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The Implementation of Corporate Social Responsibility (CSR) in Indonesia

Laporan Kegiatan Call For Paper


Tugas Seminar Kelas A
Oleh :

Gardina Aulin Nuha


NIM 140820301018

MAGISTER AKUNTANSI
FAKULTAS EKONOMI
UNIVERSITAS JEMBER
2015

PRAKATA

The Implementation of Corporate Social Responsibility (CSR) in


Indonesia
Gardina Aulin Nuha
gardinaaulinnuha@gmail.com

ABSTRACT
Corporate Social Responsibility (CSR) is a responsibility of company
towards society and the environment due to the activity of the company.
CSR practices has began incurrency since 2001 due to the demands of
society. Finally in 2007 the government made CSR practice mandatory
by issuing Law No. 40 year 2007. By the rise of CSR in Indonesia, this
article aims to review and examine the practices related to CSR in
Indonesia both in terms of culture, regulations, and implementation of
CSR by the company. In terms of culture, CSR needs to be examined in
order to fit the Indonesian culture so that Indonesia would have an
appropriate definition of CSR; in terms of government regulation, it is
necessary to establish an independent team to assess the CSR practices of
companies that are required and should explain everything clearly related
to the sanctions provided if the company neglect the practice of CSR;
while in terms of the implementation of CSR in Indonesia, there found an
indication of abusing the purpose of CSR itself. So we need to understand
the benefits of CSR with ethical goals, so that that the company would
not be trapped on his actions and the public and environment would not
be harmed.
Keywords: Corporate Social Responsibility (CSR), Culture, Implementation, Indonesia,
Regulation
INTRODUCTION
CSR is the responsibility of the company to the community and the environment.
Nuha (2014) explained that CSR is a media company that was used as evidence that the
company is not only concerned with the entity but is also responsible for improving the
quality of the social environment and as a sign of the ongoing commitment of the
company.
The implementation of CSR in each country are definitely different, that is
because the characteristics of each country are not the same. Several things can affect the
practice of CSR such as culture, regulation, and others. Mele (2004) explains that the
practice of CSR in Spain affected by cultural, political, and Social Affairs in the country.
Therefore this paper is trying to do a review on CSR practices in Indonesia with
qualitative method. So hopefully we can get an idea of how implementation of CSR by
companies in Indonesia.
CULTURE INDONESIA AND CSR
Culture is a way of life that developed and shared by a group of people, and
passed down from generation to generation (Wikipedia, 2015). Herskovits and
Malinowski in wikipedia, said that everything contained in the society is determined by

the community's own culture (cultural-determinism). Therefore, if we associate with the


CSR practices implemented by the Indonesian people in this company, there will be
cultural influences in the process of implementation.
In line with the research and Juslin Wang (2009), states that there is a link
between the culture of a country with the implementation of CSR in the country. Results
of these research suggested the existence of a new definition of CSR in accordance with
the culture of the people in China. So that the implementation of CSR derived from the
definition based on Chinese culture into line and can resolve problems that occur.
Indonesia is one country with people who have a religious side in which religion has
become one of the important elements in the Pancasila and upheld by necessity interact
with fellow human beings and God Almighty.
CSR globally important elementis profit, people and planet. 3P is a concept
presented by Elkington (1998). These three elements are according to Elkington is a
determinant of the sustainability of the business entity. If we browse for the back, 3P is
considered able to realize the sustainability of the business is related to accountability to
the people and the planet on the company's business in maximizing profit. So that people
and the planet here is the "party" that should accept the responsibility of the company.
But if we associate with Indonesian culture that believes in God Almighty, there is one
important element that also deserve accountability, namely God. So if we correct the
definition of CSR taking into account the culture of Indonesia then there should be
accountability to God becomes the underlying implementation of CSR in Indonesia.
Therefore, at this time began to appear the study of sharia-based CSR (in this case Islam)
which is also an underlying Shariah Enterprise Theory which states that God is the
stakeholders who also accept responsibility for the entity.
REGULATION OF INDONESIA AND CSR
CSR in Indonesia country commonly referred to as Corporate Social
Responsibility which began to emerge around the tahun1983 that begins with a small
business coaching program BUMN. In Indonesia discourse on CSR started to emerge in
2001, but prior to this discourse has surfaced many companies are implementing CSR and
very little is expressed in a report. This happens probably because we do not have means
of support such as: reporting standards, skilled personnel (both authors of the report and
the auditors). Furthermore, CSR was originally a voluntary now starting to turn into

