Your SlideShare is downloading. ×
0
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners - The Strategy of Obtaining Consents from Local Partner, Local Government and Central Government

461

Published on

Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners delivered the presentation at IMM’s 2014 Kalimantan Coal Conference. …

Noke Kiroyan, Chief Consultant and Anang Noor, Principal Consultant from Kiroyan Partners delivered the presentation at IMM’s 2014 Kalimantan Coal Conference.

The IMM’s Kalimantan Coal Conference brings together 120+ senior executives, decision makers from government, mining, infrastructure, shipping and supply sectors to discuss new policies and strategies for tackling the current and emerging issues within the burgeoning Kalimantan coal sector.

For more information about the event, please visit: http://www.immevents.com/kalicoalconference13

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
461
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
27
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. THE STRATEGY OF OBTAINING CONSENTS FROM LOCAL PARTNER, LOCAL GOVERNMENT AND CENTRAL GOVERNMENT Noke Kiroyan, Chief Consultant Anang Noor, PrincipalConsultant September 5, 2013 © 2013 KIROYAN PARTNERS. All rights reserved.
  • 2. OUR TOPICS TODAY Indonesia – the Big Picture The Ideology The Regulatory Framework and Some Issues Political Risk Who are Our Stakeholders? Engaging Stakeholders to Obtain Their Consents The Role of Community Development EngagingVarious Levels of Government Local Business Partners A Success Story 2
  • 3. THE BIG PICTURE
  • 4. 4 THE WORLD’S LARGEST ARCHIPELAGO SUMATRA JAVA KALIMANTAN PAPUA SULAWESI BALI WEST NUSA TENGGARA EAST NUSA TENGGARA MALUKU NORTH MALUKU SULAWESI Island • Population 17 million • GDRP US$2,900 • Land area 174,600 km2 JAVA Island • Population 136 million • GDRP US$2,700 • Land area 128,300 km2 SUMATRA Island • Population 50 million • GDRP US$2,900 • Land area 473,000 km2 KALIMANTAN Island • Population 14 million • GDRP US$4,000 • Land area 615,300 km2 PAPUA Island • Population 3.6 million • GDRP US$2,900/1,900 • Land area 420,540 km2 • Population: 237 million • 17,500 islands • Land area:1.9 million km2 (the size of Mexico, almost 2/3 of India) • 300 ethnic groups All population figures based on 2010 census.
  • 5. 5 CENTER OF THE INDONESIAN UNIVERSE • Home to 137 million people, thereof approx. 90 million Javanese (largest ethnic group in Southeast Asia). • Size: 128,300 km2 (1/2 the size of New Zealand). • 1000-km northern route (groote postweg - inset) constructed byGovernor-General Herman Willem Daendels in 1808-1810 to prepare against British invasion to date is the main artery linking west to east. The main stretch between Jakarta-Surabaya, the two largest cities in Indonesia, currently accounts for almost 25% of Indonesia’s economy. • Center of political power and economy since colonial times, Javanese culture is dominant, excessively so during President Soeharto’s 32-year reign.
  • 6. THE ARCHIPELAGO ECONOMY: UNLEASHING INDONESIA’S POTENTIAL IndonesiaToday • 16th-largest economy in the world • 45 million members of the consuming class • 53% of the population in cities producing 74% of GDP • 55 million skilled workers in the Indonesian Economy • US$0.5trillion market opportunity in consumerservices, agriculture and fisheries, resources, and education …..and in 2030 • 7th-largest economy in the world • 135 million members of the consuming class • 71% of the population in cities producing 86% of GDP • 113 million skilled workers needed • US$1.8trillion market opportunity in consumerservices, agriculture and fisheries, resources, and education 6“The Archipelago Economy:Unleashing Indonesia’s Potential – ExecutiveSummary”, McKinsey Global Institute, September 2012.
  • 7. MISPERCEPTIONS ABOUT INDONESIAN ECONOMIC PERFORMANCE The Indonesian economy has performed strongly over the past decade and is more diverse and stable than many realize. Indonesia had the lowest volatility in economic growth compared to OECD and BRIC countries. Another misperception is that Indonesia’s economic growth centers on Jakarta. The fastest growing urban centers are large and mid-sized cities with more than 2 million people, incl. Medan, Bandung, Bogor and Surabaya. Indonesia is not an Asian manufacturing exporter driven by its growing workforce or a commodity exporter driven by its natural resources. The main drivers of growth are domestic consumption and services. The majority of Indonesia’s productivity gain has come not from a shift of workers from lower-productivity agriculture into more productive sectors, but from productivity improvement within sectors and not at the expense of employment. 7“The Archipelago Economy:Unleashing Indonesia’s Potential – ExecutiveSummary”, McKinsey Global Institute, September 2012.
