| Indonesia: Fine-Tuning CSR Legislation |
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| Thursday, 17 December 2009 | |
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Plans to cap the minimum amount a business allocates to corporate social responsibility has been scrapped from the draft law, the Jakarta Post has reported. Member of the drafting team for Article 74 of the 2007 Corporate Law, Maria Radyati, was reported to have said that including such a provision "would be disastrous.” Radyati, who is also a lecturer of the Trisakti University, was reported to have said, “When the law was enacted, companies already had unscrupulous people standing on their doorsteps, citing the law and asking for CSR funding... If the implementing regulations were to mention a figure or a percentage for CSR funding, these people would have even more power to do those things.” Currently, Indonesia law requires businesses dealing with natural resources to implement corporate social responsibility and environmental protection programmes. In addition, this spending should be appropriately calculated and budgeted as company costs. However, two years after the law's enactment, corporations and the government have yet to agree on the details of the regulation. The initial plan was to require companies to allocate 5 percent of profits towards corporate social responsibility.
In addition, Radyati said there were plans to oblige
companies to channel the funding to local authorities,
but this has been excluded from the draft. She was quoted as saying, “Some companies may wash their hands of their CSR programs by saying
local governments are responsible for implementing programmes. And when the government fails to implement them, local communities will start protesting about |
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