Journal of Applied Sciences Research

JOURNAL OF APPLIED SCIENCES RESEARCH

JOURNAL home page: http://www.aensiweb.com/JASR 2014 Special; 10(15): pages 22-26. Published Online 6 December 2014. Research Article

The Implementation Pattern of Corporate Social Responsibilty (Csr) of Coal Mining Company In East Kalimantan

1Indah Martati, 2Besse Asniwaty, 3Suminto, 4Labima

Department of Business Administration, Samarinda State Polytechnic, East Kalimantan, Indonesia.

Received: 30 September 2014; Revised: 17 November, 2014; Accepted: 25 November, 2014; Available online: 6 December 2014

ABSTRACT

This study aim is to analyze and discover patterns of implementation of Corporate Social Responsibility of coal mining company in East Kalimantan. The data obtained by depth interviews, participatory approach to corporate stakeholders and literature. Furthermore, the data were analyzed using descriptive qualitative method. Respondents in this study are communities around mining company, Community Consultative Committee (CCC), Social Corporate responsibility Officer ( CSRO ) of Kitadin Embalut mining company, PT Turbaindo Coal Mining, PT Berau Coal, PT Kideco Jaya Agung, PT KPC. The study results showed that the implementation of CSR programs Pattern for Company which has mining concession from central government in East Kalimantan has relatively the same pattern that is bottom-up and top-down combination. CSR programs are built from the community through the CCC proposal submitted to the CSRO, the proposals then selected based on suitability of companies strategies and policies of its CSR program. The programs realized are the the communities priority program and are not included in local government budgets.

Key words: CSR, top-down, bottom-up, combination system.

INTRODUCTION community around the mine, as a priority stakeholders in order to increase the added value in The operation of a coal mining company in East order to be more independent and prosperous society Kalimantan with the permission of the central and the company has a greater chance of developing. government ( PK2B ) known as PT KPC PKP2B in CSR programs oriented towards the 5 (five) areas of East Kutai Regency, PT Berau Coal in Berau the field of economics, education, health, socio- Regency , which Kideco Jaya Agung in Paser cultural, and environmental infrastructure. Priority Regency , Turbaindo Coal mining operate in West implementation each year determined in accordance Kutai, Kitadin Embalut located in the Kutai regency with the CSR policies of each mining company. and there are hundreds of coal mining company in East Kalimantan has a logical consequence of the 2 Corporate Social Responsibility (CSR): communities around the mine operations area. CSR is a concept whereby companies carry out Positive contribution of the presence of a coal its responsibility for the impact produced by the mining company in East Kalimantan can not be operation of its business to social, economic, and denied, for example on employment and creating environmental. CSR is not only to comply with business opportunities. However, its social impact legislation but also become part of the company's can not be ignored that, among others, the occurrence business strategy and address the social, economic, of damage to the environment around the mining and environmental. For companies that are concerned area, changes in socio-economic structure of society, about the Good Corporate Governance (GCG), then local communities and employees gaps. The change the application of the company's CSR is a of the socio-economics structure will result in manifestation of the behavior and ethics of the decreased level of social welfare if it is not handled company and is one of the stages of implementation properly. of corporate governance itself. As a form of corporate responsibility and The concept of CSR is based on the ISO 26000 commitment in realizing the company's concern to fully understood that includes seven main subjects: reduce the negative impacts caused by the activities GCG implementation, human rights, labor practices, of the mining company's Corporate Social the environment, fair operating practices activities, Responsibility (CSR) is implemented. Objects consumer issues, and involvement / community implementing CSR dedicated primarily to the empowerment. If it is assumed that the company has