  • 8. THE IDEOLOGY
  • 9. 9 NATIONAL POLICY MAKING PROCESS POLITICAL WILL GOAL: GOOD OF COMMUNITY POLITICAL ATTITUDE GOVERNMENTS POLICIESAND STRATEGIES “Negotiating Mining Agreements: Past, Present and FutureTrends”, Danièle Barberis, 1998.
  • 10. ARTICLE 33 OF INDONESIAN CONSTITUTION The economy shall be organized as a common endeavor based upon the principles of the family system. Sectors of production that are important for the country and affect the life of the People shall be controlled by the State. The land, the waters and the natural riches contained therein shall be controlled by the State and exploited to the greatest benefit of the people. 10
  • 11. YEAR ERA POLITICALWILL 1945-1950 Revolution No, fighting a war 1950-1957 Proto-Democracy No, pressing concerns with nationhood 1957-1966 Guided Democracy No! 1966-1998 NewOrder Yes! 1998-2005 Reformation: Learning Democracy Basicallyyes, but more important issues need to be prioritized 2005-now Consolidation? Firming up Democracy Trying to make up our collective minds POLITICAL WILL TOWARD MINING 11
  • 12. The National Policy-Making Process will remain unchanged, no matterwho emerges as President in 2014 The Indonesian economy continues to grow, fueling domestic demand for natural resources Government policy in future will direct even more coal and minerals toward domestic needs WHAT THE FUTURE HOLDS 12
  • 13. THE REGULATORY FRAMEWORK AND SOME CURRENT ISSUES
  • 14. MINING REGULATORY FRAMEWORK Government Regulation MEMR Regulations PerMen 28/2009 on Mining Services PerMen 34/2009 on Domestic Market Obligation PerMen 17/2010 on Benchmark Pricing PerMen 12/2011 on Procedures for Stipulating Mining Business Area and Information System of Mineral and Coal Mining Area PP 22/2010 on Mining Areas PP 23/2010 on Mining Business Operations PP 55/2010 on Mining Direction and Supervision PP 78/2010 on Mine Reclamation and Closure 14
  • 15. Law No. 4/2009 Jan 12, 2009 Minerals and Coal Mining Minister of EMR Regulation No. 18/2009 Aug 19. 2009 Procedures for Amendment of Investment relating to CoWs and CCoWs Minister of EMR Regulation No. 28/2009 Sep 30, 2009 Minerals and Coal Mining Services Business Minister of EMR Regulation No. 34/2009 Dec 31, 2009 Prioritization of Coal and Mineral Supply for Domestic Interest Government Regulation No. 22/2010 Feb 1, 2010 Mining Area Determination DG of Minerals and Coal Regulation No. 376/2010 May 10, 2010 Affiliated Mining Services Providers Government Regulation No. 23/2010 Feb 1, 2010 Minerals and Coal Mining Enterprise Activities Government Regulation No. 55/2010 Jul 5, 2010 Direction and Supervision of the Management and Implementation of Mining Business Adapted from “Mining Law & Regulatory Practice in Indonesia: A Primary Reference Source”, Bill Sullivan andChristianTeo Purwono & Partners, 2013. PREVAILING LAWS AND REGULATIONS (1) 15
  • 16. Minister of EMR Regulation No. 17/2010 Sep 23, 2010 Procedures for Minerals and Coal Benchmark Price Determination Government Regulation No. 78/2010 Dec 20, 2010 Reclamation and Post-Mining Activities Presidential Regulation No. 26/2010 Apr 23, 2010 Extractive Industry Income Transparency Minister of EMR Decree No. 617/2011 Mar 3, 2011 Coal Prices for PLN-Operated Power Plants DG of Minerals and Coal Regulation No. 999/2011 Aug 26, 2011 Procedures for Determining Cost Adjustments to Coal Benchmark Price Presidential Decree No. 3/2012 Jan 10, 2012 Establishment of Evaluation Team for Renegotiation of Cows and CCoWs Minister of EMR Regulation No. 7/2012 Feb 6, 2012 Local Processing and Refining of Minerals PREVAILING LAWS AND REGULATIONS (2) 16 Adapted from “Mining Law & Regulatory Practice in Indonesia: A Primary Reference Source”, Bill Sullivan andChristianTeo Purwono & Partners, 2013.
