Meeting on PPM's Cost Formula Assignment

The Ministry of Energy and Mineral Resources (MoEMR) will issue the regulation on the determination of the cost formula of Community Development and Empowerment (or abbreviated "PPM"). The government's plan was presented at a meeting in Ditjen Minerba (DJMB) on 19 June 2019 ago. The event at DJMB was attended by Hendra Sinadia and Delma Azrin, Deputy Chairman of the Environmental & Forestry Committee representing APBI-ICMA, Executive Director of IMA, and Chairman of PERHAPI. The focal point in the DJMB meeting was from the Directorate of Coal Administration who presented a study on the proposed determination of the PPM cost formula. The Ministry of Energy and Mineral Resources has argued that the PPM cost formula needs to be set up for the mining sector to increase the benefits of mining business activities to be more perceived by the community. According to a study from DJMB, the PPM cost of the coal mining company is about 1.3% of Earning Before Tax (EBT)/EBITDA (EBT Depreciation & Amortization) based on the PPM cost data of the CCoW holding company. While the data from minerals have not been reviewed by the Directorate of Mineral Exploitation in DJMB. The Formula of the PPM fee will be put in the Minister Regulation to be prepared in the near future. 

In order to prepare the feedback from the business actors, APBI-ICMA  had the initiative to invite industry/profession associations such as IMA, ASPINDO, PERHAPI and others to APBI's meeting on July 1, 2019 and then continued on July 4, 2019. Prior to the meeting with cross-association, APBI-ICMA secretariat sent an e-mail regarding the issue throughout the members to obtain a response. Addressing the government's plan, the APBI-ICMA understands the government's desire to increase PPM costs is to increase the positive impact perceived by communities in relation to mineral and coal mining business activities. APBI-ICMA member companies are also committed to continuously increase the cost of PPM which is also part of Corporate Social Responsibility (CSR).

On the other hand, APBI-ICMA suggested that the cost of PPM should not be regulated in a particular formulation because it is essentially a CSR/Comdev/PPM/or the term PKBL (known as BUMN) is voluntarily. The statement is also the position of the business actors who are members of KADIN, APINDO and other business groups who respond to the enforcement of Social Responsibility & Environmental (TJSL) corporation that is governed in the Law for the Company Limited. In addition, mining business activities have fulfilled about 16 of the 17 objectives of the Sustainable Development Goals (SDG) which the SDGs are the commitments of the government of Indonesia and all the UN member states. The mining industry commitment in the SDGs is even bigger than the PPM cost component which is regulated in the Decree of ESDM No. 1824 K/30/MEM/2018 on the guidelines for implementation of Community Development and Empowerment. 

The Corporate Forum for Social Development (CFSD) even mentioned that setting up a PPM (or CSR) cost formula is not known in the literature or scientific studies related to CSR anywhere. We recommend that focusing on PPM is more emphasized on the program plan that suits the needs of both people affected (mine circumference) and the wider community. It is in line with the spirit in the Minister Decision (MoMER) No.1824 K/30/MEM/2018 requesting for IUP/IUPK holders to develop social mapping in compiling PPM programs. The preparation of social mapping is important to be aligned with the PPM master plan which until now, for the initiative of the master plan is initiated by the provinces of East Kalimantan and North Kalimantan.

APBI and IMA intend to meet the DJMB to get further clarification and discuss on matters related to the fulfillment of SDGs commitment and the PPM cost formula. In addition, APBI and IMA will discuss with BAPPENAS which is also a focal point of the government of Indonesia in terms of monitoring the implementation of RI's commitment to the SDGs. In this case APBI and IMA will also invite SDGs experts.

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