The Potential Utilisation of State-Owned Enterprise’s CSR for Supporting

Roberto Akyuwen* and Marthin Nanere**

*Finance Education and Training Center Jogjakarta, Ministry of Finance Republic Indonesia

**Regional School of Business, La Trobe University, Bendigo, Victoria, Australia

Abstract

The State-Owned Enterprises (SOEs) have played an important role in social and economic development in Indonesia by providing various goods and services, creating employment, empowering communities, improving government revenue, and accelerating economic growth. Recently, there have been 139 SOEs in Indonesia and 12 of them or almost 9 percent have been privatised. Total annual profit after taxes of the SOEs was close to 80 trillion rupiahs in 2008 and total amount of taxes paid to the government was 200 trillion rupiahs. More than 80 percent of it was contributed by the 10 biggest SOEs alone. Besides running the business as usual in total 35 sectors, under government regulation, each of SOEs has to set aside 1 to 3 percent from its profit after taxes for implementing Partnership Programs and maximum 1 percent from its profit after taxes for Environmental Development Programs. Conceptually, these programs are the typical implementation of Corporate Social Responsibility (CSR) by many SOEs in Indonesia. The main purpose of this paper is to analyse and explore the effeectiveness of both the Partnership and Environmental Development Programs to support sustainable conservation and ecotourism in small islands. Most of SOEs are operated in the regions, which have small islands, such as Moluccas, North Moluccas, and other provinces. Generally these regions have limited fiscal capacity to finance all developmental activities. Consequently, the SOEs are expected to financially support the province and regency governments by allocating some of their profits set aside for Partnership and Environment Development Programs.

Keywords: SOEs, CSR, Partnership, Environment Development, conservation, ecotourism.