  • 17. Government Regulation No. 24/2012 Feb 21, 2012 Amendment of Government Regulation No. 23/2010 Minister ofTrade Regulation No. 29/2012 May 7, 2012 Mining Product Export Requirements Minister of Finance Regulation No. 75/2012 May 16, 2012 Export Tax on Export Goods Minister of EMR Regulation No. 11/2012 May 16, 2012 Amendment of Minister of EMR Regulation No. 7/2012 Minister of EMR Decree No. 2934/2012 October 8, 2012 Domestic Coal Supply Quota for 2013 Presidential Instruction No. 3/2013 Feb 13, 2013 Acceleration of Domestic Processing and Refining DG ofCoal and Minerals Regulation No. 644/2013 Apr 23, 2013 Amendment of DG of Minerals and Coal Regulation No. 999/2011 Minister of EMR Decree No. 2901/2013 July 30, 2013 Domestic Coal Supply Quota for 2014 PREVAILING LAWS AND REGULATIONS (3) 17 Adapted from “Mining Law & Regulatory Practice in Indonesia: A Primary Reference Source”, Bill Sullivan andChristianTeo Purwono & Partners, 2013.
  • 18. KEY PRINCIPLES OF THE NEW MINING LAW Clarification ofCentral Government, provincial, and district authority. There will only be mining licenses (IUP), no more contracts between a company and the government (CoW system). Licenses will be issued through tender mechanism based on equality and transparency. Emphasis on reclamation and post-mining. Added value to Indonesia. Priority to domestic market needs. 18
  • 19. MINING LICENSES – THE LATEST SNAPSHOT IUP (IzinUsaha Pertambangan/MiningBusiness License) replaced the CoW as legal basis for mining operations. The IUP is issued by local administration,mostly Regencies (Kabupaten). More than 10,000IUPs have been issued all across Indonesia,the vast majority for coal. Many IUPs are problematicfor various reasons, that theCentral Government, through the DG for Minerals&Coal intervened and conducted a verification process. IUPs that are in compliance with regulationsand do not overlap are issued a “CleanandClear” certificateby the DirectorGeneral. UntilJuly 2013 the number of CnC certificates issued in nine stages reached 5,957 or almost 60%. 19
  • 20. FORESTRY • To preserve biodiversityand ecosystem • Strictly off limits for non- conservation activities • Accessible to mining operations after obtaining Borrow and Use Permit from Ministryof Forestry • Underground mining allowed • May be converted to Production Forest if certain conditions are fulfilled 20 FORESTCATEGORIES MAIN ISSUES Prohibitionto conduct open pit mining in protected forest hampers explorationand exploitationin mining ObtainingBorrow and Use Permit from Forestry Department takes years
  • 21. REGULATION ON TRANSPARENCY ON STATE REVENUE FROM EXTRACTIVE INDUSTRY Aims at management of extractive industries based on the principles of good governance and sustainable development, and to enhance competitiveness of the investment climate for extractive industries Reflects the principles of the Extractive Industries Transparency Initiative (EITI) — in line with the domestic agenda to improve the investment climate in oil & gas and mining, and as an instrument to increase transparency in revenue sharing between the central government and the regions Indonesia became an EITI candidate country in 2010 and hopes to deliver its first report on the implementation of EITI before end of 2011 21
  • 22. BENEFITS OF TRANSPARENCY INITIATIVES It ensures that financialflows are reported to a wide audience in a publicly accessible, comprehensive and easily understood manner Transparency improves a country’s credibility among foreign investors and the international banking community The positive political and economic effects of transparency can have many indirect social effectsincl. lowering costs of government investment and poverty reduction 22“Beyond CorporateSocial Responsibility – Oil Multinationals andSocialChallenges”, Jedrezej George Frynas, 2009.
