Andi Haswidi, Jakarta – As corporate social responsibility (CSR) becomes mandatory in the new law on corporations, analysts warn the implementation of the legislation could be abused by politicians.
"I suspect this has something to do with the upcoming election. I fear the politicians will try to take a free ride for their campaigns at the cost of business players," economic analyst Faisal Basri told The Jakarta Post on Sunday.
Political parties might take advantage of a company's CSR programs to win over voters, or ask for part of a company's CSR budget to finance their social activities and political campaigns, he said.
Faisal criticized the factions in the House of Representatives for their approval Friday of the clause in the new law requiring all companies operating in and or connected with natural resources to institute social and environmental responsibility programs.
A political analyst at the Center for Electoral Reform, Smita Notosusanto, said abuse of the new requirement was likely. She said in the past the private sector has been a pivotal source of financing for political campaigns.
"There should be a clear definition in law and regulation that differentiates CSR and political campaigns, to avoid abuses," she said.
According to the commentary accompanying the legislation, Article 74 on CSR not only affects natural resource-based companies, such as mining, oil and gas and plantation firms, but also companies that do not exploit natural resources but "affect the functions of natural resources", which basically means all businesses outside the financial, information technology and consulting sectors.
Prior to the passage of the law, the Indonesian Chamber of Commerce and Industry (Kadin), together with Indonesian Business Links and dozens of other business associations, released a joint statement saying making CSR obligatory violates the principles of good governance and best practices, and that it is counterproductive to the concept of CSR.
"Corporate social responsibility is totally different from environmental responsibility. You can't just mix them up like that. Moreover, if CSR becomes obligatory, than it is not CSR anymore, which is supposed to be voluntary in nature," economic analyst Faisal said.
The implementation of the law, he said, would cause confusion or even overlap, as there were already laws governing environmental responsibilities, such as the Environment Law and the State-Owned Enterprises Law, plus different regulations imposed by local governments.
Faisal said CSR programs would be abused and used as part of the campaign machines of political parties.
"The implementation of this legislation will seriously hurt the already poor investment climate here. For foreign investment, this legislation literally says 'go away,'" Faisal said. A spokesman for the Federation of Industrial Associations, Franky M. Sibarani, said business associations had to lobby the government over the new law.
"The government is expected to finish the ancillary regulations in three months. What we want to do now is talk to the government so that they will listen to our perspective on what CSR is," Franky said.
He also said seeking a judicial review by the Constitutional Court was one option the federation was currently studying.