Tag Archives: human rights

Corporate Knowing and Showing: tell us what harm you might cause

This article was first appeared in The Jakarta Post on 6 June 2016, the article may be found here.

The basic tenet of creating an institution called corporation is to bring more benefit for the society at large. Corporations can generate economic wealth at a much larger scale than individual business. The government provide incentives for corporations, as a means to increase production, which at the end may help the government in distributing the wealth.

Unfortunately, on the other side of the coin, corporate business operations have also been accused as the main cause of environment degradation, triggering social conflicts, and human rights violations. Almost all company may be related to at least one of those issues. For instance, a global food chain company may be accused for fueling deforestation by using paper pack made from the Indonesian rain forest timber.

In the earlier day, the environment, consumers and human rights activist relied on the ‘naming and shaming’ campaign, in making the company to respond to their voices. Negative publicity and boycott on the company’s product are some examples.  This campaign assume that reputation is the most important element for company’s business. The naming and shaming campaign tries to create an incentive for corporation to stop its harmful activities.

Unfortunately, there are a number situations that could make this naming and shaming approach difficult to achieve its objectives. First, the complex structure of corporation. The layer of corporate groups and the web of subsidiaries across borders make it difficult to trace which company should be held responsible for the harm. Moreover, with its capital power, corporations can easily transfer its operation to other countries, leaving the harm unaddressed.

Second, corporations hide behind the national law and the local government protection. Many companies take the advantage on the absence of law, regulation uncertainty and weak legal enforcement in the country where they operates.  Third, to avoid being targeted to a negative publicity, company create its own voluntary standards which contains policy to respect social, environment and human rights issues. Whereas, most of these standards are used as a lip service, and many of them are lacking of public verification mechanism.

Since the birth of the United Nations Guideline on Business and Human Rights in 2011, there has been a fundamental change in the way corporations should behave towards social, environment and human rights issues. This guideline introduces a new approach which replace the naming and shaming campaign. It endorses a new rule of the game, that is the ‘knowing and showing’ approach.

Instead of blaming and punishing companies with bad publicity to stop their negative impact to society, the knowing and showing approach provide a chance for companies to take prevention steps  before the harm occurs.  Companies are encouraged to conduct assessment to know what harm they may cause to the environment, local communities, and employees. Likewise, companies are endorsed to communicate to the public, all measures that they have taken to minimise the negative impact arising out of their business operation. In this way, the company will be able to tell the real situation to the public, yet maintain its reputation.

How does this knowing and showing approach work? The UN guideline provides a practical instrument to implement this approach. This instrument is the human rights due diligence. The human rights due diligence starts with commitment by company to respect human rights, and followed by assessing what impact to human rights that the company may cause, in what way, and to what level of severance.

The result of this assessment must be known by every personnel at all level within the company, and the company must take appropriate measure to address every single identified harm, including to cooperate with government and non government institution relating with particular issue. The measure that has been taken must be evaluated, whether or not this measure has properly avoid the negative impact to occur or minimising the impact when it occurs. Finally, the company must prepare a regular report which contains all information about the above activities, and it must be accessible to the public.

Preparing human rights due diligence at the earlier phase of a project would be an ideal condition. However, this due diligence may also be conducted at any stage of a business activities, regardless of the sector and the size of the business. For instance, it is not too late for companies involved in the reclamation project in the Teluk Jakarta to conduct human rights due diligence. Likewise, it would be better for the company operating a goldmine project in Tumpang Pitu Banyuwangi to prepare due diligence, as the project has only started a few weeks ago.

However, we should bear in mind that human rights due diligence is not aiming at justifying the business project to continue. As mentioned above, it is a mechanism for the company to realise what harm they may cause, and a tool for all stakeholders to communicate and find a better solution to avoid human rights violations from occurring. When the human rights impact is so severe, there is no other option for the company, unless to halt the project. As we are all agree that human lives worth more than everything.


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TNCs, Labour, Environment and Human Rights in Indonesia

This article was first published in The Jakarta Post on the 4th July 2013, here>>>.

The business operations of transnational corporations (TNCs) have long been labelled as one of the main contributor of human rights violations, environment degradation, social conflicts and deteriorating labour conditions. As TNCs can easily relocate their capital to different countries whenever their business interest is at risk, they tend to put little respect to non-business issues.

Though that situation is correct to some extent, TNCs on the other hand, has a huge potential to endorse better condition of human rights in country where their business operation is located. One of the main reasons for this argument is that with its financial power, TNCs are capable to play significant role in promoting better respect for human rights, sustaining environment, help to improve social live through the fulfillment of access to health and education services, and establishing proper labour conditions.

The most recent haze crisis is one of examples where the operations of TNCs have brought negative impacts to the environment and posing risk to the health of not just the local populations, but also to the people across the region. Likewise, not so long ago, the collapse of underground tunnel incident in one of the largest mining site in Papua had resulted to the lost of several lives. This incident shows that mining operation poses a high risk to workers’ live and to the environment.