  • 23. MANAGING POLITICAL RISK
  • 24. NON-TECHNICAL RISK DOMINANT Stakeholderacceptance is key to successful project delivery 73% of delaysto capital projectsrelate to ‘non-technical’risk – delaysin permitting and community protests Highly networked society with instant access to information and news, means that local action can result in global attention 24 “ManagementSystems for Social Performance –The ShellJourney”, presented by Shell at the Regional Stakeholder Consultation on the Post-2015 Development Agenda in Nusa Dua, Bali, December 14, 2012.
  • 25. MINING AND SOCIO-POLITICAL FACTORS Socio-political factors are the single defining complex of issues that determine the success or failure of a mining operation Mining is an industry that more than any sector of the economy reflects and is directly impacted by the political and social conditions in a country Mining companies need to acquire sufficient understanding of the social and political situation at national and local levels prior to committing resources 25
  • 26. Natural disasters Community relations Community development Ethnic conflict COMMON ISSUES IN INDONESIAN MINING (1) 26 Land ownership issues (resolved & unresolved) Environmental issues Industrial action Illegal mining
  • 27. Infrastructure use Technical failure Poor governance/ ethics Divestment of shares COMMON ISSUES IN INDONESIAN MINING (2) 27 Intercommunity rivalry & jealousy Intra-community rivalry & jealousy Employment Demands of local government
  • 28. CSR CRUCIAL TO MINING 28 Negativepublic opinion due to environ-mental and social concerns Targetedby local and inter-national pressure groups Challengeof maintaining‘local license to operate’in the face of resistance by localcom- munities Mining companies generallyoperate in remote areas that are economically under-developed and lacksocial welfare “Corporate Social Responsibility in the Mining Industries”, NataliaYakovleva, 2005.
  • 29. RESPONSIBLE MINING – A SOCIAL PERSPECTIVE SOCIAL IMPACT ASSESSMENT • Stakeholder Analysis and Engagement • Community Needs Assessment • Mine Closure Planning STAKEHOLDER MANAGEMENT • Community Development • Capacity Building • Good Governance • Mine Closure Refinement and Adjustment MINECLOSURE • Infrastructure • Local Economy • Good Governance • Mine Closure Finalization and Monitoring 29
  • 30. POST-MINE CLOSURE: THE ULTIMATE TEST Livelihood of region and communities secured Strong social institutions in place No “ghost towns” left behind No serious reputational issues “Mining culture” firmly established 30
  • 31. SOCIAL RESPONSIBILITY IN ISO 26000 Responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that Contributes to sustainable development,health and the welfare of society; Takes into account the expectations of stakeholders; Is in compliance with applicable law and consistent with international norms of behavior; and Is integrated throughout the organization and practiced in its relationships. Adapted from “ISO 26000:Guidance on Social Responsibility”, 2010. 31
  • 32. SUSTAINABLEDEVELOPMENT SCHEMATIC OVERVIEW OF ISO 26000 32 Adapted from “ISO 26000:Guidance on Social Responsibility”, International Organization for Standardization, 2010. Clause 1: Scope Guidance to all types of organization regardless of their size or location Clause 2: Definition Terms, abbreviations and abbrev. terms Clause 3: Understanding Social Responsibility History, Characteristics, Relationship between SR and Sustainable Development Clause 4: Principles of Social Responsibility • Accountability • Transparency • Ethical Behavior • Respect for Stakeholder Interests • Respect for Rule of Law • Respect for International Norms of Behavior • Respect for Human Rights Clause 5: Two Fundamental Practices of Social Responsibilities Recognizing Social Responsibility StakeholderIdentification and Engagement Clause 6: Social Responsibility Core Subjects Human rights Labor practices The environment Fair operating practices Consumer issues Community involvement/ development ORGANIZATIONAL GOVERNANCE Related actions and expectations Clause 7: Integrating Social Responsibility throughout an Organization Practices for integrating social responsibility throughout an organization Voluntary initiatives for social responsibility Communication on social responsibility Reviewing and improving an organization’s actions and practices related to SR Enhancing credibility regarding SR Understanding the social responsibility of the organization The relationship of an organization’s characteristics to SR Bibliography: Authoritative sources and additional guidance Annex: Examples of voluntary initiatives and tools for social responsibility
