Corporate Social Responsibility - Regulating Community Development

The recent enactment of the Company Law Bill has brought to an end a long and tortuous history of getting an updated and more relevant Company Law into the legislation field of play. The Bill itself has been on the National Legislation Program (Program Legislasi Nasional / Prolegnas) since 2005 and was originally submitted to the House of Representatives (DPR) in October 2005. The almost 2 years it has taken to pass the DPR may surprise some but if one is to consider the Inventory List of Problems (Daftar Inventarisasi Masalah / DIM) on this Bill extended to some 813 problems, then it is not at all surprising that it has taken this long to plough through the list in order to secure passage of the Bill.

The Bill has not been without an element of controversy and this is particularly so with the insertion of Corporate Social Responsibility (CSR) provisions (Chapter V, Article 74). What is interesting about this particular provision is that it applies only to companies that are involved in the exploitation of Indonesia's natural resources. However, this is not entirely true as the Elucidation to the Article implies that the provision applies to any company that undertakes business activities that may impact on the environment. Therefore, it is a bit of a misnomer to state that the Article refers only to CSR as it in fact also includes an element of environmental responsibility.