So far, the government has taken action in both the haze and the underground tunnel case by conducting investigations. However, this action seems to be insufficient to prevent similar incidents to reoccur in the future. The government should begin to think of alternative measures to ensure that TNCs observe human rights, environment protection, health and safety, and respecting the social lives of local population in conducting their business operation.

To date, there are a number of non-binding instrument at international level. Likewise, many TNCs have publicly announced their own standard of conduct in relation to labour, environment, social and human rights issues. However, what makes violations of these issues by TNCs continue to occur? There are at least two answers for this question.

First, it is argued that TNCs are profit-maximization entities. Therefore, they will only consider non-business issues if this conduct would increase their profitability. Unfortunately, many TNCs think that respecting human rights, protecting labour and environment would only put additional cost to their production line. This is exactly what happened in the haze incident. Fire is the cheapest method in carrying out land clearance in the expansion of palm oil plantation.

Second, TNCs adopt a self-making human rights, labour and environment standard as part of their marketing strategy. They use this self-making standard merely as a lip service to show that they have put effort to implement the standard. In fact, many of these self-making standards are lack of regular examination mechanism by an independent auditor. Therefore, the implementation of these self-making standards cannot be clarified.

The international human rights regime put the government as the main duty bearer to ensure the protection, respect and fulfilment of human rights. It is the duty of government to ensure that TNCs, operating within its jurisdiction, do not perform any harm to the labour, environment, and human rights. In order to fulfill its duty, the Indonesian government need to implement an instrument on these issues for TNCs to observe. Among a wide range of standards for TNCs available at international level, the government should seriously consider to adopt the ‘OECD Guidelines on Multinational Enterprises’.

There are a number of advantages in adopting this standard. This guideline set a number of conducts to be carried out by TNCs in wide area of issues, including human rights, labour, and environment. Further, this guideline provides a mechanism for examination and dispute settlement by the National Contact Point for any allegation to the violation of rights by TNCs. In addition, it has been implemented since 1974, and has been lastly up-dated in 2011 to adjust with the recent development in the way TNCs conduct their business operation. Most importantly, this guideline is endorsed and implemented by all 34 governments of OECD member countries, the home countries of worlds’ largest TNCs.

Unfortunately, adopting and enforcing an international instrument, especially a non-binding instrument like the OECD Guideline is not an easy task. This effort may also invite strong resistance from the TNCs. However, there are a number of alternative ways which may be considered by the Indonesian government.

First, the adoption of OECD Guideline may be done through inserting the guideline into bilateral investment treaty or other international investment treaties which is signed by Indonesian government and the other foreign country governments, especially the OECD member countries. Inserting a non-binding instrument into a legally binding instrument such as treaty would strengthen the regulatory character of the non-binding instrument.

Second, the Indonesian government has recently been conducting a renegotiation of mining contract with a number of TNCs that holding mining concessions or permits. This would be a good momentum for the government to include the implementation of the guideline by TNCs on the negotiation table. The government should grab the opportunity to ensure the commitment of TNCs operating in mining sector to observe the guideline. A similar procedure may be followed to other sectors that pose high risk to labour, environment and human rights.

Third, this alternative might be the most contentious, nevertheless, worth it is considered. The Indonesian government may consider of becoming an adherence country to the ‘OECD Guidelines on Multinational Enterprises’. Adherence to the guideline shows that the government is not being discriminative to TNCs operating in Indonesia. This is because every Indonesian company operating overseas will also committing to observe the guideline. Thus, adherence to the guideline will create a ‘level playing field’ and minimise resistance from the TNCs operating in Indonesia to implement the guideline.

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Fitting Human Rights into the ASEAN-China FTA: Indonesian Perspective

Another version of this article was first published in The Jakarta Post daily news paper on 12 January 2009, see in more detail here>>>.

Trade Liberalization

Entering the year 2010 is marked by the entry into force of a free trade area agreement between ASEAN and China or also known as the ASEAN-China FTA. Unfortunately, not many commentators or even government agency specifically analyze the possible impact of this FTA agreement to the fulfillment of rights-human rights in Indonesia. In fact, there are many aspects of human rights that can be affected by the enforcement of this FTA, some of which are the rights to health and a healthy environment, right to work and to earn a decent livelihood, the access to natural resources rights, and other social, economic, and cultural rights.

Because of space limitation, this article will not examine the impacts that can be caused by the FTA on all aspects of human rights which has been recognized under several legislations in Indonesia. The simple analysis addressed in this article on the linkages between the implementation of this FTA with the prospect of the fulfillment of human rights in Indonesia is expected to become inputs for the government and NGOs in formulating their policies. So that human rights fulfillment is not marginalized by trade liberalization reasons.