  • 33. ISO 26000 APPLICATION AT COLLAHUASI MINE 33 “Collahuasi and ISO 26000:Towards excellence in sustainability”, Regina Massai C. & Bernardita Fernandez B., presented at SR Mining 2011,October 2011 in Santiago, Chile. Maximizing contribution to sustainable development ISO 26000 (expected behavior) Practices in force at Collahuasi Collahuasi’s policies, principles and values Gap analysis comparing with expected SR behavior Gap analysis with ISO 26000 principles • Interviews with key stakeholders • Informationrelating to Collahuasi’smanagementsystem was reviewed along with the recommendationsestablished inClause 7 of ISO 26000 (integrating SR throughout an organization
  • 34. LAW No. 40/2007 ON CORPORATIONS (UU PT) Chapter I Article 1 Paragraph 3 Socialand environmental responsibility is the commitment of corporations to participate in sustainable economic development to improve the quality of life and the environment in ways that are beneficial to the corporation itself, the local communities as well as society at large. 34
  • 35. LAW No. 40/2007 ON CORPORATIONS (UU PT) ChapterV Article 74 35 1) Corporationsin the business of and/or whose business relate to natural resourcesmust conduct social and environmental responsibility. 2) Socialand environmental responsibilityas stipulatedunder paragraph1) is a corporation’s obligation that is budgeted and treatedas costs of the corporationand implemented with due considerationof propriety and reasonableness. 3) Corporations that neglect their obligation as stipulated under paragraph 1) will be sanctioned under the prevailinglaws. 4) Further legislationon social and environmental responsibility will be establishedin a Government Regulation.
  • 36. WHO ARE OUR STAKEHOLDERS?
  • 37. STAKEHOLDER THEORY Any group or individual who can affect or is affected by the achievement of the organization objectives 37 “Strategic Management:A Stakeholder Approach”, R. Edward Freeman, 1984.
  • 38. Who are our stakeholders? What are their stakes? What opportunities and challenges are presented by our stakeholders? What corporate social responsibilities do we have to our stakeholders? What strategies, actions, or decisions should we take to best deal with these responsibilities? ELEMENTS OF STAKEHOLDER MANAGEMENT “The Pyramid of CorporateSocial Responsibility –Toward the Moral Management of OrganizationalStakeholders”,Carroll, A. B., Business Horizons No. 34, 1991. 38
  • 39. STAKEHOLDER IDENTIFICATION To whom does the organizationhave legal obligations? Who might be positively or negatively be affected by the organizations activitiesor decisions? Who manifested concern about the issues or impacts? Who has been involved in the past when similarconcerns need to be addressed? Who can help the organizationaddressspecific impacts? Who can adversely affect the organization’sabilityto meet its important objectives? Who would be disadvantagedif they were excluded from the engagement? Who in the value chain is affected? Who may have an impact on the reputationof an organization? Who may influence the policy and regulatory environment in which the organizationoperates? Who may impact on the value of the organization? 39 Adapted from “ISO 26000:Guidance on Social Responsibility”, 2010.
  • 40. STAKEHOLDER ATTRIBUTES AND TYPOLOGY 40 “The Primordial Stakeholder:Advancing the ConceptualConsideration of StakeholderStatus for Natural Environment”, Driscoll, C. and Starik, M. Journal of Business Ethics,Vol. 49, 2004 “The Natural Environment as a Primary Stakeholder: the Case of Climate Change”, Haigh, N. andGriffiths, A. Business Strategy and the Environment, Aug 2007 0 = Non-Stakeholder 1 = Latent Stakeholder 2 = Expectant Stakeholder 3 = Definitive Stakeholder 4 = Primary Stakeholder 3 3 3 3 121 2 1 2 4 21
  • 41. Stakeholder Cate- gory Power Legiti- macy Urgen- cy Proxi- mity Main Score (/20) Vulnera -bility Real Impact V+R Score (/10) Bupati (Regent) pr 5 5 5 5 20 3 5 8 Regency Planning Bureau (BAPPEDA) pr 4 5 5 5 19 2 2 4 Land Admin. Agency (BPN) pr 4 5 5 5 19 3 5 8 Provincial EPA pr 3 5 5 5 18 3 5 8 GunungVillage de 2 4 5 3 14 5 5 10 Wira (informal leader) de 5 5 2 3 15 3 1 4 Clan-based organization (Jakarta) la 1 1 1 2 5 1 1 2 Village youth organization de 4 5 1 5 15 0 1 1 EXAMPLE OF STAKEHOLDER ANALYSIS Adapted from study conducted by Kiroyan Partners for a mining company to prepare a stakeholder engagement strategy. 41
