Competition and Cooperation in Social and Political Sciences

Proceedings of the Asia-Pacific Research in Social Sciences and Humanities, Depok, Indonesia, November 7-9, 2016: Topics in Social and Political Sciences

Isbandi Rukminto Adi, Rochman Achwan, Isbandi Rukminto Adi, Rochman Achwan

• Publisher: CRC Press
• Year: 2017
• Edition: 1
• eBook ISBN:
  9781351819145
• Topic: Social Sciences
• Subtopic: Civil Engineering
• Index: Social Sciences

The book contains essays on current issues in Social and Political Sciences, such as the issues of governance and social order; social development and community development; global challenges and inequality; civil society and social movement; IT-based community and social transformation; poverty alleviation and corporate social responsibility; and gender issues. Asia and the Pacifi c are the particular regions that the conference focuses on as they have become new centers of social and political development. Therefore, this book covers areas that have been traditionally known as the social and political areas such as communication studies, political studies, governance studies, criminology, sociology, social welfare, anthropology and international relations.

Contibutors

The policy of community empowerment in implementing Corporate Social Responsibility (CSR) of a coal mining company (a case study of CSR implementation by PT BARA as a state-owned company)

R. Resnawaty & I.R. Adi

Department of Social Welfare, Faculty of Social and Political Sciences, Universitas Padjadjaran, Bandung, Indonesia

ABSTRACT: This paper discusses the discrepancy between a coal mining company and society in Indonesia. One of the efforts to decrease that discrepancy is through CSR activities, which aim to empower and develop society. PT BARA, as a state-owned enterprise, has both internal and external policies for the implementation of CSR. As a government company, PT BARA links CSR with various policies (laws, regulation ministers, ministerial decrees, etc.). PT BARA aims to contribute to the escalation of society’s quality of life through their CSR programmes. To achieve that, PT BARA has a policy of implementing CSR through the Partnership and Environmental Development Programme, in accordance with the provisions of the regulations of the Minister of State Enterprises. As a state-owned enterprise, PT BARA then becomes a mainstay of the local government in the implementation of regional development. Therefore, PT BARA’s policies on CSR are followed by various dynamics on achieving their goals in order to increase the quality of life of the community.

1 BUSINESS SECTOR IN COAL MINING IN INDONESIA

The complexities in the mining industry cover several concerns, which are not only related to the production capacity of the company, technology, capital sufficiency and mineral supply availability, but also include the relationship between the mining company and the surrounding community. Most of the time, the existence of mining companies brings up several issues regarding the surrounding area, especially in relation to the disparity of wealth between the two. Mining employers are supposedly concerned and are expected to be responsible for the well-being of the surrounding area, both for the people and the natural environment. The company’s concern towards the surrounding community is reflected through various CSR programme initiatives.

Every company has certain goals when conducting CSR activities. At mining companies, CSR is aimed at securing the mining operational activities and achieving targets from mining exploration. To achieve these goals, mining companies have both internal and external policies. The internal policy is a range of strategies that the company uses to encourage the achievement of the vision, mission and goals of CSR. Meanwhile, the external policy towards the community is a foundation or a guideline, which rules how the entire company’s components should be conducted and should act towards the implementation of CSR.

PT BARA (not the real name), located in Muara Enim Regency, South Sumatera Province, is a state-owned mining enterprise (BUMN) that certainly has both internal and external policies for conducting their CSR programme. As a state-owned company, PT BARA’s CSR implementation is also regulated under various central government regulations, which makes it more complex compared to that of private mining companies. Therefore, besides aiming to support the mining operational activities, it also needs to empower the surrounding community.

2 CSR CONDUCT MOTIVES

A company’s motives in administrating CSR will affect the form of both the company’s internal and external policies in conducting CSR. An internal policy is a policy made by the company that is related to those efforts in achieving CSR goals that have been applied by the company. Bowie (1990) states that a company is the reflection of capitalist behaviour, which collects as much profit as it can. The steps taken in the implementation of CSR are the reflection of moral concerns towards society. Therefore, most often, CSR is conducted through charity or philanthropic activities towards clients, consumers and society.

Appropriate to what Bowie said, PT BARA is reflecting of capitalist behaviour also. It still constitutes a profit-oriented. Thus, the economic motive becomes the main motive when formulating CSR policies. Therefore, in the end, the implementation of CSR is an effort to reach a previously arranged goal, namely achieving maximum profits. However, besides the economic motive for conducting CSR, PT BARA also has the goal of making a contribution towards the improvement of the quality of life of the community. By increasing people’s welfare, this will have positive effects towards the company’s exploration activities, with the hope of being free from any strike protests that ask for welfare, job vacancies, and land compensation to the company. From investigating these matters, it seems the internal policies made by PT BARA are based on the company’s interests. This fact is related to the statement by Prayogo (2011), that in order to reduce external pressure and to consider business safety, community development (comdev) programmes are undertaken to maintain a good relationship with the local community, to reduce business risks and to smooth the mining activity. The implementation of the external policy of PT BARA on CSR activities is manifested through “Program Kemitraan dan Bina Lingkungan/PKBL” (Partnership and Environment Development Programme). This programme supports the manifestation of the vision and missions of PT BARA. In this regard, PT BARA has a vision to achieve a prosperous, self-reliant and environmentally friendly community. Meanwhile the company’s missions are (1) to support government programmes to improve the economic, social and public education of the community and to preserve the environment; (2) to empower local potential and to expand the market in order to provide more job opportunities for the company’s surrounding community; and (3) to encourage public participation to support the company’s long-term plans and post-mining development.

