Bisnis.com, JAKARTA – Foreign and domestic banks are urged to review companies that have been debtors but are involved in environmental issues, such as oil palm plantations and limestone mining.
Recent research by the Indonesian Responsibank Coalition shows how the role of foreign and domestic banks is very important in the business of plantation and cement companies in Indonesia. The research was launched today by examining the relationship between banking and the two business sectors.
The Responsibank Coalition consists of a number of civil organizations namely Infid, ICW, Prakarsa, PWYP, WALHI, and YLKI. The research examines the oil palm plantations of PT Wira Mas Permai in Banggai Regency, Central Sulawesi, and PT Semen Indonesia Tbk (Persero) in Rembang Regency, Central Java.
Kurniawan Sabar, one of the researchers said, for example, is a loan from PT Bank Mandiri Tbk worth IDR 1.4 trillion, which supports the business operations of PT Semen Indonesia in the construction of its factory in Rembang. Bank Mandiri has been invited to a Focused Discussion Forum prior to the launch of the research to provide clarification on the provision of credit.
The limestone mine itself is still being opposed by local residents for allegedly damaging the Groundwater Basin. “It will result in the loss of springs that support the lives of the people of Rembang,” said Kurniawan during a discussion on the launch of the research, Friday (30/10/2015).
Meanwhile, the case of PT Wira Mas Permai’s oil palm plantation, which is owned by the Kencana Agri Group, also involves a number of national and foreign banks. Edo Rakhman, a researcher on this issue, explained that the loan was related to plasma plantations, but it turned out that the plantation was not built.
“PT Wira Mas Permai did not build a plasma plantation which is the main obligation for oil palm opening,” said Edo in the discussion.
The Kencana Agri Group itself receives financing facilities from international banks such as HSBC and Citibank. The research explained that the two banks had strict requirements on the environment, but practices in the field were not implemented.
The ResponsiBank Indonesia Coalition stated that it asked the Financial Services Authority (OJK) to encourage the banking sector in Indonesia to include social and environmental risk standards prior to credit disbursement. The coalition says this is important because banks are the lifeblood of company expansion, including those that do not obey the environment.
“To cut the blood flow of rogue companies, banks have to be more strict and review their investments when there are violations,” the coalition said.