  • 42. ENGAGING STAKEHOLDERS TO OBTAIN THEIR CONSENT
  • 43. DEMOCRACY MULTIPLIED THE NUMBER OF STAKEHOLDERS, REGIONAL AUTONOMY ADDED UNKNOWN DIMENSIONS 43 Stakeholder relations management becomes more complicated Issues management emerging as crucial factor that many are unequipped to handle Relations must be maintained at all levels Currently Indonesia has 34 provinces and almost 500 municipalities and regencies
  • 44. STARTING STRATEGICALLY 44 • Central Government • Local Government • Local Partners • Local Communities KEY STAKEHOLDERS IDENTIFICATION Analyse priority based on stakeholders and relevant issues to be used as the basis for determining engagement strategy ISSUES ANALYSIS& PRIORITIZATION Strategy to create the best conditions obtainingthe consent from key stakeholders so that organizational goals can be achieved STAKEHOLDER ENGAGEMENT STRATEGY
  • 45. SOCIAL LICENSE TO OPERATE 45 “Earth Matters: Indigenous Peoples,The Extractive Industries andCorporateSocial Responsibility”, Ciaran O’Faircheallaigh & Saleem Ali, 2008. Many companies recognize that their social obligations are no longer discharged simply by meeting legal duties Government mandates remain necessary, but alone are insufficient basisfor corporate legitimacy – they need to earn and maintain a social license to operate Good corporate community relations, stakeholder engagementand consultation and efforts to meet particular community demands are means by which companies seek to improve reputation among those with the ability to impact operations, and thereby obtain a social license to operate
  • 46. STAKEHOLDER ENGAGEMENT Stakeholder engagement involves dialogue between the organization and one or more of its stakeholders Stakeholder engagement can take many forms – it can begin as a response by an organization to one or more stakeholders and can take place in informal or formal settings Stakeholder engagement should be interactive and is intended to provide opportunities for stakeholders’ views to be heard – its essential feature is that it involves two-way communication 46 Adapted from “ISO 26000:Guidance on Social Responsibility”, International Organization for Standardization, 2010.
  • 47. KEY COMPONENTS OF STAKEHOLDER ENGAGEMENT 47 “Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets”, International Finance Corporation, 2007.
  • 48. LEVELS AND METHODS OF STAKEHOLDER ENGAGEMENT 48 “AA1000 Stakeholder Engagement Standard 2011 – FinalExposure Draft”, AccountAbility, 2011. CONSULT Limited two-way engagement: organization ask questions, stakeholders answer Surveys Focus groups Meetings with selected stakeholder/s Publicmeetings Workshops Online feedback mechanisms Advisory committees NEGOTIATE Collective bargaining with workers through their unions INVOLVE Two-way or multi-way engagement: learning on all sides but stakeholders and organization act independently Multi-stakeholder forums Advisory panels Consensus building process Participatory decision making process Focus groups Online feedback schemes COLLABORATE Two-way or multi-way engagement : joint-learning, decision making and actions Joint projects Joint ventures Partnerships Multi-stakeholder initiatives EMPOWER New forms of accountability; decisions delegated to stakeholders; stakeholders play a role in governance Integration of stakeholders into governance, strategy and operations management
  • 49. TYPES OF COMMUNICATION 49 “Unfolding StakeholderThinking: Theory, Responsibility and Engagement”,Jörg Andriof, Sandra Waddock, Bryan Husted, SandraSutherland Rahman, 2002. Participatory/ interactive decision-making Stakeholder engagement Two-way communication One-way communication Ad hoc communication Greater sharing of information leading to knowledge Better understanding of stakeholders and their issues High stakeholder involvement Highinformationexchange
  • 50. ENGAGING LOCAL COMMUNITIES
  • 51. ENGAGEMENT STRATEGIES WITH LOCAL COMMUNITIES 51 Permanent Non- Indigenous Peoples Indigenous Peoples Groups of Interest Transient Communities Less influence. Consultation, not consent. Can be approached simultaneously with development Consent required. Influence can vary. Must be involved prior to project development Consent not legally required, but preferred. Influence can be significant. Consultation should occur prior to project development Can have strong influence, especially in media. Consent not required. Consultation prior to or during project development The Ethical Funds Company, 2008.