things that are required. Where CSR has been formally regulated through government
regulation.
Law governing the implementation of CSR. UU no. 40 Year 2007 regarding
Limited Liability Company. Regulation regarding disclosure of CSR in Article 74
paragraph (1) states that:
The company that runs its business activities in the field and/or related to
natural resources is obligated to carry out the social and environmental responsibility.
The above legislation does not require the whole company, but only to the
company that its activities in the field / related to natural resources. But I think that CSR
regulations stipulated in Law No. 40 In 2007, less explained the object of the law. As we
know, in Indonesia has a diverse kind. There are companies extractive, agricultural,
industrial or manufacturing, and others. So that there should be further discussions related
to the type of company that is in accordance with the classification of types of companies
by BEI.
Furthermore, Law No. 40 of 2007 article 74 paragraph (2) states that
Social and environmental responsibility referred to in subsection (1) is the
obligation of the company budgeted and accounted for the cost of the company that its
implementation is done with attention to propriety and reasonableness.
In a government regulation issued in 2012 related to this article explained that
"appropriateness and reasonableness of the company's policy is tailored to
the company's financial capability, and the potential risks that lead to social and
environmental responsibility to be borne by the company in accordance with its
business activities which do not reduce the obligations as set out in the provisions
of laws and regulations related to the business activities of the company.
In terms of sanctions in Article 74 paragraph (3) states that
The company does not carry out its obligations as referred to in
subsection (1) is penalized in accordance with the provisions of laws-the
invitation.
In a government regulation issued in 2012 related to this article explained that
The definition of "subject to the sanction in accordance with the

provisions of the legislation" is subject to any form of sanctions provided for in


the related legislation.
In the explanation of the Law and Government Regulations above we can know
that the funds on CSR practices adapted to the risks arising on the company's activities on

society and the environment. Therefore, should the government needs to establish a team
of assessors related to the risks posed by the company for example, only with the
formation of a special auditor CSR assess each company's CSR activities.
In addition, in the event of sanctions, is still not clear what sanctions are provided
by the government for negligence company either in the Act or the Government
Regulation. Should read clearly the sanctions provided in the form of fines or the like. So
the company will be more orderly in fulfilling this regulation.

THE TENDENCY TO ABUSE THE PURPOSE OF CSR PRACTICE IN


INDONESIA
The current CSR practice has become common in Indonesia where the
Government has required the CSR practices for certain company pursuant to law. But not
only the required company, companies that are not required in the legislation also often
perform CSR programs. According to research conducted by the Roper Search Worldwide
(Susanto, 2007) show 75% of respondents provide more value to the products and
services marketed by companies that contribute to the real community through
development programs. Approximately 66% of the respondents also indicated that they
are ready to be rebranded to the brand companies that have positive social image. This
proves the occurrence of expansion of consumer interest toward corporates. Particularly
in Indonesia itself it is also bound to happen, the community that was originally interested
in using a product or service based on the quality of the products or services in the end
when a company has a CSR programs and it's taken very positively by society so their
tendencies and choosing a product or service will be expanded where not only output they
value but the name or image of the company will be considered as well.
CSR or Corporate Social Responsibility in the early advent is due to the
negligence of a company to have a negative effect on the environment or society that
CSR is presented to demonstrate its responsibility to the negative impact that was created
by the activities of a company. So CSR actual purpose is purely for the welfare of society
and the corporate environment without any specific purposes. Community considerations
in assessing their consumption decisions for a product or service to see its image because
of the CSR program that ultimately gave rise to new perceptions about the purpose of
CSR itself.

