Corporate Social Responsibility (CSR) Draft Regulation Explained

Company Data Amendment Indonesia
Company Data Amendment by Legal Entities in Indonesia
April 12, 2018
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Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) Currently Discussed by House of Representatives

Corporate Social Responsibility (CSR)Currently the draft bill on Corporate Social Responsibility (Draft Bill) is being discussed and formed by the House of Representatives. Currently Corporate Social Responsibility  (CSR) are regulated by multiple regulations and the aim of the new regulation is to become the basis for the implementation of CSR by companies in Indonesia.  In this column we will discuss the organization of CSR, CSR forums and CSR awards regulated in the Draft Bill.

Organization of Corporate Social Responsibility  (CSR) 

The Draft Bill requires the implementation of CSR by all companies, both legal entities (such as PT or PT PMA) or non-legal entities (such as CVs of Firms) domiciled and conducting business in Indonesia in the fields related to natural resources or investment. The organization consists out of:

  1. Planning: During this phase, the company determines the budget allocation and inventorizes the problems and needs of the beneficiaries. The CSR Planning must be submitted by the company to the CSR forums in the provinces or districts / cities to be synergized with other companies’ CSR plans.
  2. Implementation: The implementation of the CSR will be done in cooperation with other companies by developing the community, preserving the environment, and / or fostering entrepreneurship.
  3. Reporting: The company must submit the results of the CSR in written form to the Regional Government. The report should include the targets achieved, the number of beneficiaries, and the realization of the CSR implementation budget.

Companies that do not carry out CSR may be subjected to administrative sanctions in the form of written warning, restrictions on business activities, suspension of business activities, or revocation of the business license of the company.

Corporate Social Responsibility  (CSR) Forums

The CSR Forum itself can be established in the Regency / City or in the Province, whose members are representatives of the Company and the operating costs are sourced from the Company’s contributions. The CSR Forum can hold regular meetings to:

  1. Synergize CSR programs between the companies
  2. Develop CSR programs
  3. Report the company’s CSR implementation to the Regional Government
  4. Provide a proposal to the Regional Government for awards
  5. Report the implementation of activities to the Regional Government

Corporate Social Responsibility  (CSR) Awards

The Regional Government will reward awards to companies that successfully implemented the CSR by meeting the following criteria:

  1. Conducting activities that result in improving the welfare of the community around the company;
  2. Absorbing the work force that comes from the communities surrounding the company; and / or
  3. creating environmental sustainability around the company.

The Draft Bill may be subject to changes as it is currently being discussed by the government.

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