  • 52. OBTAINING CONSENT FROM LOCAL COMMUNITIES 52 FPIC is a free and informed negotiation between investors, companies, governments and Indigenous Peoples (IPs) prior to development of mining operations on the customary lands The IPs have the right to give or withhold approval of proposed projects which may affect their own land, which they occupied or used FPIC is necessary to ensure the game at field level between indigenous peoples and governments or companies and, where it produces a negotiated agreement, about providing greater security and less risky investment
  • 53. FREE PRIOR INFORMED CONSENT Free from force, intimidation, coercion, or pressure by anyone (it can be a government, company or any organization). Prior implies that consent has been sufficiently sought in advance of any authorization or commencement of any project. Also, local communities must be given enough time to consider all the information and make a decision. Informed means that the community must be given all the relevant information to make its decision about whether to the agree to the project or not. Consent requires that the people involved in the project must allow indigenous communities to say “Yes” or “No” to the project. This should be according to the decision-making process of their choice. 53 “Putting Free, Prior, and Informed Consent into Practice in REDD+ Initiatives: ATraining Manual”, Karen Edwards, RonnakornTriraganon, Chandra Silori & JimStephenson, 2012.
  • 54. 54FRAMEWORK FOR ANALYSIS OF CORPORATE-COMMUNITY RELATIONS 1. Inter- or intra- group fragmentation or division 2.Worsening quality of life (livelihood, security, disease, culture) 3. Sense of being disrespected 4.Rewarding violence or threats of violence 5. Substitution 6.Increasing likelihood of human rights abuses NEGATIVE IMPACTS 1. Inter- or intra- group fragmentation or division 2.Worsening quality of life (livelihood, security, disease, culture) 3. Sense of being disrespected 4.Rewarding violence or threats of violence 5. Substitution 6.Increasing likelihood of human rights abuses NEGATIVE IMPACTS 1. Inter- or intra- group cohesion or cooperation 2.Improved quality of life (livelihood, security, disease, culture) 3. Sense of being respected 4.Rewarding constructive action for mutual benefit 5. Increasing the capacity of government to provide services and security 6.Reducing human rights abuses POSITIVE IMPACTS 1. Inter- or intra- group cohesion or cooperation 2.Improved quality of life (livelihood, security, disease, culture) 3. Sense of being respected 4.Rewarding constructive action for mutual benefit 5. Increasing the capacity of government to provide services and security 6.Reducing human rights abuses POSITIVE IMPACTSPRINCIPLES FOR GETTING IT RIGHT PRINCIPLES FOR GETTING IT RIGHT PRINCIPLES FOR GETTING ITWRONG PRINCIPLES FOR GETTING ITWRONG POLICIESAND PRACTICES POLICIESAND PRACTICES Unfair Non-transparent Disrespectful Uncaring Non-transparent Narrow accountability Non-transparent Fair Transparent Respectful Caring Transparent Broad accountability Transparent “Getting it Right: MakingCorporate – Community RelationsWork”, Luc Zandvliet & Mary B. Anderson, 2009.
  • 55. SUSTAINABLE MINING THROUGH COMMUNITY DEVELOPMENT Priorities relatingto different social, environmental and economic goals determinedthrough participatoryprocess. Relationshipwith stakeholders based on collaboration,trust and respect. No one to be made worse of. Ensuring the rights of marginalizedindividuals and groups. Economic benefits by mining to be shared equitably. Investment in trust funds, skills training,or social infrastructure. No unacceptableenvironmentaland other negative legacies. Capacityto be developed at local level to manage revenues for development needs through public-privatepartnership. 55“Breaking New Ground:The Report of the Mining, Minerals andSustainable Development Project”, MMSD, 2002.
