Poverty prevails despite gold deposits

Jongker Rumteh and Muninggar Sri Saraswati, Minahasa

There is not much difference between Buyat Pantai village in Minahasa, North Sulawesi and other poor villages in coastal areas across the country.

People in this village live in wooden huts, most of which have no bathrooms, clean water or electricity and most -- if not all -- residents make a living from fishing, using traditional boats and equipment. A fisherman earns between Rp 500,000 (US$55) and Rp 1 million per month, around the same as the minimum wage for workers in the province.

One fisherman explained that his family had gotten used to eating just one meal a day, if he failed to catch enough fish.

Skin diseases are common among the people, who have long lived without adequate sanitation.

Recently, some of the residents complained about swellings in certain parts of their bodies. They said they could not afford to get medication until people from outside the area offered free medication.

What makes this particularly unheralded village a bit different is its high-profile neighbor; PT Newmont Minahasa Raya (NMR), a subsidiary of the giant Newmont Mining Corporation headquartered in Colorado, the United States.

Occupying some 500,000 hectares of production forests, the firm has exploited some two million troy ounces, or 62.6 tons, of gold since its operation began in 1996. Its operational license expires this year.

Apart from the mines, there are offices and lodges on site that accommodate some 100 employees. The number of employees has gradually declined from the initial 700 as its closure draws near.

The offices and housing areas are of the same standard as most wealthy developed countries, with an uninterrupted supply of electricity and clean water as well as a fully stocked medical center. A well-equipped ambulance is on-call to take sick employees to hospitals in the provincial capital of Manado, which is around 120 kilometers away.

Handled by a well-known caterer, the canteen inside the mining site provides restaurant meals, with Western food like steak or pasta.

Because it is a close neighbor to the impoverished village, the company spends some US$330,000 a year for community development, PT NMR external relations manager David Sompie said.

The company, he said, had built reservoirs and held training seminars to introduce new skills to the local people. They have also offered small-scale loans for them either for fishing or other purposes.

The company has also constructed infrastructure like roads, public toilets and bathing areas as well as garbage disposal sites. It still plans to help the village get electricity, David said.

"But, improving the condition of the people is not as easy as turning up your hand," he said.

David added that the company has contributed direct and indirect benefits to Indonesia to the tune of $561 million since 1994.

Several residents living nearby Buyat Bay, however, told The Jakarta Post that the presence of the company brings little benefit to them.

"Indeed, the road is better now than before, but the fish are vanishing. It's probably because they dispose of their waste in the bay," claimed Chris, a fisherman.

North Sulawesi administration officials refused to reveal the budget allocations for development in the area around Buyat Bay.

H.D. Waworuntu, the secretary of South Minahasa regency, where the bay is located, said his administration had developed the area.

"I don't remember the budgeted amount but we have allocated it. I think the area only has a transportation shortage," he told The Jakarta Post.

Theoretically, 60 percent of the state revenue from companies in the natural resource exploitation business must go to the regency where the sites are situated, 20 percent to the provincial administration and another 20 to the central government.

Economist Drajad Wibowo suggested that the government adjust its policies involving natural resource businesses like mining or plantations.

The country already had a heap of legislation related to business, many of which were overlapping or contradictory, he said.

Drajad said the laws and regulations, however, did not necessarily address the issue of having environmentally friendly companies as they had to invest a lot to start their business, such as building infrastructure to get to the sites.

"Therefore, no money is left to restore the environment or help with development of poor villages," he said.

He urged the government to be transparent in allocating the revenue that was pouring in from such companies.

"Otherwise, the classic story of poor villages next to rich mining companies will continue," Drajad of the Institute for Development of Economics and Finance (Indef) said.