibility (CSR) programs focused on education, health and
the environment because, based on field studies, these three
areas were the ones that needed to be prioritized.

"With the CSR program in place since 1999, we want to become
part of the local community in areas where we operate and wish to
raise the welfare of the community in a broader sense," said PT
Unocal Indonesia's corporate communication and corporate
responsibility manager Tatang Sutanto.

Therefore, contributions to the community are not confined to
the funding arena but include programs with long-term effects
that are beneficial to local communities, such as providing
training in relevant fields like agriculture, cattle breeding and
fishing, he said.

"The programs have been successful due to our partnerships
with all those involved, such as local administrations, non-
governmental organizations (NGOs) and community empowerment
organizations (LPM)," he noted.