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

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It is also worth noting that one company was able to improve its category ranking from Blue in 2005
to Green in 2007.
The outcome of environmental protection compliance evaluation shows that foreign companies in
Indonesia tend to apply higher standards than required by Indonesian law. This was confirmed during the
interviews when the foreign companies stated that they use environmental standards originating from their
holding companies, which are tighter than Indonesia’s. In light of such a finding, the fear expressed by some
that Indonesia is turning into a “pollution haven” due to the relocation of “dirty” may not be entirely true.
Since the negative impact caused by pollutants emitted by the chemical industry is not strictly the
responsibility of the Indonesian government, but rather predominantly that of the business community,
companies in the chemical industry in Indonesia have formed National Responsible Care ® (KN-RCI)
to serve as a tool companies can use to apply Responsible Care ® principles. Members of Responsible
Care ® are obliged to follow a six-principle code of ethics:
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Care for the community and response to emergencies through communications and dialogue
with the local community (CAER-Community Awareness & Emergency Response Code)
Pollution Prevention Code
Process Safety Code for production processes/industrial facilities
Safety Distribution Code
Employee Safety and Health Code
Product Stewardship Code (handling product design to disintegration in nature)
The synergy between the government and chemical companies in Indonesia attests to the fact that the
Indonesian government and the chemical industry are concerned about minimizing the impact that
chemical products cause on the environment and society.
From the companies’ standpoint, research findings indicate that respondents are concerned about the
environment (Table 18). Some companies have slogans stuck in various places on factory grounds
serving as awareness raisers to the public about environment and work safety. Companies have allocated
special funds to handle public complaints and deal with waste management. All the companies surveyed
had sound waste management systems in place, which was why no public complaints arose. However,
chemical companies and members of the community did not agree on the impact of operations of
chemical industries on environmental quality. While chemical companies considered their operations
safe for the environment, members of the general public were concerned about the contamination of
water and air caused by company operations.
Based on the community members’ perceptions, the factory and its operations have adversely affected
water and air quality, but there are as yet no indications that it has directly been the cause of sickness
affecting members of the local community. Air pollution, caused by smoke, fumes and odours spewed
by factory chimneys often cause severe irritation and discomfort. Some people who have high sensitivity
to pungent odours suffer from headaches. The air temperature surrounding the chemical plants tends
to be relatively higher, which is attributed to the fact that many trees have been cut down to clear the
way for the establishment of the chemical plants.
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Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia