Influence of foreign oil companies on local economics in riau, 1967-2004

This chapter focuses on the impact of foreign oil companies on the economy of Riau, especially during the early days of the New Order government. Oil exploration activities in the vicinity of Riau were undertaken by Dutch companies during the colonial period, and the Dutch colonial government succeeded in reducing the influx of investment by foreign oil companies, primarily from the United States, using the rules set out in the Indies Mining Act or Indische Mijnwet of 1899. In contrast to the colonial period and Old Order era, the New Order government invited foreign oil investment in line with the Foreign Investment Act of 1967. Despite having negative environmental impacts, the entry of foreign capital was expected to stimulate the economy in the oil mining areas. However, environmental changes would also change activity patterns and the character of society because of the impact on patterns of work and shelter. Given the huge profits earned by foreign oil companies operating around Riau, this chapter seeks to determine whether, overall, the activities of these foreign companies can stimulate the economy in in which they operate or if they do not provide economic value added to the people who live around the mining area.