Improving the welfare of local communities

Improving the welfare of local communities

Sudibyo M. Wiradji, The Jakarta Post, Jakarta

Corporate Social Responsibility (CSR) has started to gain
ground in Indonesia with more companies seeing social
accountability as a vital component of management.

Although many CSR practices are in fact efforts to appease
clients, the trend toward social accountability has been quite
promising.

The CSR concept has for years been adopted by major
multinational companies as an integral part of their management.
Financial performance is no longer the sole concern of
stakeholders, such as investors, consumers, employees and nearby
communities.

Companies are now expected to participate in non-financial
fields such as human rights, environmental protection and
community development.

At present, social accountability also determines the survival
of companies. Forestry related companies or palm oil plantations,
which operate in conservation areas, or are involved in illegal
logging, could be boycotted by foreign buyers.

The fall of former dictator Soeharto in 1998 and the birth of
democracy in the country has resulted in periods of unrest.
Companies, particularly those involved in forestry, oil
exploration and mining activities, are subject to allegations
that they are stealing land or natural resources from locals.

Oil and mining companies, aware of their precarious position
in the community, are adopting a new approach in formulating
their community development (CD) programs.

Companies such as PT Caltex Pacific Indonesia (CPI), PT
Freeport Indonesia and PT Newmont Nusa Tenggara have demonstrated
strong commitment to their CD programs. They have not only
provided assistance, in the form of education or health services,
but are actively empowering the local economy.

"More villagers can now access health services," said the
Riau-based communications manager of Caltex Harry Bustaman. In
addition, Caltex also provides medical treatment for children
living near the company's oil operational sites

"To date, as many as 240 kids with harelips have undergone
surgery under Caltex's free treatment program," he said.

Caltex allocates some Rp 220 million (About US$25,880) each
year for medical services, including providing medicines for
various diseases, immunization for babies, supplementary food to
boost the nutrition of pregnant women and children under five,
and health education.

Companies also see environmental conservation as a critical
issue, particularly reclamation and reforestation. "Reclamation
is a priority for our company. Our involvement in reclamation is
written into our contracts," Harry said.

In its efforts to improve the quality of local human
resources, for instance, Freeport -- which is based in Timika,
Irian Jaya (Papua) -- provides various training and educational
programs. The hope is that more local people will be technically
able to work for the company in the future. Leadership and
administration training is also offered.

In 1996, the year in which the program was first launched,
less than 50 local Papuans were employed by the gold-and-copper
giant. The number of locals employed by Freeport continues to
increase. "By the end of 2002, the number of jobs provided was
2,000 and Freeport had surpassed its target," said Freeport's
senior manager for corporate communications Siddharta Moersjid.

Since 1996, Freeport and its joint-venture partners have
contributed one percent of gross revenues to community
development programs. The funds are channeled through the
Freeport Partnership Fund for Community Development, which was
previously known as the Freeport Fund for Irian Jaya Development.

"Contributions to the fund in 2003 reached US$21.5 million,
total contributions since inception of the fund amount to nearly
$133 million," said Siddharta.

Freeport spent a total of $93 million on sustainable
development programs in the vicinity of operations in 2003,
including $50 million on environmental management and $41 million
on social development.

In addition to its strong commitment to managing the impact of
its mineral waste as the result of mining activities, Freeport is
also seriously engaged in the government's mandatory reclamation
efforts in the areas affected by the mining operation.

Siddharta said that as of 2002, Freeport has managed to
regreen around 47 hectares of mining sites. "As many as 59 kinds
of trees have been planted in these areas on a trial basis. Of
that number, 34 are suitable for our regreening projects," he
said.

"Based on extensive reclamation studies and actual experience,
tailings-deposition areas can be readily re-vegetated with native
and agricultural plants once mining is completed," he said.

Meanwhile, Newmont -- which operates a massive gold-and-copper
mine in Batu Hijau, Sumbawa, West Nusa Tenggara -- is gearing up
for the implementation of a number of CSR projects this year.

PT NNT's chairman and executive officer Wayne W. Murdy said
that the company is committed to carrying out its Social
Responsibility Policy considering that "environmental, health and
safety issues can affect the communities where we operate."

The company's CSR programs are aimed at directing the
community toward self-sufficiency. Programs include improving
health through training and capacity building; improving the
quality of education through a combination of school-based
management, library donations, use of book mobiles, teacher
training, and literacy programs; and awarding over 2408
scholarships up until 2003.

Efforts are now underway by the company to improve the income
and the quality of life of farming and fishing groups through the
use of appropriate technology, village laboratories and several
irrigation systems that will provide irrigation for over 700
hectares and benefit over 350 families, according to Murdy.

"We will continue our internationally recognized training
programs and safety programs," he said.

NNT's previous varied CSR projects have been successfully
accomplished thanks to the company's active consultation,
collaboration and partnership with the local community, as well
as other stakeholders, Murdy said.

One such project is local business development (LBD) designed
to promote local business as an engine for sustained economic
growth. Areas of emphasis include micro-finance and
business-skills training.