The ASEAN-China FTA was actually first agreed in 2001 in the ASEAN-China Summit which formulate a Framework on Economic Co-operation and to establish an ASEAN-China Free Trade Area. Under this framework, it was agreed to establish a free trade area within 10 years time. Furthermore, the agreement was then reinforced by the signing of Framework Agreement on Comprehensive Economic Co-Operation Between ASEAN and the People’s Republic of China in Phnom Penh, on November 4, 2002, by the head of state and government of all ASEAN countries and the People’s Republic of China.

ASEAN-China FTA is not the first trade liberalization agreement which entered by Indonesia. Indonesia’s participation in regional and international trade agreement began with the AFTA in 1992, followed by its accession as member of the WTO, and by other agreements such as the ASEAN-Japanese FTA, Korea-ASEAN FTA, as well as bilateral agreement with Japan in Indonesia-Japan Economic Partnership Agreement (IJ-EPA). These agreements could possibly be added by the EU-ASEAN FTA. The same possibility may also happen in the ASEAN-Australia-New Zealand FTA, both agreements are now still in the negotiation process.

Some commentators found that a number of trade agreements may potentially limits the fulfillment of human rights. IJ-EPA for example, got criticized because this agreement is considered to facilitate the entry of hazardous toxic waste to Indonesia (The Jakarta Post, 06/27/2008). Similarly, the ASEAN-Australia-New Zealand FTA is considered to be expanding the opportunity on the ownership of land by foreigners, this is due to national treatment provision, in which foreign companies should be treated the same as those obtained by domestic companies in terms of land ownership (bilaterals.org , 02/04/2009).

The fulfillment of Human Rights

What about the ASEAN-China FTA? Would there be any impact from the implementation of this FTA on the fulfillment of human rights in Indonesia? There have been many objections raised by the industry associations and business on the implementation of this FTA, mainly because they are not ready yet to compete. Some analysts believe China’s international trade will only benefit more in this FTA, this is based on the deficit trade balance against China which continues for the last few years. But that is more to economic reasons, below are some reasons to describe why the FTA would potentially affect the fulfillment of human rights in Indonesia.

First, among the commodities that have to be liberalized are agriculture and fisheries products. However, the majority of Indonesia’s populations are very much depending in these two sectors. The possible entry of agricultural and fisheries products from China in a substantially lower price would be a direct threat to the fulfillment of the rights of Indonesian farmers and fishermen to work and earn a decent livelihood. In fact, the effect of these cheaper agricultural and fisheries products from China has already hit our farmers and fishermen even before this FTA enter into force (Antara, 30/12/2009).

The same situation will possibly be occurred in the manufacturing sector. The entry of goods at a lower price from China would make our key manufacturing industries unable to compete and will have to close his business or at least reduce its production capacity. This situation will not only result in the higher rates of termination of employment – which is estimated to  reached the figure of 7.5 million workers – but the harder competition for jobs will obviously lower the bargaining position of labor and workers. This situation will in turn make it too difficult for the workers to obtain their basic rights, such as the rights to a proper wages and compensation on termination.

Second, of course we still remember when the Indonesian Department of Health issued a ban on the circulation of food products, beverages and cosmetics imported from China. This was because they proved to be contained with chemicals which harmful to human. Likewise, it was also found that some elements in toy products come from China are made from harmful chemicals. The lower cost of producing goods in China seems to have a direct relationship with the poor health safety of these products. These experiences should become an important lesson for the government.

With tariff reduced to zero percent, it is inevitable that the number of imported goods from China will be significantly higher. The government should then strengthen the health standards of a product. However, this measure alone is not enough, governments will also need to reinforce its control mechanisms, imposing effective sanctions for non-compliance and provide direct and appropriate compensation for the victim. Without these four measures in hand, it is sufficed to say that the government may have ignored the rights of its citizens on healthy living and healthy environment.

Third, unlike the upcoming EU-ASEAN FTA which in its negotiating directive clearly stating that the establishment of a free trade area between the European Union and ASEAN will fully respect the implementation of “… international environmental and social agreements and standards”, the same provision does not exist in the ASEAN-China FTA. The lacks of guarantee to respect environmental and social rights in this FTA may put the environment and society in a vulnerable position.

As we all may have been aware, environmental standards in China are relatively low. Industrialization in China led to a higher level of air and water pollution. It is argued that China will more likely to overtake the United States as the largest producer of carbon emissions in the world (New York Times, 26/08/2007). With the entering of industrial machinery and investors from China, government must ensure that the environmental law and corporate social responsibility obligations are strictly observed. We certainly do not want the ASEAN-China FTA opens the way for the destruction of the environment and violations of social and cultural rights of the people by foreign investors.

Does not fit: But must be worn

Like fitting a new dress, it appears that ASEAN-China FTA does not entirely fit with human rights. This is because the implementation of this FTA may potentially hinder the fulfillment of human rights in Indonesia. There will be a lot of homework for governments, including ensuring the availability of jobs, the fulfillment of labor rights, environmental protection and respect for social and cultural rights. But the Indonesian government seems unlikely to back out of this agreement. Although it will feel a bit cramped, the human rights dress must not be unworn.

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