The empowerment of local communities

The empowerment of local communities

Sudibyo M. Wiradji, The Jakarta Post, Jakarta

Community development (CD) programs have become an integral
part of the operations of oil, gas and mining companies.

The programs are developed not only to reduce the social
impact of these companies' operations, but also to empower the
residents living near their operation sites.

"By supporting and developing their livelihood, we expect
local people to have more job opportunities," said the external
relations manager of Caltex Pacific Indonesia, Edwin
Abdulmuthalib.

Caltex, a subsidiary of U.S.-based Chevron Texaco, operates in
Riau province. Its contact of work for the Rokan oil block runs
through 2021.

As of 2004, Caltex had spent over Rp 100 billion on
entrepreneurship training programs for small businesses and
cooperatives under the Business Development Institution (LPB)
initiative. The LPB was introduced in 2001.

At least 500 small business owners, including farmers, cattle
breeders, fishermen and weavers, have taken part in the LPB
initiative, Edwin said.

Local businesses have grown significantly thanks to the
training programs, and many of these businesses now provide jobs
for hundreds of locals.

"Slowly but surely, local people are expected to be self-
reliant and Caltex will play a role as the driving force," he
said

Since its operations in Riau province began in the 1950s,
Caltex has designed and implemented numerous CD projects, with
the construction of infrastructure such as roads and bridges
being the top priority in the earlier years.

In cooperation with the local government, Caltex has also
built a polytechnic college in Riau to help meet the growing
demand for graduates ready to work in the heavily industrialized
province.

Over the past five years, the United Kingdom-based Premier
Oil, which operates the Anoa oil field in the West Natuna Sea in
the Riau Islands, has designed training programs to help the
local community to learn new job skills.

Together with the West Natuna consortium, Premier Oil provides
training to residents of Matak island and surrounding areas like
the Anambas islands and Natuna. This training includes mechanics,
carpentry and sewing.

According to an agreement with the local government, the
program will eventually be turned over to the local manpower
agency, said Premier Oil vice president for general affairs Sonny
Kosasih.

Also, kindergartens have been established by several villages
close to the operation site of Premier Oil following the
establishment of the Anoa preschool by Premier Oil on the island
of Matak.

Meanwhile, mining companies like gold and copper producer PT
Freeport Indonesia and coal producer PT Adaro Indonesia have
encouraged locals to develop businesses outside of the mining
industry.

In 1996, Freeport established a partnership fund for community
development programs. Freeport and its joint venture partners
contribute 1 percent of revenue from their operations to benefit
the local community.

"Contributions to the fund in 2004 reached US$19 million.
Total contributions since the inception of the fund amount to
nearly $152 million," said Freeport senior manager for corporate
communications Siddharta Moersjid.

Some of that money has been used to finance the construction
of an ice factory and processing facility to help Kamoro
fishermen near the company's mine in Timika regency develop their
businesses.

Kamoro fishermen are given training to help them run their
businesses and export their catches.

Freeport has also developed an integrated animal husbandry and
poultry production center in the regency's lowlands to help local
businesspeople increase their income.

Freeport has also set aside funds for closure programs when
the company ends its operations in the area, which should be in
2041.

"We have set aside adequate financial resources to pay for the
decommissioning of operating assets and reclamation costs," he
said.

For PT Adaro Indonesia, it is important to ensure that
products produced by small-scale businesspeople are marketable
and able to sell. That's why the company involves the Astra
Assistance Fund Foundation (Yayasan Dana Bantuan Astra, YDBA) in
providing training in management, marketing and improving product
quality for local small-scale businesspeople.

"YDBA has experience and expertise in this subject and we can
take advantage of its network for the benefit of local small-
scale businesspeople," said Adaro Indonesia's administration
manager, Priyadi.

Adaro Indonesia operates in Tabalong and Balongan regencies in
South Kalimantan and Hulu Sungai Utara in East Kalimantan. Most
of the residents near its operational sites work on plantations,
breed cattle or produce furniture.

Priyadi said more local people had access to jobs thanks to
training programs introduced by the company three years ago.

Adaro allocated about Rp 8 billion for its CD programs for
2005.

Meanwhile, mining companies that have closed their operation
sites are responsible for the fate of local people surrounding
the area. Apart from CD programs that were implemented when the
companies were in operation, they also introduce other programs
to ensure that local people will not be adversely affected by the
closures.

PT Newmont Minahasa Raya (NMR) -- which operated a gold mine
in Ratatotok village in North Sulawesi and is currently
completing its mine closure activities there -- is developing the
businesses of residents as part of its social and economic
commitments.

Newmont's senior manager for external relations, Robert
Humberson, said in 2002 that NMR had introduced microfinance or
microcredit programs in response to capital shortages faced by
the communities of Ratatotok, Buyat, Basaang and Belang.

A lack of capital had hampered the development of local
businesses, he said.

Many local fishermen, farmers, cooperatives and enterprises
have taken advantage of the loan facility.

Humberson said the program had proven beneficial to local
people and would continue to do so in the future.

Citing an example, he said Kelompok Wanita Nelayan Damai
organization in Norgo Village, Belang, which took advantage of
the microcredit facility, was able to develop the businesses of
its members who work as fish traders.

"They have also contributed to community development by
building a kindergarten for their children," he said.