The new president should embrace inclusive and responsible business practices

In many areas, communities seeking justice for the violations allegedly committed by corporations against them have suffered more significant losses, intimidation, criminalization and imprisonment.

Support from afar: Members of the Muslim community protest in front of the Arjuna Wijaya Statue in Central Jakarta on Sept. 20, 2023, against a government plan to develop Rempang Island near Batam into a Chinese-funded economic zone that would displace around 7,500 people. (AFP/Yasuyoshi Chiba)

By: Herni Ramdlaningrum (Program Manager The PRAKARSA)

Across the world, giant corporations wield significant influence over a country’s development. The products produced, jobs created and resources consumed have far-reaching consequences. Similarly, in Indonesia, the role and impact of the business world on the country’s development cannot be underestimated. We even witness how the relationship between businesspeople, government and politicians is closely intertwined.

Furthermore, a third of Indonesia’s economic players, predominantly large business owners, openly support a particular candidate. This relationship goes beyond fanaticism; it involves interests and has a flavor of patronage.

The patronage relationship between politicians and businesses creates a network of reciprocal dependencies marked by mutual interdependence. This dynamic relationship influences policy formation and affects a governance system lacking the institutional capacity and political will to enforce regulations for the business world. As a result, business practices in Indonesia tend to be reckless, leading to various negative social and environmental impacts.

According to data from the National Commission on Human Rights, there were 1,366 complaints related to alleged human rights violations committed by corporations from 2019 to 2021. These included violations of land ownership rights, welfare rights and the right to life. The businesses or sectors accused of violations included plantations, industry, mineral and coal mining, forestry, oil and gas, fisheries, financial, media, property, tourism, manpower agencies, marketing and trading. This indicates the widespread adverse effects of the business world across sectors throughout Indonesia.

In the garment industry, which is mostly located in Java, human rights exploitation and labor rights violations are prevalent. In Indonesian garment factories, women constitute a significant portion of the workforce, around 60 percent in 2016.

However, the Better Work Indonesia report of 2013 highlighted low compliance with the International Labor Organization (ILO) core conventions and national laws in the garment, textile and footwear industries. The report also emphasized widespread noncompliance with regulations regarding overtime pay, social security benefits and short-term contract employment.

Environmental violations are evident in the plantation sector. According to Global Forest Watch in 2020, Indonesia was among the top 10 countries for primary forest loss. Data from Statistics Indonesia (BPS) on net deforestation in forest and non-forest areas from 2013 to 2019 showed a significant increase in net deforestation from 2014-2015. Although it has slowed down since 2015, the deforestation rate in forest areas in 2018-2019 was still higher than in 2013 (BPS data, Net Deforestation in Forest and Non-Forest Areas in Indonesia 2013-2019).

Furthermore, based on European Parliament Briefing data in September 2020, the percentage of land covered by forests in Indonesia has decreased from around 90 percent in 1990 to about 70 percent in 2020. Compared with other Southeast Asian countries, Indonesia experienced the highest land cover loss, exceeding 1,000 hectares from 2005 to 2019.

This occurred due to the significant opening of tropical forest land in Indonesian national parks, partly driven by increased demand for palm oil and timber. Global Forest Watch also revealed that Indonesia lost 9.75 million ha of primary forest in 2020, which accounted for 36 percent of forest cover loss due to small- to large-scale mining, agriculture and plantation activities, including palm oil.

Communities living around operating businesses also bear the negative impacts. For example, pollution from the disposal of toxic and hazardous waste by one of Indonesia’s largest textile producers in Sukoharjo, Central Java, has led to health issues for the local community. The surrounding residents protested and filed lawsuits to obtain a healthy environment. Fortunately, their protests received support from the then regent. The factory was temporarily closed until it could improve its waste management system.

However, only a few legal action cases by communities affected by corporate negative impacts succeed. In many areas, communities seeking justice for the violations allegedly committed by corporations against them have suffered more significant losses, intimidation, criminalization and imprisonment. For instance, in Banyuwangi, East Java, three farmers advocating for their rights over violations they experienced ended up with a five-and-a-half-year sentence on charges of causing unrest.

Given the numerous cases and the massive human rights violations committed by the business sector, Indonesia is facing an emergency of inclusive and responsible business practices.

Although the government has shown attention to business and human rights through the issuance of Presidential Regulation (Perpres) No. 60/2023 on the national business and human rights strategy, a specific policy framework for inclusive and responsible business has yet to be available. However, the ASEAN Secretariat has released a policy framework on Inclusive Business and Corporate Social Enterprise that refers to four global frameworks: the United Nations Guiding Principles on Business and Human Rights (UNGP BHR), the UN Global Compact (UNGC), the ISO 26000 and Responsible Business Conduct.

Inclusive and responsible business, as outlined in these four instruments, emphasizes the integration of social, environmental and ethical considerations into business practices.

This approach requires companies to actively promote human rights, labor standards, environmental sustainability and anticorruption measures throughout their operations and value chains. Inclusivity means ensuring fair and equal treatment for all stakeholders, including employees, communities and suppliers. At the same time, responsible business practices require proactive efforts to minimize negative impacts and contribute positively to the well-being of society.

By aligning with this framework, the business world is committed to upholding fundamental principles, promoting transparency and engaging in sustainable improvements, thereby contributing to a more sustainable and socially responsible global business environment.

Back to the current situation, the public should leverage the ongoing presidential election to demand the upholding of inclusive and responsible business practices. The elected president must be willing to establish a regulatory framework that encourages businesses to integrate human rights, environmental sustainability and ethical considerations into their operations. The government must be firm in enforcing stricter regulations on labor standards and environmental protection.

By fostering a business environment that prioritizes inclusivity, transparency and ethical behavior, the new president can contribute to developing a sustainable and socially responsible business landscape in Indonesia, moving away from the exploitation of natural resources and suppression inherited from Indonesia’s colonial past.


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