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usinessmen burdened by the compulsory corporate social responsibility (CSR) law are demanding more flexibility in its implementation, fearing it may hinder profits and slow the country's business sector overall.

"As a large company, we may not notice the impact so much, but what about new companies and investors?" President Director of Bakrie Sumatera Plantations Ambono Januriantono said during a CSR award event in Jakarta on Monday.

Ambono said the law, if introduced with a rigid minimum limit of how much a company must put aside for CSR, could discourage investment.

"It would not help distribute wealth. On the contrary, it would only help big companies profit further."

President Director of coal mining company Adaro Energy said if the government obliges companies to pay specific costs, it could lead to foreign competitors getting the upper hand.

"Take coal companies for example," Boy Garibaldi Thohir said. "We used to have a geographical advantage over Australian coal companies because of the high fuel price and freight costs. Due to the current fuel price drop, we are in for a rough ride."

Boy said during competitive times, the central government and local administrations should not enforce the rule with an iron fist and provide no room for adjustment.

The rule in question is article no. 74 from the 2007 Law on Limited Liability Companies. The article stipulates that CSR is mandatory for companies working in the natural resources sector, such as mining and forestry.

"Environmental damage in Indonesia is already too devastating," Social Affairs Minister Bachtiar Chamsyiah, said. "Laws on specific sectors like the environment will not be enough to curb the damage."

A number of regional administrations have vowed to implement the law in its entirety, underlining the need for companies to prevent environmental damage within their operation areas.

The East Kalimantan provincial administration, for instance, said it would take action against resistent companies operating in the province if they did not submit an Environmental Impacts Analysis (Amdal) before their operations or obey their CSR obligations.

East Kalimantan Governor Awang Faroek Ishak said the presence of mining companies and timber concession holders in the province was leading to rapid environment degradation.

"Companies operating in East Kalimantan should pay more attention to their corporate social responsibility programs," he said recently.

Awang urged regents and mayors in the province to punish companies that pollute or damage their natural areas.

"Regional heads should not extend the contracts of such companies."

In November last year, a number of business groups filed for a judicial review of the law. The decision is to handed down next month.

However, the Indonesia Chamber of Commerce (Kadin), one of the plaintiffs, demanded an exact percentage for the CSR cost and called for reduced flexibility to ensure certain parties do not exploit the law and escape payments and responsibilities.

The latest percentage suggested by Kadin was 2.5 percent of a company's profit.

Social Affairs Ministry Director General for Social Empowerment, Gunawan Sumodiningrat, reiterated the need for an exact percentage to be handed down to companies.

"A company needs a limit on how much it should give back to the people, in order to gain their support and prevent additional fees."

Chairman of Corporate Forum for Community Development (CFCD) Thendri Suprianto said that such a law will prove useful for a company should there be protests from certain parties.

"Rather than screaming out that you have paid your taxes when someone robs you, isn't it better to prepare extra safeguards beforehand?"

Most of the CFCD's member companies practice CSR by providing their surrounding communities with assistance to empower small businesses or organize local savings and loans associations. Bakrie Sumatera Plantations and Adaro are CFCD members. (dis)

Article 74 of Law No. 40 2007 on Limited Liability Companies

(1) Companies running their business in the natural resources sector must accept social and environmental responsibilities.

(2) Social and environmental responsibilities are mandatory for companies and included in the company's cost. Their execution will adhere to standards accordingly.

(3) Companies failing to meet these responsibilities will be punished under the relevant laws.