Improving Governance of Extractive Industry in Gunung Mas Regency Some Initial Steps

event 2014-05-30   local_offer Socio-environmental impact, Testimony , Training   edit Dian Anggraeni

Gunung Mas (Gumas) Regency is a resource-rich district. It has 82 major mining companies (gold, coal, and zirkon) and more than 1500 households are traditional gold miners. In addition, it also has a large number of Palm Oil plantations. Despite being a resource-rich district, the health condition of people in Gunung Mas, especially women and children, is vulnerable. Malaria, TBC, Dengue Fever and child malnutrion are found in many locations. There also are seven cases of HIV AIDs in Kurun Subdistrict - three married couples and one child. The palm oil industry, for example, is causing a lot of villagers to give up their lands and to end up in poverty. Villagers are changing their livelihood to become laborers in palm oil companies or to become traditional gold miners. And many girls become married at a very early age. During 2012-2013, the government recorded more than 50 cases of girls giving birth at the age of 14-15 years.[1] The situation is becoming more critical for maternal and child health, and women and children are the most vulnerable subjects.

On the other hand, the fiscal capacity of the Gunung Mas government to fund the district development plan is only 13%. It therefore is very dependant on cash transfers from Central and Provincial Governments. The weakness of this funding, especially through the Special Allocation Fund scheme is that the procedures and criteria are rigid, which makes it difficult for the district government to develop a comprehensive program that can handle cross-cutting factors for the above health cases.

The writer has been grateful by recieving scholarship from ASPAC-Hub 2nd training in Jogjakarta last month. She discover all sessions are interesting. The Value Chain sessions have deepened my understanding about what to do next after returning from the training. In addition, the session with Mr. Carlos Monge also enouraged me to learn more about the Republic of Peru’s good practice in managing revenue from extractive industries. I would love to develop an action plan on this that contributes to better public services, especially for maternal and child health care in Gumas.

I discovered that the essence of the value chain sessions is that cost-benefit analysis should reflect not only short term benefits, but also should calculate opportunity costs as a result of environmental and social impact. I came to the conclusion that measuring CSR at Gumas, for example, means measuring the direct benefit of CSR today, and opportunity benefit in the future; compared to direct costs today and the opportunity costs of CSR in the future. So, we may calculate whether CSR will be beneficial in the long term, or will just provide a short term benefit at the expense of some costs.

Learning form Peru: The law in Peru mandates that the Central Government transfers part of the industry’s royalties to regional and local governments. The royalties received by municipalities represent a great opportunity to lift communities out of poverty. In terms of health services, the increase in programs to improve the supply of maternal care, and the increase in demand via Seguro Integral de Salud (SIS) or National Comprehensive Health Insurance have proven to be a winning combination.[2]

Shortly after returning to Palangka Raya, I started collecting some data. I also continue engaging with government officials to discuss further, improving governance in Gumas. Now, I am focused on three things: 1) Lobbying and negotiating with Gumas Government Officials and staff; 2) a multi-stakeholder forum for effective contribution of extractive industries towards better services, especially maternal and child care action planning; and 3) Action planning to do revenue analysis from extractive industries - mining and plantation . In addition to that, once Gumas Officials agree with the whole agenda, we will work together to provide adequate capacity building to enable the government, the business sector, and especially the community and civil society to engage effectively in the multi-stakeholder forums.

I know that there will be many ‘bumpy roads’ to cross to make this agenda happen, but I already have made my mind to start doing this now! I have this confidence because I have the full support from YTS’s Executive Director and the YTS team. The good reputation and credibility of YTS in the eyes of the Gumas government also provides leverage to start this initiative.

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Dian Anggraeni – Yayasan Tambuhak Sinta (YTS) Governance Project Coordinator

[1] Various data fro Gumas Agencies

[2] Peru’s Comprehensive Health Insurance and New Challenges for Universal Coverage Report, 2013