Concept of CSR and the Role of Social Accountability International (SAI) Relating to Its Effectiveness

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1 2013/SOM1/IEG/DIA/003 Session 1-2 Concept of CSR and the Role of Social Accountability International (SAI) Relating to Its Effectiveness Submitted by: Indonesia Public-Private Dialogue on Investment - Corporate Social Responsibility for Local Communities Jakarta, Indonesia 30 January 2013

Concept of CSR & the Role of SAI Relating To Its Effectivity by DR.

Responsibility is an assistance from the corporation such as state owned enterprises (SOEs) as manifestation of social s attention and

implementation of task and the achievement of the SOEs objectives.

2 Concept of CSR & the Role of SAI Relating To Its Effectivity by DR. Bahrullah Akbar, MBA The Board s Member VII of BPK-RI Jakarta, January 30th 2013 Definition, Scope, & Strategic Goals Corporate Social Responsibility is an assistance from the corporation such as state owned enterprises (SOEs) as manifestation of social s attention and responsibilities to solve the problems faced by the society, and also to increase the society s understanding toward the implementation of task and the achievement of the SOEs objectives. The Units conducted the CSR is the Head Office of SOEs and their branches throughout the countries. The strategic goal of the SOEs in connection with the CSR is the organization s goal which is strategic in order to implement the mission, vision,andstrategic values of the SOEs. 1

3 SOEs and its subsidiaries in Numbers SOEs numbers : 143 Its Subsidiaries : 235 PKBL Facts Per 2012 No. Year PK (Rp Miliar) BL (Rp Miliar) PKBL (Rp Miliar) 1s , , , , , , , , , , , (Prognosa) 2, , , , , , Jumlah Mitra Binaan/kali transaksi s.d 2011 No. Year Jumlah Mitra Binaan 1s , , , , , (Prognosa) 237, ,057,

4 The Comparison with PKBL Social Responsibility in Law No. 19 of 2003 concerning SOEs Article 88: SOEs can set aside some of its net income for the purposes of fostering small businesses / cooperatives and community development around the SOEs Partnership Program (Program Kemitraan) is a program designed to support and increase Micro Business capability to be independent and self reliant through fund utilization of SOEs profits. Environment Development Program (Program Bina Lingkungan) is a program designed by SOEs to empower the social condition through fund utilization of SOEs profit. PKBL s Regulation Law Number 20 Year 2008 on Micro, Small and Medium Enterprises Article 21: "... State- Owned Enterprises can provide part of the financing of the provision of annual earnings allocated to Micro and Small Enterprises in the form of loans, guarantees, grants, and other funding 3

5 PKBL s Regulation Law Number 40 of 2007 on Limited Liability Company.? Article 74 paragraph (1): "... the Company which runs its business activities in the field and / or related to the natural resources required to implement the Environmental and Social Responsibility..." PKBL s Distribution Patterns Loan 80% PKBL (4% profits) Partnership Program Environment Dev. Program Capacity Building 20% Environment Education Health Natural Disaster Public Facilities Places of Worship 4

PKBL as a part of the implementation of CSR Others

Business Others Others activity Elkington s Triple

economic gain (profit), butalso a concern for the

(people) CSR is the term that has been adopted by

serious realities related to the future well being

In the current business environment, CSR has become

6 PKBL as a part of the implementation of CSR Others Charity Activity CSR PKBL Granting loans to Micro Business Others Others activity Elkington s Triple Bottom Line companies are not only chasing a mere economic gain (profit), butalso a concern for the environment (planet) and the welfare of society (people) CSR is the term that has been adopted by companies around the world to begin addressing serious realities related to the future well being of our planet and our society. In the current business environment, CSR has become not only the 'right thing to do', but it has also become the 'competitive' thing to do 5

The Objectives of CSR To aid the effort of social problem

society which is directly or indirectly connected with the

To support the knowledge and the understanding of the

achievement of the objectives of the SOEs The Principles of

7 The Objectives of CSR To aid the effort of social problem solving including the improvement quality of live of the society which is directly or indirectly connected with the objectives of the SOEs. To support the knowledge and the understanding of the society to the implementation of the task of SOEs and the achievement of the objectives of the SOEs The Principles of CSR Principles To Support the Transparency Clear accountability to the public To avoid the conflict of interest 6

8 The Scope... The Development program of economic and improve the knowlegde and the understanding of the society towards the implementation of the task and the objective s achievement of the SOEs. The social activities of the SOEs relating to social problems in the society, such as in: The education sector The health sector The environment sector The cultural sector The religion and tolerance of the religion s life Handling of the natural disaster The Recipients CSR is given to the parties that has met the criteria and the qualificationthathassetbyitssoesbecauseithasnotbeenset by the Ministry of the State Owned Enterprises yet. 7

Accountability of the CSR by the SOEs Program Planning is officially included in the Annual Plan that has set every year by Board

9 Stages of the CSR Stages of the CSR including: a.program Planning b.program Implementation c.program Evaluation and Reporting ThosestagesisimplementinginitsSOEsdependon the policy from its entities. Accountability of the CSR by the SOEs Program Planning is officially included in the Annual Plan that has set every year by Board of Directors and the Board of Commisioners. After the implementation of the CSR, the program evaluation and reporting of its program will be reported in the Shareholders General Meeting. 8

CSR relating to National Medium-Term Development Plan CSR is a part of several national development funding scheme that can be utilized in order to enhance national development funding sources.

CSR is potential for supporting national development achievement Need policy harmonization about institutions / companies and the government in the process of planning, implementing, and reporting

10 CSR relating to National Medium-Term Development Plan CSR is a part of several national development funding scheme that can be utilized in order to enhance national development funding sources. CSR mandated by Law No (Limited Company). CSR is potential for supporting national development achievement Need policy harmonization about institutions / companies and the government in the process of planning, implementing, and reporting LAW OF THE REPUBLIC OF INDONESIA NUMBER 17 OF 2007 CONCERNING NATIONAL LONG-TERM DEVELOPMENT PLAN YEAR National Medium Term Development Plan, hereinafter referred to as the National Development Plan is the national development planning document for a period of 5 (five) years, the National Development Plan I in , the National Development Plan II, III Year National Development Plan , and IV Year National Development Plan

11 Emphasis RPJM 1 and 2 Based on the implementation, achievements, and the sustainability RPJM 1, RPJM 2 is intended to consolidate the restructuring of Indonesia in all fields by emphasizing efforts: improving the quality of human resources, including the development of science and technology capabilities strengthening the competitiveness of the economy CSR Audit Kinds of Audit Financial Audit Performance Audit Special- Purpose Audit CSR is a part of the company s expenses thatmustbeexamined related to its effectivity whether its has been well targeted and well managed 10

12 The Pin-point The audit process requires a strong commitment from key persons (BoD), it also involves the involvement of stakeholders and local residents related to the operation of the company. CSR programs should encourage national development planning (RPJM) End of Presentation 11

THE INDONESIAN EXPERIENCES IN DEVELOPING POVERTY REDUCTION STRATEGIES

THE INDONESIAN EXPERIENCES IN DEVELOPING POVERTY REDUCTION STRATEGIES by DJOHARIS LUBIS Deputy Poverty Reduction Coordinating Minister of People s Welfare Republic of Indonesia 1 Introduction Indonesia: