The politics of corporate social responsibility in Indonesia

In July 2007, Indonesia became the first country to introduce mandatory legal requirements for corporate social responsibility when the Indonesian parlia-ment passed Law 40/2007 on Limited Liability Companies. This paper examines the political dynamics that shaped this and subsequent regulatory developments re-lated to corporate social responsibility and assesses the likely future direction of Indonesia's corporate social responsibility policies. We argue that policy de-bates over corporate social responsibility in Indonesia have reflected a strug-gle between the dominant sections of Indonesia's capitalist class, local commu-nities that have been negatively affected by corporate activity and their allies in the non-governmental organization movement, and predatory elements in the political parties and bureaucracy for control over the economic resources gen-erated by the activities of major corporations in that country. We argue that the dominant sections of Indonesia's capitalist class have so far won this strug-gle in large part because of their instrumental connections to senior Golkar figures within the government. With respect to the future direction of corpo-rate social responsibility policy, we argue that much will depend on the out-come of future presidential elections. If these elections produce a political leadership that supports a mandatory approach to corporate social responsi-bility, there is some chance that mandatory requirements for corporate social responsibility in Law 40/2007 will be implemented. If they result in the election of a leadership that does not support a mandatory approach to corporate social responsibility, by contrast, such a change is unlikely.