Govt urged to help make firms 'socially responsible'
The Jakarta Post, Jakarta
When people living around the Tangguh oil and gas block in Papua asked David Clarkson, the executive vice president of the BP-led Tangguh LNG Plant, about what his firm could do for their children, he replied "we decided that we needed to educate them".
Apart from education, he said, the firm had conducted several community development programs -- part of its corporate social responsibility (CSR) -- such as providing clean water, public health services, housing programs for locals and supporting the conservation of mangrove swamps.
Clarkson's firm is only one of the many companies that say they apply the principles of CSR, including PT Freeport Indonesia, state oil and gas company Pertamina, cigarette maker PT HM Sampoerna, PT Coca Cola Bottling Indonesia, PT Bank Central Asia Tbk, PT Microsoft Indonesia, Nokia Mobile Phone Indonesia, PT Timah and the Astra Group.
However, Business Watch Indonesia managing director Henry Heyneardhi said that in many cases the firms that claimed they applied CSR looked the other way when violations of labor legislation and rights were perpetrated by their subsidiaries or suppliers.
"Since it is on a voluntary basis, CSR tends to be a mere public relations tool. People can see that CSR adoption by companies does not stop violations as regards their social and environmental surroundings," he said on Tuesday during a seminar held by a non-profit organization, Leadership for Environmental and Development (LEAD) Indonesia.
Many firms worldwide preferred the CSR framework of community development programs, such as providing free health services, scholarships, assistance to small and medium enterprises, and providing assistance to the victims of disaster.
Furthermore, Henry said, the government should enact legislation to encourage the emergence of an ethical investment environment, such as providing tax incentives to firms that adopted CSR and prioritizing such companies for government projects.
Senior economist-environmentalist Emil Salim urged the government to intervene so as to encourage the private sector to implement CSR to balance economic development with the public interest, including cultural and environmental conservation.
He said the government could intervene in CSR implementation by providing incentives, imposing penalties and allocating resources to less-profitable areas of public interest.
"I am not against development, but I'm against development that damages our environment and culture," he told The Jakarta Post on the sidelines of the seminar.
He suggested that foreign and local firms were not interested in investing in the country's public needs, such as public health services, housing, transportation, inter-regency roads, and parks as these were simply not profitable.
He called it a market failure, which the government could actually correct through intervention.
Such intervention could take the form of tax incentives or subsidies for companies that conserved forests, or the imposition of harsher penalties on firms prospecting in protected forest or polluting their surroundings, he said.
Furthermore, he added, if sports and culture were not profitable, the government should allocated state resources so as to encourage the private sector to support these areas.
"The government is allowing mining firms to exploit protected forests at the expense of our social and environmental interests. What is to become of us, say, in 2025? Is this the sort of development we want?" he asked.