Business wants CSR dropped from bill on corporations

The Jakarta Post , Jakarta | Tue, 07/17/2007 2:23 PM | Business

Andi Haswidi, The Jakarta Post, Jakarta

Business leaders representing various associations, including Indonesian Business Links (IBL) and the Chamber of Commerce and Industry (Kadin), have voiced their opposition to the government's plan to make Corporate Social Responsibility programs obligatory.

""CSR is a voluntary approach that is designed to benefit all stakeholders. If it's regulated, than it becomes a mandatory responsibility,"" IBL advisory board chairman Noke Kiroyan told a public discussion Monday.

Noke said that CSR was a concept that was based on a commitment to conducting businesses in line with certain norms and ethics so as to help achieve sustainable development.

""CSR is a concept that we have adopted from the developed world. And even they don't tell companies how to run their CSR programs,"" he said.

The government and the House of Representatives are finalizing a new corporations' bill, which includes an article requiring companies to allocate a portion of their profits to CSR programs, and imposes sanctions upon those failing to do so.

The exact percentage of profit that must be set aside and the sanctions for non-compliance are to be set out in the ancillary regulations once the bill is enacted into law.

Achmad Daniri of the National Committee on Governance Policy (KMKG) said that the drafting of the bill itself violated the principles of good governance as the main stakeholder, the business community, including Kadin, had been excluded from the process.

""If CSR is made obligatory, than it will just be another form of tax,"" Indonesian Employers Association (Apindo) chairman Sofyan Wanandi said during the forum.

""The initial percentage is expected, I think, to be around 5 percent. In actual practice, this would be come to around 4 percent of net profit. Add corporate income tax at 30 percent, then the total tax on companies will be 34 percent.""

Sofyan argued that making CSR compulsory would damage the economy as investors would look to other countries that offered better investment climates.

In a joint statement that was also signed by dozens of other business associations, IBL and Kadin said that making CSR mandatory would violate the principles of good governance.

The joint statement also said that placing CSR on a statutory basis would be counterproductive to the concept of CSR itself as it violated CSR best practice around the world.

They also said that there were other options for encouraging CSR programs, including corporate income tax incentives.

""The incentive idea can be discussed during the deliberations on the income tax amendment bill,"" Noke said, referring to a bill currently being deliberated by the House.

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