Corresponding Author: Indah Martati, Department of Business Administration, Samarinda State Polytechnic, East Kalimantan, Indonesia. Tel: +62-541260588, Fax: +62-541260355, E-mail: [email protected] 23 Indah Martati et al, 2014 /Journal Of Applied Sciences Research 10(15), Special, Pages: 22-26 been operating in accordance with the provisions of actors, creating incentives and increase the ability of the legislation that applies to the main subject of the business organizations who want to get involved in seventh, then the focus of CSR is not addressing the this great effort. impact of business but trying to meet the In order for the implementation of CSR expectations of society. But in reality many programs can run as expected, then the government companies that have not yet fully operational heed can also oversee the process of interaction between legislation in force, so that the implementation of businesses and other groups for a process of CSR is focused on efforts to address the business interaction that is more fair and avoid the process of impact. manipulation or threats against another party. One of CSR (Corporate Social Responsibility) is an the legal framework of the implementation of CSR in action or activity undertaken by the company as a the local regulation was issued (Government) form of their responsibility towards the social / governing the subject. Similarly, in the East environment in which they operate. Form of Kalimantan province has issued the relevant responsibility is diverse, ranging from activities that Government Regulation of CSR (Corporate Social can improve the welfare of society and the Responsibility) that is Government Regulation No. 3 improvement of the environment, providing of 2013 on Social and Environmental Responsibility scholarships for children are not able to, the Company Limited as well as partnerships and provision of funds for the maintenance of public community development programs. facilities, donations to the village / community Some coal companies in East Kalimantan which facilities that are social and useful for many people, has been carrying out CSR programs long before the especially people residing around the company is regulation issued by the Local Government including located. Corporate Social Responsibility (CSR) is a Kitadin Embalut Kutai Kartanegara Regency, PT phenomenon of corporate strategy that Kideco Jaya Agung in Paser, PT Berau Coal in accommodates the needs and interests of its Berau, PT Kaltim Prima Coal in East Kutai, PT stakeholders. CSR arises since the era in which Turbaindo Coal Mining in West Kutai, and PT Bukit awareness of the long-term sustainability of the Baiduri Enterprize (BBE) in the city of Samarinda. company is more important than profitability. CSR The term for CSR programs by each company is will be a positive impact on society; This will greatly different, some use the term Community depend on the orientation and the capacity of Development, or Community Empowerment but with institutions and other organizations, especially the same intention and purpose. government. A World Bank study (Howard Fox, 2002) shows, the role of government related to CSR 2.1.The Implementation Patterns of Corporate Social includes the development of a healthy market policy, Responsibility (CSR) in KALTIM: resource participation, political support for CSR

Picture: CSR Program Implementation Patterns

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2.1.1. Planning stages: following categories: 1) Economics (home industry, In this phase, the Community Development Agriculture, Horticulture, Animal Husbandry and Officer or other designations provide Fisheries), 2) Education 3). Health, 4). Environment, recommendations targeted program area (Ring 1, 5). Public Relations and donations, 6). Infrastructure. Ring 2, Ring 3 and Ring 4) to the leadership. One is Mobilization of resources (budget, time, personnel) used as a basis in determining the condition of the for the implementation of CSR activities with area around the mining of data. Once the assessment earnest. When starting the activity, make what is a is held, then the leadership of the region to decide noble task to build communities, villages and which one will be the areas targeted by the program. companies. The next step is to develop a data-based line which Once the program started implemented activities includes an overview as well as the social, economic, to be conducted is still the first long visit support and community environments region of the target groups on a regular basis, providing insight and program. Baseline data were obtained through the motivation. Assisting and facilitating and involving following stages: experts in a particular program. Make regular reports 1. Economic and Social Mapping stakeholders daily, weekly or monthly of any CSR activities and 2. Creating a risk profile monitoring at certain periods to assess the suitability 3. Hold Focused Group Discussion (FGD) and of planned and actual resources and to evaluate the in-depth interviews. program to measure the outcome of interventions In planning, it is crucial to do is engage the CSR has been done (by using predefined parameters) community to form a Community Consultative The budget allocated to be managed in Committee (CCC) is a public communication forum accordance with the procedures and program budget set up by the villagers assisted the company. target beneficiaries are among others: already have Technically CCC serves as a collaborative experience in managing a similar business, existing institutions plan, implement and oversee the business activities, job opportunities for local people, continuity of community development programs in residents or groups who will receive the funds every village built. CCC role in empowering role that currently does not have a problem with other includes four facilitative role, the role of education, financial institutions, Provide personal funds as a the role of representation, as well as technical roles. share of funds on business risks, the presence of Meanwhile, the role of post-mining CCC still collateral for a loan granted, get recommendations directly involved in the planning, implementation, from a team of CCC, has prospects of development, monitoring, and evaluation of CSR programs. test Escaped aspects of feasibility assessment and The final stage in planning is to ensure that the appropriate use of the budget report financial entire planning process is well documented in the accountability mechanisms. form of: attendance, minutes of meetings, CCC, Mentoring is done to strengthen the capacity of presentation materials, photos, videos, and other the CCC in order to form a synergy and partnership supporting documents. CSRO compile the program of stakeholders during the process of social plan and its annual CSR budget of the entire assisted transformation - economic society. In this guidance villages that will be submitted to the Chairman of the there are several ways that can be done include: CSR site. Contents of the final report covers program Finding local champions (agent of change) which can planning documents including the minutes of the be a driving force and the driving community budget and the program and budget planning initiatives. Involving all subjects, respect and always agreement that has been signed. considers each individual or group has the uniqueness and potential regardless of attributes, 2.1.2. Community Development Program: appearance, and others. Using a variety of methods Implementation: and approaches to removing the best knowledge and It is crucial stages of the mechanism of ability of a person or group. Provide an opportunity Community Development is implementing CSR for individuals or groups to solve problems. Make a programs that have been planned in a participatory solution specifically for the group and the situation in manner with the CCC to achieve the objectives of accordance with the context. CSR programs in line with the expectations of The success of CSR programs is strongly stakeholders and the companies. Where as steps that influenced by the CSRO way to communicate with a must be done is to submit a proposal to the person or group. Selecting media or communication leadership of the CSR site coordinated by CCC. channels appropriate to consider the objectives and After approval leaders CSR site, pointing out the targets of communication. Recognize the target name of the project implementation, making official audience: the language and style that is accepted, report containing the results of program activities and readiness, emotional situation, and expectations. report to the Mine Head of CSR programs and CSR Convey messages clearly and precisely, at the right in the central leadership. It points to consider in the time and understand the local culture community. implementation of the program is to ensure that CSR Meetings to discuss the technical solutions programs are already entered in one or more of the regarding the problems in the field of work. Conduct

