Sustainable Development Impacts of Investment Incentives: A Case ...

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Local community members were of the view that the benefits they derive from the existence of the
factories in their midst are constrained by their lack of education, which is vital for working in the
chemical factories. This explains why there are few members of the local communities who are employed
by chemical factories. For those who have the opportunity to work in the chemical factories, they serve
in minor roles suitable for employees with secondary technical education.
A small section of the local community perceived the existence of the chemical factories with strong
scepticism, citing the lack of benefits. These people are primarily those who are not employed by the factories
due to their lack of education. Nonetheless, most respondents perceived no significant negative side effects
caused by the existence of the factories in their midst. However, as will be elaborated in the following section,
pollution—though still within tolerable limits—is cause for concern of many respondents.
5.3 Impacts on the environment
Besides the state and condition of investment and prospects of the chemical industry in Indonesia, one
issue that needs special attention is environmental safety. Industrial pollution is often generated by
various energy uses in operating facilities, which is compounded by a lack of emission control equipment
such as an electrostatic precipitator, a fuel gas desulfurization, a scrubber and others. Pollution can be
caused by the industrial process and raw materials used in the production facilities.
The chemical industry is the number one polluter in Indonesia. 7 The production process in chemical
industries such as alcohol requires a lot of water and releases a large volume of effluents to surrounding
areas. Liquid effluents cause contamination because they contain micro-organisms, in the form of
solutions and suspensions, among others, that arise from direct fermentation. The industry generates
other liquid pollutants during the production process: contaminated water from washing equipment
and tools, solid effluents from metals parts, residues of CaSO4, gas effluents in the form of alcohol
vapours. These forms of industrial pollutants are very dangerous and poisonous causing environmental
damage to air and water.
The policies adopted to control industrial pollution revolve around emphasizing the use of clean sources
of energy, reviewing regulations such as the emission standards and reinforcing self-supervision. Based
on the outcome of findings by the State Ministry for Environmental Protection, most industries are yet
to comply with the provisions. These are the forms of non-compliance within the provisions:
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Ejecting emissions through chimneys;
Not supervising emission standards;
Not fulfilling emission standards;
Not carrying out periodic self-supervision;
The sampling hole and the supporting facilities are not in accordance with regulations;
Non-installation of Continuous Emissions Monitoring equipment; and
Monitoring equipment is dysfunctional.
7 KLH (2003)
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Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia