How to build fundamental pillars of long-term relationships between business and community.

Recent statistics show an increasing trend of foreign direct investment (FDI) in Indonesia. After slightly decreasing from 9,612 in 2013 to 8,885 in 2014, during the first two quarters of 2015, the number of foreign investors increased to 7,603, according to data from the Investment Coordinating Board (BKPM).

This increased interest in investing in Indonesia should be matched by increasing investor capability to deal with local communities.

For many business entities, community is the most important stakeholders, because they operate within or nearby a community. Businesses are not stand-alone: They need information, human resources, access to raw materials for products and clients/customers, which are essential for businesses to operate sustainably.

For example, international consumer producers such as Nestle must work with local farmers to obtain the best coffee, cocoa and milk for their world-class products, while Unilever has been empowering farmers of local black soybeans to produce its famous black ketchup.

A mining company gives local community compensation by providing facilities to obtain social licenses to operate, because the company exploits land and effects the hunting areas of indigenous people.

The term '€œpartnership or collaboration'€ is trivial, hence business people often underestimate the fact that maintaining harmonized relationships is not always easy.

Communities should be treated as a subject in partnership, meaning they are at an equal level with the companies working in their lands/surrounding. Equality means they are given the right to do what they can to achieve common goals.

Key essential elements of equality-based partnerships are trust, accountability and sustainability. It sounds simple, but it requires serious commitment to succeed.

Trust emerges from respect. When a company respects its surrounding community, it has to be genuine, because people can feel it. Indigenous people or people in villages are sensitive about this, and vulnerable to the attitudes of business people.

There are preconceptions about how business is generally understood and characterized. Business is profit-driven, wants quick fixes, is hard-nosed, self-centered, greedy and inconsiderate.

Of course not all business people are like that, but such preconceptions can be used as a useful reflection to manage partnerships with stakeholders.

Treating communities equally means respect for their local wisdom. This grows trust, a fundamental element of partnership. Transparency is another attitude that is required when business builds cooperation with communities.

While this is tough because of the commercial confidentiality of many business practices, such '€œopen-handed'€ behavior should be demonstrated. When a company is honest and transparent about its intention and goals in operation areas, it reveals that the company is accountable, hence credible.

Another attitude that is also difficult to practice is creating mutual benefits for both business and the community. No relationship can last if one partner feels it is being treated unfairly. This is the most problematic situation, because business is naturally a '€œwinning side'€ while the community is a '€œlosing side'€.

Is this true? The answer is '€œno'€. Business might win in some areas because it has capital and technology, but business loses easily without access to natural resources or raw materials for products.

Sense of belonging

When business people want to build a partnership with the local community, it is always wise to counter the preconceptions about business mentioned above.

Communication and approaches should stay away from discussing profit or money, as this can be seen as greedy. Patience and perseverance are better than acting hard-nosed and inconsiderate.

In the end, being self-centered is counterproductive. Compassionate approaches often work well,
but do not give any promise that can back-fire.

Interviews with social-economic experts reveal that some of the preconceptions are myths. One expert, who has worked in almost all provinces in Indonesia and studied local communities, shared a few tips on how to deal with local communities: One of the most important steps is learning land-use patterns, to better understand the daily activities of people in certain areas. Religion, local culture, customs and local wisdom should be studied to ascertain the do'€™s and don'€™t'€™s.

For example, when there is a historical site or ritual site, a company should preserve it. Likewise, companies must adapt their operation if they operate in an area with strict cultural or religious rituals.

Rural communities are mostly made up of farmers or farm laborers, who also earn income from various other activities. Getting the right information from them means knowing when is the right time to chat with them.

Interestingly, many corporate staff who work on community relations have a preconception that local people are demanding, lazy, uneducated, difficult to deal with, hot-tempered and weak-willed. Is this true? If they look lazy or weak-willed, it is because their work pattern does not experience too much pressure (time, speed, deadlines) or they are simply too tired.

On the other hand, they can be perceived as demanding, difficult to deal with, hot-tempered. The reason behind these perceived characters is their low understanding of the talking points/context. We should explain things simply.

Often companies or investors assign consultants to make preliminary approaches to the community. When consultants want to enter companies'€™ operation areas, they must: i) obtain knowledge about the area and its inhabitants; ii) fulfill administrative requirements; and iii) comply with corporate regulations related to health, safety and security. Lack of information on local culture is one of the challenges faced by investors, particularly expatriates.

Although such information can be sourced from local government, religious leaders, cultural leaders etc, investors or companies can also look at social media.

Unfortunately most comments are in Indonesian. Administrative procedures tend to create hurdles if the consultants do not hold a specific permit/letter, i.e. from local government. This letter is a pre-requisite to obtain permission from village heads. Administrative requirements for expatriates are more restrictive.

In addition to the immigration permit, expatriates must also get permits from police offices in the area of survey.

In conclusion, managing partnerships with communities should start from treating communities as a '€œsubject'€ in our conversation, not an '€œobject'€. As a subject, the community would be empowered and
gain a sense of belonging to the proposed project.

Having adequate local knowledge and permits is essential to build the fundamental pillars of long-term relationships. Last but not least, remember the preconceptions about each other (business vs community), to avoid unnecessary misunderstandings.
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The writer is currently the Executive Director of Indonesia Business Links (www.ibl.or.id), and Chair of the Board of Trustees of the ASEAN CSR Network (www.asean-csr-network.org).
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Partners for Change

This page is produced by The Jakarta Post in cooperation with CCPHI-Partnership for Sustainable Community. It promotes best practices in community partnerships. For more information, contact the Supplements & Supplemental Products section at supplement@thejakartapost.com.

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