Kutai Kartanegara (Kukar) is one of oil, gas, and mining producing districts in Indonesia, where more than 70% of the local budget comes from extractive industry, especially from oil and gas, and coal mining. As the producing area, the local parliament initiates to draft local regulation on the local content in the extractive industry in District of Kukar.

After a number of visits to several institutions and stakeholders, such as Ministry of Energy and Mineral Resources, Ministry of Home Affairs, Pertamina, and national secretariat of PWYP Indonesia in Jakarta, the Kukar parliament held socialization of its regulation to community and local stakeholders in around mining area. The socialization forum held on 29 April 2017 in Sub-district Samboja is aiming to gather suggestion and support in the regulation drafting process.

PWYP Indonesia’s coordinator, Maryati Abdullah one of the speaker in the forum conveyed the welcome of its coalition toward the initiative as local government’s effort to improve community participation in the local economic development in rich natural resources area. By doing so, people welfare can be improved.
In her presentation, Maryati emphasized that local participation mechanism (local content) should be implemented in transparent and accountable manner. It needs a clear mechanism, including the steps, implementing institutions, scope of local content, also monitoring and evaluation scheme.

Maryati also underlined that the increase of local content in the extractive industry shall be in accordance with the plan and target of the local development. So it would be easy to measure the success rate. For instance, the target of decrease of unemployment and also the increase of income. She also warned that the local content regulation should be balance with the local economy development from other sectors, mainly from non-natural resources such as agriculture, tourism, and etc. So that the local economy will not depend on the extractive industry.

Maryati added, the dependency to extractive industry is highly vulnerable toward the market uncertainty, especially the volatility of commodity price. This indication has been seen in Kukar, where the drop of oil price has been brought the economic growth of Kukar to minus 7,6% in 2015, drastically decrease from 2014 that only minus 1,5%. “That’s why Kukar should be rigorously manage the natural resources. So the district won’t be trapped in the direct revenue orientation, but should ensure that natural resources create the multiplier effect to increase the economy and people welfare,” said Maryati.

In the forum, the Chief of Special Committee for Local Content Regulation in Kukar, Junaidi,
emphasized the importance of this regulation to enhance people participation in the extractive industry. So that, the community can get direct advantage from the natural resources in Kukar.