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Article

22 Mar 2006

Author:
Meidyatama Suryodiningrat, Jakarta Post

Mining a 'social license' for foreign extraction companies

Protests against PT Freeport have spread and turned violent; hundreds threatened to march on ExxonMobil's operations in Cepu; and a mob burned a PT Newmont exploration camp in Nusa Tenggara. Coincidence? Perhaps. Emerging xenophobia? To a degree. A more plausible cause is the conjuncture of profiteering, political interest and social grievances toward foreign extraction companies. In this age of emerging Corporate Social Responsibility (CSR) foreign contractors are not just accountable to the sovereign landlords (the government), but must also acquire a "social license" from the indigenous occupants of the land they exploit. This means going beyond mere compliance with tax obligations and profit sharing. Development can in itself perpetuate poverty, hence CSR requires a more needs-based approach. It's a method which moves away from the perfunctory allocation of nominal sums to the establishment of programs that enhance local dignity, reward the labor of local initiative while creating a working partnership between stakeholders...Some corporations who have operated here for decades find it difficult to revamp their image despite the grand sums allocated for the social projects. In the end, they opt for the simpler solution: Pay their taxes, dutifully disburse reasonable amounts for CSR projects and seek refuge with the government. The acute ramification is that their much-trumpeted acquisition of a social license rings hollow. It may carry the blessing of office holders, but bear little weight with local stakeholders. A process of slow implosion occurs as the cycle of problems perpetuates and the companies become more dependent, paying an increasingly heavy political cost over time. But no matter, because the prize of colossal profit is still worth the headache for the corporations...[C]ompanies which resist selling their soul for political protection, allow scrutiny of their operations and focus on an attentive basic-needs approach to their local neighbors in the end (should) gain a social license of some actual value.