Corporate social responsability in Indonesia

Corporate Social Responsibility in Southeast Asia

Current State of CSR.
Common to both countries is the strong support of the government in
promoting CSR.
CSR reporting is also growing development in both countries. . A study
conducted in 376 companies listed in the Indonesian Stoc !"change
showed that 37# were involved in CSR reporting and only seven companies
produce stand$alone CSR reports. %he &uala 'umpur Stoc e"change has
also re(uired publicly listed companies to disclose information that has the
potential to influence the financial performance of a company. )owever*
there is still no re(uirement for companies to disclose their CSR activities.
&ey +layers and Current Roles. &ey CSR players in both countries are the
respective governments* business organi,ations and local CSR networs.
-usiness organi,ations as well as local CSR networs are important players
in the practice of CSR in Indonesia and .alaysia. . -usiness organi,ations
and non$profit organi,ations have also reali,ed that there is a need to assist
S.!s in developing CoCs and implementing CSR programsAI.$R/R
Center* 0122 03
Corporate Social Responsibility in Southeast Asia
!nablers and Challenges. CSR enablers in Indonesia and .alaysia differ* but
the challenges faced by both countries are the same.
CSR in Indonesia is driven by globali,ation since there is a considerable
amount of .3Cs operating in the country. %hese .3Cs can improve the
practice of CSR in small and medium enterprises in their supply chain by
encouraging them to implement CSR programs and pro4ects. .3Cs also
bring with them international standards and practices. In doing so* they share
the nowledge with local corporations. In woring with business
organi,ations lie I-'* these .3Cs along with large local companies can
help develop the capacity of small and medium enterprises. .3Cs can share
best practices with their suppliers to improve the nowledge of small and
medium enterprises regarding CSR.
CSR development in Indonesia and .alaysia is confronted by the lac of
CSR awareness and technical capability among local companies. Indonesian
companies also face challenges concerning governance issues and wea
implementation of laws. In .alaysia* the main barrier for CSR development
is the lac of awareness on CSR. 'ocal .alaysian firms are primarily
focused on philanthropic activities as prescribed by law. .alaysian
companies focus more on following religious beliefs as opposed to social
responsibility.
Another barrier is the lac of technical capability in developing and
implementing CSR. 5hile some large companies have a solid understanding
on the concept* value and importance of CSR* the CSR programs are often
scattered and unrelated to the business. As a result* there is a concern that
CSR programs may not be sustainable.
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Conclusions
6nfortunately* the implementation and understanding of CSR in Indonesia is
not ma"imal. As the result* the application of industry couldn8t reach the
bottom of the whole society. Some of CSR practices in Indonesia are not
represents the ob4ectives of CSR it8s self.
%his type is often happened in Indonesia. %he company will conduct a big
one day event under environmental topic. -ut .
9or e"ample* +% %oyota Astra .otor had wor together with ++') -ali*
local 3:; at -ali$Indonesia which co%he real CSR is about how the
company can devote to the community* environmental* and social
circumstances. concern on environmental education.
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* from at least four different perspectives. 9irst* the mandatory nature of CSR
strengthens its position as a legal obligation to corporations= not 4ust a
statement of goodwill or charity whose implementation depends upon their
willing cooperation. It provides a con$ sensus on standards that should be
applied through$ out Indonesia. %his* indeed* addresses the problem
of diversity of standards and the (uestionable ef>cacy of the soft voluntary
mechanism. Second* the adoption of CSR into law enhances its reception
and implementation in Indonesia* by dif$ ferent staeholders atdifferent
levels.At the corporate level* while the primary target may be corporations
that directly or indirectly impact natural resources* such a mandatory nature
at the very least promotes a degree of awareness among other corporations
to loo beyond motives of pro>t ma"imi,ation. It is not inconceivable that in
the future* the same regulation could be applied to all types of corporations
and in all sectors. .oreover* the adoption of CSR as a legal norm would
re(uire all governmental organi,ations to incorporate it into policy. At the
grassroots level* the mandatory CSR would encourage society to focus more
attention on the monitoring of corporate behaviors and CSR mechanisms.
%hird* the mandatory nature can serve as a pre$ ventive mechanism that
eeps companies from unduly bene>ting as a result of the system. In other
words* maing CSR obligatory is one way of ensuring that there is no free
ride for corporations ?+riyono* 0117@. .oreover* mandatory CSR can be a
complement* not a replacement* to other remedial mechanisms. 9or e"ample*
in the event that victims of corporations lost a case or were given no >nan$
cial compensation for damage to their living envi$ ronment* they may still
bene>t from the AACSR mandatory fund*88 which should be allocated by cor$
poration* through various services. In this case* such CSR may have the
effect of actually strengthening and empowering these victims. 9ourth* while
a mandatory form of CSR is probably not a favorable approach among
states* it does lay down a precedent for other countries to tae similar steps
toward institutionali,ing CSR in the form of legal obligations.