The company’s internal policy is related to budgeting, staff organisation and programme monitoring and evaluation. In terms of budgeting, PT BARA has allocated 4% of its profits for conducting community development and empowerment programmes. Such a large fund has been issued by the company in order to achieve the company’s vision and missions to increase the community’s welfare. The amount of 4% issued by the company is twice as big as the percentage mandated in the Regulation of the Indonesian Minister of State-Owned Enterprises Number. Per-05/2007 on the amount of CSR funding taken from net income.

The chairman of PT BARA has a commitment to keep increasing the quality of life of the community. The allocated fund has been increasing each year, along with the increase of PT BARA’s profit. However, it was found that the large budget has not yet been able to bring more empowerment to the society. This issue could be explained by observing how the allocated CSR budget has been utilised.

Until 2012, the budget for the Partnership Programme had been around 2%; meanwhile for the Environment Development Programme it was around 2% of the total company budget. However, in 2013, there was a policy change resulting in a change to the budget for the Partnership Programme to only 1%, while a 3% proportion was allocated to the Environment Development Programme. This policy shows that PT BARA focuses on programmes related to the processes of developing, improving and constructing infrastructures. In relation to the policy change on budget allocation, change might occur when the company gives big support to certain development plans in the regency. On one hand, this shows that the company has a commitment to conducting CSR based on the development goals of the surrounding region, such as constructing a sports centre or assisting with the construction of school buildings, as well as constructing infrastructures that require a large budget. However, on the other hand, the budget allocation is less likely to directly show the company’s alignment towards society. The development programmes that become the focus of the CSR programme are those that have not yet been covered entirely by the government, which are usually related to the construction of physical infrastructures that only have a small impact on society. In other words, most of the programmes are still top-down in nature.

Table 1. PT BARA CSR fund allocation from 2010 to 2012.

	(in million Rupiah)
Programme	2010	2011	2012	2013
Partnership	67.730	98.940	125.780	41.700
Community development	26.110	74.090	90.090	113.970

The budgeting policy adopted by PT BARA falls into the category of corporate philanthropy, which is a traditional form of CSR. The corporate philanthropy activity conducted by the company is a direct contribution by the company, as a form of charity, towards the resolution of issues faced by society (Saidi & Abidin, 2004; Kottler, 2005). This is one of the reasons why the CSR programmes have not yet effectively empowered the community.

3 THE POLICY OF EMPOWERING THE MICRO, SMALL, MEDIUM ENTERPRISES (SMES) AND DEVELOPING THE LOCAL ECONOMY THROUGH THE PARTNERSHIP PROGRAMME

The Partnership Programme was initiated in the middle of 1989 by the Indonesian Ministry of Finance through Ministerial Decision No. 1232/KMK.013/1989. This regulation stipulates that a Partnership Programme is conducted between one big company and small enterprises under the principle of assisting, supporting and protecting the small enterprises. Ideally, there should be an equal standing in partnership relations, so there will be neither intimidation by the bigger enterprises nor dependency from the smaller enterprises. However, in reality, the Partnership Programme conducted by PT BARA is simply a programme of providing capital assistance, so that the external policy made by the company is merely a regulation on the mechanism of giving aid to small enterprises. This results in a superior-subordinate relationship pattern between PT BARA and its smaller enterprise partners.

The Partnership Programme conducted by PT BARA has been focusing on the efforts to increase the capacity of SMEs so that they will become strong and independent enterprises. The activities of the programme constitute the provision of capital assistance through soft loans to small enterprises and grants in the form of training and empowerment to improve the local economy. Basically, the Partnership Programme is an effort by PT BARA to enhance the welfare of society; it is expected that the programme will create new job opportunities for the community. From the perspective of community development, the efforts to improve the welfare of society constitutes the application of economic development in responding to the crisis or the economic issues faced by society. Such effort is carried out by finding out alternative new enterprises for them, revitalising and increasing their quality of life (Ife, 2012, p. 221).

The Partnership Programme is aimed at the local SMEs in order to increase their capacity through capital assistance. Meanwhile, grants, which are assistance that does not need to be returned, constitute a form of conservative economic development. PT BARA realises that if CSR is not conducted, there will be many negative impacts that can disturb the relationship between the company and the community. Therefore, the CSR programme is an integral part of the efforts to achieve the company’s goals and, thus, various regulations to control the implementation of the Partnership Programme are made.

Basically, the Partnership Programme can be classified into two categories, i.e. the capital assistance programme and the grants programme. The capital assistance programme is a revolving fund programme that can be utilised by small enterprises, especially those that cannot access loan capital services from banks. However, at the beginning of the programme, small enterprises get capital assistance that is bound by a special loan agreement. Therefore, they consider the funding to be pure assistance that does not need to be returned. This results in a number of cases of non-performing loans in the Partnership Programme, which is still running now.

In 2012, PT BARA co-operated with a bank for fund distribution, especially for the revolving fund programme. A certain prerequisite for partner candidates was added, namely the obligation to have ‘collateral’, to separate the small enterprises that have the capacity to return the loan and the enterprises that do not have the capacity to return the loan (non-performing loans). The collateral is one of the factors determining whether or not the small enterprises are eligible to receive a loan. This policy is actually a step towards making the programme sustainable and keeping it revolving. The use of collateral will encourage small enterprises to run the...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Organizing committee
• Keynote speech
• Contibutors
• Author index