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.