  • 56. FROM DEPENDENCY TO DEVELOPMENT Company partners with communities, NGO, and government to determine community needs Company develops an exit strategy for the project and works toward eventual exit Company highlights roles and responsibilities of community and government in designing and implementing the project Company provides skill- training and capacity- building projects to the community Company builds capacity of local authorities to provide services or acts as an advocate of the community to the government 56 “Getting it Right: MakingCorporate – Community RelationsWork”, Luc Zandvliet & Mary B. Anderson, 2009. Company implements projects itself Company leaves project in hands of government to fund and run when they leave footprint area Company highlights its role in project with large signs, company logos etc. Company builds infrastructure (schools, clinics, roads) projects for the community Company acts as a replacement for government in the provision of services to the community
  • 57. EMPLOYMENT AND HIRING POLICIES IN THE COMMUNITIES Agree with local communitieson who should be consideredlocal Publiclycommit to hiring localcommunity members for all jobs for which they are qualified Include requirementsfor local hiring for contractors Maximize number of people that can benefit from unskilledemployment opportunities Support the educationsystem Commit to local hiring targetsof management staff Help localpeople get certifiedfor skillsthey alreadypossess Provideapprenticeshipsto youth Require contractorsto hire trainerfor local employees Include requirementthat contractorstake on apprenticesat a ratio Establish partnershipwith vocationaltrainingcentersto train locals Ensure the staff pool representsthe diversity of the populationto avoidbias and accusationof bias 57“Getting it Right: MakingCorporate – Community RelationsWork”, Luc Zandvliet & Mary B. Anderson, 2009.
  • 58. ENGAGING VARIOUS LEVELS OF GOVERNMENT
  • 59. OBTAINING GOVERNMENT CONSENT Research on Social, Political, Economic & Regulatory Aspects Identify Key Government Institutions: understand their needs, concerns, and perceptions Mapping and Prioritization Prioritize government institutions should be involved in the process of obtaining consent Engagement Strategy to Foster Relationships 59
  • 60. GOVERNMENT STAKEHOLDERS Governor or Regent (Bupati) Mining Agency Local Environ- mental Agency Forestry Agency Local Revenue Agency Manpower Agency Regional Develop- ment Agency (BAPPEDA) Trans- portation Agency Local Police 60 Ministry of Energy & Mineral Resources Ministry of Environ- ment Ministry of Forestry Investmen t Coordi- nating Board Ministry of Economy Ministry of Finance Land Adminis- tration Agency
  • 61. PRINCIPLE #1 When dealing with other government agencies it can not be emphasized enough that the local Mining Agency (Dinas Pertambangan) is kept in the loop. All letters to any other institution must be copied to this agency. In matters of principle that touch upon the jurisdiction of central government (forestry, security), the Directorate General of Minerals and Coal must be informed as well. 61
  • 62. LOCAL BUSINESS PARTNERS
  • 63. BUMD (business entity owned by local government) • Usuallyestablishedto hold shares on behalf Of the local government • Susceptibleto change if with change of office holder in local government Local businesses owned by community members • May play strategic role in obtaining social license to operate • Capacity-building providesmeans to influencepositively Concession Owner • Licenseand/or land title as equity participation • Investor has little leverage TYPES OF LOCAL BUSINESS PARTNERS Must be included in Stakeholder Analysis, and due diligence needs to be conducted before any agreement is entered into. 63
  • 64. OBTAINING CONSENT FROM LOCAL PARTNERS Identification Potential Partners Searchthrough formal and non-formal: personal relationships, informationfrom officialauthorities, business associations, etc. Due Diligence Gather information on local partners background: • Financial performance • Personal integrity • Reputation • Business ethics • Business and political network • Environmentand social performance Engagement Strategy Buildinga reliableand profitablerelationships 64
  • 65. A SUCCESS STORY
  • 66. The first major mining operation to come on-stream in Indonesia after Newmont’s Batu Hijau mine in Sumbawa in 2000. 66 Sixth generationContract of Work signed in 1997. Challengingsocial environment: 1 km off trans-Sumatrahighway, asset changed hands 5 times. Constructioncompleted in less than 3 years. On track to produce 280,000 oz.Au and 2 – 3 million oz.Ag p.a. World-class mine in every respect. US$ 800 millioninvestment.
  • 67. TO CONCLUDE: MAJOR MINING PROJECT COMPLETED KEY SUCCESS FACTORS Hong Kong capital, Australian miningknow-how and strong Indonesian socio-political expertise at top managementlevel Thorough analysesof community issues preceded construction Continuousstakeholder analysisand engagement 67
  • 68. THANK YOU Menara Karya, 10th Floor Suite H Jl. HR Rasuna Said BlokX-5 Kav. 1-2 Jakarta 12950 – INDONESIA T/F +6221 5794 4694 / 5794 4696 info@kiroyan-partners.com www.kiroyan-partners.com

×