Resources management sharing

By Ryad Areshman Chairil

MELBOURNE (JP): The declaration by Exxon Mobil to temporarily halt its gas production facilities in Aceh was the latest blow to the Indonesian resources industry after a couple others including from PT Caltex, PT Newmont, PT Freeport, Indo Muro Kencana, PT Kaltim Prima Coal and PT Kelian Equatorial Mining.

At a time when the country is experiencing its worst economic crisis, the mining industry is blamed as the cause of most of the social problems in Indonesia. The industry is said to have failed to reach a proper social economic balance between the state, developers and local communities.

Even developed countries with modern laws with regards to resources have not been able to solve this problem by reaching a real win-win solution. Their efforts are focused on how to minimize problems and avoid potentially lifelong conflicts. One crucial factor here is the involvement of local people.

Experts have said that Indonesian resources development had had little local involvement and therefore failed to recognize locals' claim to the land.

But this negligence has not been without reason. There has always been a lack of clarity between state laws and the customary rights on land status. One reason for this is the interpretation of Article 33 of the 1945 Constitution, with which the state has always claimed that they hold the sole right to control all land including customary land -- for the benefit of the people.

The phrase "to control" has been the source of years of debate. The interpretation has gone too far, having been manipulated by high ranking officials to protect their own political and business interests.

"Controlling" was never used as intended -- to achieve justice and equality. Benefits of production that were supposed to be equally distributed were controlled by the state and allocated to high officials and their cronies. Later, rulers themselves went into business. The rich became richer and the poor became poorer.

Another reason for the lack of clarity over customary rights of land is their weak position under positive law. If legislation of land is based on this right, hak ulayat, it would contradict the 1945 Constitution and the state ideology Pancasila. So cases involving this right did not meet arbitration procedures under the law.

Unfortunately, the state reinterpreted the rights of local people as the right to compensation from losing their land -- without the people being able to effectively stand up for their rights.

However what has not been realized here is that in the transfer of land, from locals to developers in the form of mining rights, the hak ulayat attached to the land is not automatically transferred or lost. Locals still believe they have every right to practice their beliefs on the land.

Therefore there would be two rights on one plot of land: mining rights and customary rights. Both developers and locals will keep claiming their respective rights.

In search of a more harmonious relationship, the state should revise its decision-making process with regard to its resources. Firstly, it should be realized that future decisions in this area would be impossible without acknowledging the equal rights of locals and nonlocals to the land.

Locals do not hate mining activities; they just need to be respected in the form of participation in every decision. Thus it would be good to have a public hearing prior to the development of mining resources. Developed countries have recognized the importance of such public hearings.

Through public hearings, developers would be challenged to not only be commercially successful, but also socially responsible. This mechanism opens an opportunity to create win-win solutions, thus improving relations and cooperation between the mining firm and community, which can lead to higher productivity, lower production costs and a better investment.

Public hearings are positive media to explain details of a development program and possible impact during the activities. With this participation, the problem of tokenism is prevented -- where people are consulted or informed about the decision but with little power to affect it. Public hearings help to encourage all stakeholders to cooperate and share the management and responsibility of resources development.

However, such hearings must reach a consensus. It should be negotiated in good faith where each party is required to identify their interests and concerns, and determine which, and to what degree, they are prepared to compromise.

A bargain in good faith requires that the claims made should be honest, with an open mind and a genuine desire to reach agreement, as opposed to simply adopting a rigid, predetermined position without any preparedness to shift.

All discussion materials for a public hearing should be prepared, which would lead to a legitimate and accountable status before the stakeholders if a dispute occurs.

Secondly, the state should consider creating a regulation that can recognize the interest of customary rights relating to resources development or other industries. A "Native Title Act" should be formulated like those in Australia and Canada.

These are acts recognizing the rule of traditional law and customs of the title holders, with reference to international standards for protection of universal human rights and fundamental freedom. But at the same time the acts are not rigid laws because they are open for negotiation in good faith.

For example the Native Title in Australia has established a Native Title Tribunal. The tribunal is not a court. It is an institution to receive the application of native titles, to identify parties to the application, to assist the applicants and parties to reach a negotiated outcome as well as to accept and register the claim.

Local people are encouraged to lodge their claims of land to the tribunal to have it registered and be recognized. Failing to do so will result in losing the land. The tribunal has the right to reject inappropriate claims.

If both public hearings and such native title acts are applied, they would hopefully provide more certainty for the resources development industry, while locals would also feel respected.

This is a challenge in the era of regional governance.

The writer is studying for his PhD at the Center for Energy and Resources Law, the University of Melbourne in Australia.