CSR objectives were initially purely for the welfare of society and the
environment indirectly eventually tainted or mixed with the firm intention to take
advantage also of the CSR program itself. Intention to take advantage that ultimately led
to the company was not optimal to realize the essence of CSR itself. In addition to the
intention to benefit from CSR program led to the emergence of a new perception that
CSR is used by companies as a means to show their imaging that can be influenced to
increase company profit. With the purpose of CSR branching as described above finally
CSR activities are considered merely done for the creation of a positive corporate
reputation, not for the sake of improvement of quality of life of the community in the
long term.
CSR activities are solely for the sake of reputation and aims at increasing profits
this case is still rampant in our country, because it's a lot of CSR programs that they do
not actually make a major contribution to society. Currently in Indonesia began to bloom
CSR program that only has a short-term effect with a limited scale. CSR programs
conducted less frequently touch the root of the real problems of society. Often the
company still considers itself the most to understand the needs of society, while society
itself is considered a fringe group who suffered so require assistance company. In
addition, CSR activities are considered merely done for the creation of a positive
corporate reputation, not for the sake of improvement of quality of life of the community
in the long term. CSR programs that are short term began to be applied in Indonesia is a
CSR program by providing money directly to the public, selling cheap food to the
distribution of groceries for free. It is indeed very useful for society but are short term.
Why is it dangerous? because with the implementation of CSR that does not have
the concept of going concern or are short-term can lead many companies eventually
assume that they don't need to be too think of the presence of environmental damage and
negative impact on surrounding communities resulting from the activities of the company
because they will eventually do anyway CSR by paying an amount of money without
thinking about how the long-term benefits to society and the environment. That is what is
dangerous and eventually leading to the excessive exploitation of resources go back just
for the sake of mere corporate profits. Moreover, if the company is big and famous
implement CSR programs are like that then those with resources and power that it owns
will be able to form an impressive public opinion as if they had been carrying out CSR.
When done just philanthropy, even can be said to do to cover up unethical behaviour or

could be said to be "the removal of sin" as it has been exploiting natural resources that
exist in the environmental community.

CSR BENEFITS WITH AN ETHICAL PURPOSE


Implementation of CSR program is currently being commonplace, which began
to occur abuse of CSR actual destination. This happen because companies that want to get
high profits that will receive the confidence of investors and they automatically assume it
will be a tool to enhance shareholder value. Therefore, a company actually needs to assert
that CSR is different from charity or social contributions. CSR should be run on a
program to address the needs and sustainability of the program in the long term. While
social contributions are more instantaneous and temporary effect, so it can be described
only as a solace. The spirit of CSR is expected to be able to help create a balance between
the company, the community and the environment. Basically the company's social
responsibility is expected to come back into the culture for the people of Indonesia in
particular, and the world community in unity addressing social and environmental issues.
In the research Cochran (2007), CSR has experienced an evolution where the
concept of CSR be From philanthropy to strategic philanthropy. It explains that the CSR
was originally a concept of social responsibility that is only limited to give money or
goods directly to the public began turning in the direction of strategic philanthropy.
Where this concept of giving responsibility not only in the form of the material but also
strategically provide useful long-term solutions. So the application of CSR in Indonesia
should start leads to strategic philanthropy so that the benefits received by the society are
long term.
If companies do CSR activities with thinking strategically, it will give rise to
effects of golden circle that will be enjoyed by the company and all its stakeholders.
Through CSR with long term benefit, economic well-being and social life of the
community will be more secure. This in turn will ensure the smooth running of the whole
process or activity production company and marketing the results of his production
company. While the protecting environmental sustainability is useful for smooth
production processes because of the availability of supply of raw materials. The welfare
society will encourage an increase in purchasing power, thus reinforcing the absorption
market against a company's output. Two of these factors will increase the potential for
increased profits of the company, and by itself increases the ability of the company to

allocate a portion of its profits to finance a variety of CSR activities in subsequent years.
By having an understanding of the benefits of CSR, our Government should begin to
straighten out the CSR objectives. So as to provide long term benefits to the community
as well as the company.

CONCLUSION
There are several things that can be concluded on the above presentation, as follows:
1. It is expected that there are further research on CSR associated with the culture of
Indonesia, so that the implementation of CSR will answer the problems that exist in
Indonesia related to the impact of corporate activity.
2. The government should give a more detailed explanation of the consequences of
negligence related to the implementation of CSR and it would be better if the government
formed a team of auditors CSR as an independent party that is entitled to assess the
companies that are required to do a CSR.
3. The practice of CSR program in Indonesia many still are short term so that it appears
the perception that companies can do the exploitation of people and the environment as
long as the company's share of money or goods.
4. CSR Practices should begin switching from philanthropy to strategic philanthropy. So
that the resulting benefits for the community and the long-term nature of the company.
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Internet:
http://id.m.wikipedia.org/wiki/budaya

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