25 Indah Martati et al, 2014 /Journal Of Applied Sciences Research 10(15), Special, Pages: 22-26 meetings effectively as possible to coordinate the 2.1.4. Preparation of Report to Stakeholders: implementation of the work, Doing repairs in case of The entire implementation of CSR programs in miscommunication or miscoordination. the current year are reported on a regular basis with Documenting all activities in the implementation of the format and time in accordance with the CSR programs and can be used for materials and provisions of the company. The report presented to material evaluation report CSR programs. the stakeholders (Management Company, Local In an effort to socio-economic transformation, Government, Community). Types of reports in the CSR programs require resources and sufficient form of regular reports CSR programs, CSR authority so that the collaborative approach is very performance progress reports, the use of CSR required .The company role emphasized as an Management Information System). In practice initiator, facilitator, and catalyst that can drive the companies only submit regular reports to transformation of the social and economic conditions shareholders, CSR programs open to stakeholders. change. It takes a stakeholder or community While CSR Performance Achievement Report consultation forum established by and for the submitted to the shareholders and Local Government. community. This forum serves as a collaborative Thus, the report program activities and achievements institutions plan, implement and oversee the CSR CSR performance is not all stakeholders know. continuity of the program. Stakeholder forums in This opens up the possibility of frauds against the empowering covers four roles: facilitative, education, actual implementation of CSR programs. representation, and technical. The approach in the manage stakeholders should 3 Conclusions and Recommendations: be based on the new-corporate relations which 3.1. conclusion: emphasizes the collaboration between the company 1. Implementation of Corporate Social and all its stakeholders, so as not to put the company Responsibility pattern is applied in the company coal as part of a separate and operate independently in the mining company operating in East Kalimantan has a social system. Company's relationship with the similar pattern ranging from planning to monitoring stakeholders is built on the company's sustainability and evaluation. concept, while the relations with external The implementation process has involved the stakeholders are not just transactional and short-term, community to be mediated by the Community but over the same common goal of building a better Consultative Committee. quality of life and sustainable. 2. Run program is a priority program of the aspirations of the community needs strategies and 2.1.3. Monitoring and Evaluation: policies tailored to the company's CSR program each To see the correspondence between CSR year. programs are planned to be realized that it is 3 The pattern of implementation of CSR necessary to monitoring and evaluation. To monitor programs embrace a combination system of interest the aspects: activities, resources, scheduling, and between bottom-up and top-down with a proportion implementation team output. Field visit (Visit CSR) of the interest is still not balanced. to monitor implementation of CSR programs 4 The results of the implementation of CSR involving CCC (if fit between the plan and the reality programs and the achievement of CSR performance on the ground) while collecting physical evidence. has not been reported to all stakeholders. Helping leaders Jakarta to discuss CSR and CSR program visit the site. Discussions with the relevant 3.2. Suggestion: parties regarding the use of monitoring programs and To achieve maximum performance of CSR formulate improvement agenda based on the results necessary improvements and program approaches, of the monitoring program. such as: Evaluation is necessary to look at the program 1. Increase the number of community management capabilities to reach outputs, outcomes involvement in setting the CSR program. and targets programs with specific time duration to 2. Improve the function of the Community the planned program objectives can be achieved on Consultative Committee (CCC) in order to see a target. Activities undertaken to assess the more objective interests of community performance of CCC is periodic, the results of the empowerment. evaluation report to the Mine CCC head and 3. Increase the community's bargaining communicate the results of the performance position with the company to obtain mutual benefit evaluation CCC to CCC and related parties. Helping 4. Should the community and local leaders Jakarta CSR conducted a survey of government to obtain statements of program perceptions and benefits of the program to the implementation and achievement of CSR CSR. community and beneficiaries to determine the direct and indirect impact of the CSR activities of the program so helpful to rencanna repair.

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