The “Partnership for Sustainable Development” Program in Indonesia:
Linking MDGs & the Global Compact
“Extreme poverty and a lack of sustainable development for the world’s poor
will constitute the greatest challenge to maintaining peace this century. “
Millennium Declaration
"We must work to underpin the marketplace with solid and stable foundations and
open the door to full participation by all people, including and especially the world's poor.“
Secretary-General Remarks, 1st Global Compact Advisory Council, 2002
1) Background
Indonesia
 For countries like Indonesia, there is good progress towards achieving
the MDGs at the national level, but the challenge remains to effectively
address ‘pockets of poverty’ at the sub-national level. Partnership with
business will be critical, since business serves as a driver of growth and
revenues needed to achieve development goals.
 Achieving future development gains in Indonesia will depend on its
ability to renew and sustain an adequate level of economic growth.
While renewed private investment and a return to growth will be a
significant achievement for achieving development goals, the context in
for this growth has changed.
 Not only must growth translate into development gains for the ‘pockets
of poverty’, it must also address greater demands for local autonomy
and inclusion of civil society in decision-making. Indonesia’s
challenge is to manage globalization and renewed business
investments in a way that adapts to this new development context –
growth with equity and sustainability.
Targeting Pockets of Poverty –
The Challenge in Papua Province
 Indonesia’s largest province, Papua (formerly ‘Irian Jaya’) holds the highest
levels of poverty - with about 60% of its population in extreme poverty. It
also hosts 60% of Indonesia’s biodiversity and has the nations highest rates
of HIV/AIDS. Thus, it stands as a priority for MDGs under several Goals.
 A watershed in achieving development goals in Papua will be the
“Tangguh” Liquefied Natural Gas (LNG) operation. With a US$3 billion
investment by British Petroleum (BP) and a consortium of foreign investors,
Tangguh stands as Indonesia’s largest Foreign Direct Investment (FDI) since
the economic crisis began in 1998. Tangguh is planned to commence exports
around 2010, and after several years of cost recovery, is expected to generate
approximately $1 billion revenue per year starting in 2015, to be shared
between national, provincial and district governments.
 Under a Special Autonomy Act for Papua passed in 2001, the province will
retain 70% of LNG revenues and major decision-making powers, a major shift
from times when the majority of revenues and decision were controlled by the
central government. The challenge for local government and partners will be to
manage the change associated with Tangguh and autonomy in way that can
meet human development goals equitably and sustainably towards 2015 and
beyond.
The capacity to change
 In July 2004, UNDP is commencing the “Partnerships for Sustainable
Development” programme with national and local government, civil
society and BP to engage the challenge of building local capacities to
manage this process. This is done by finding synergy among the
approaches of the MDGs and the Global Compact towards common
development objectives among government, business and civil society.
 The goal of the programme is to develop new poverty reduction
strategies and new models of local development that distinguish
themselves from past failures and translates growth into poverty
reduction.
 The unprecedented levels of local revenues that will flow from Tangguh
can be a major boost to local poverty reduction efforts. However, Papua
has failed in the past to benefit from commodity export-led growth to
improve its rate of progress on development indicators. (Papua
hosts the Freeport Copper and Gold Mine – the largest in the world).
The capacity to change
 The 2003 UNDP Human Development Report (HDR), shows that
economies with a heavy dependence on a commodity exports face
hurdles in sustaining growth, many suffering a decline in MDG
indicators in recent years. This contrasts with economies that used
trade as an engine for growth of a diversified local economy, and
enacted measures for preventing distributional conflicts.
 Economies that depend solely on commodity-exports have the
highest poverty - 80% of people in mineral exporting countries lived on
less than $1/day at the end of the 1990s, compared with 43% in service
exporters and 25% in manufactured goods exporters.
 The HDR also highlights the fact that conflicts are increasingly located
within countries rather than between countries, often taking place in
regions where commodity exports take centre stage in the local
economy and where poverty has become entrenched as a result of
distributional inequities. Twenty two of the 34 countries that were
furthest away from achieving the MGDs in 2000 were affected by
conflict, mostly internal.
2) The BP Natural Gas Investment
Bird’s Head Region of Papua Province
Sorong
Manokwari
Bintuni
Tangguh
Babo
Fak Fak
Tangguh Project Site
Regional Growth Centers
Babo Airfield
Timika Facility
Timika
LOCATION OF GAS FIELDS
OPEN
2° 10'
WIRIAGAR PSC
( ARCO )
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WIRIAGAR
VORWATA
BINTUNI BAY
ROABIBA
2° 20'
OFAWERI
GAS FIELDS
0
2
4
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8
10 KM
133° 00'
ra_summ
9
OFF-SHORE GAS PRODUCTION FACILITIES
AND PIPELINES
Vorwata
Wiriagar
20.6 Km
31.2 Km
LNG Facility
Example of a production facility
Gambar Skematik Rencana Pabrik LNG dan Fasilitas Pendukungnya
BP Management Vision for Tangguh
A World Class Model of Responsible Industrial Development
A Catalyst for Sustainable, Long-Term Expansion and Diversification
of the Indonesian Economy with a focus on Papua Province
A Partnership between BP, Civil Society, and the Donor community
Development of Clean Energy for the future
BP Management Principles
Enhancement of human resources and governmental capacities to
sustain the economic and social benefits derived from the project
Protection of the Environment
Equitable treatment of local communities
Stimulus for Regional Economic and Social Development
Efficient production of natural gas resources
Creation of Exports and Foreign Exchange
BP Tangguh Performance Standards
The BP Tangguh Gas Operations will set an example for others to follow and
will build confidence in investing in Papua Province
All Government of Indonesia Social and Environmental Impacts Assessment
procedures, rules and regulations are being scrupulously adhered to
World Bank development planning and management standards will be
rigorously implemented
International and National NGO sustainable development standards will be
applied
Tanah Merah Village
Worlds Largest Mangrove Forest
Peat Swamp Forest
Nipah and Sago Palm Forest
Lowland Forest
Savannah
Mountains and Uplands
Artisanal Fishing
i
Commercial Trawling
Sago Production
Timber Production
Mangrove Wood Chip Mill
Oil Palm Estate
Transmigration
AN INTEGRATED SOCIAL STRATEGY
Consultation
Empowerment
Partnership
Participation
Sustainability
Diversified Growth Strategy – help create diversified and sustainable economic development in existing
urban areas to prevent uncontrolled migration to the plant site
Revenue Management – help accelerate timing of funds flow to Papua, promote transparency over
Tangguh funds to government and build capacity for wise decision making
Community Based Security – bring about a clear environment and role for the community to provide front
line protection of the plant, and for the Indonesian military to provide a second line of protection
DAV recognition programme – provide compensation to Directly Affected Villagers by the project, using
international best practice to consult and develop community action programmes
Training and workforce management – ensure Papuans are able to take part in opportunities provided by
the Tangguh project, seeding overall economic development in the region
Forum and Foundation – establish vehicles for dialogue and development in the broader Bintuni Bay area
Biodiversity – achieve best practices for integrating sustainable biological conservation with sustainable and
practical development
AMDAL – an EIA to meet national and international standards, implementing environmental best practice
Village resettlement – in accordance with World Bank standards
…….delivery on the ground through facilitation and direct action
Conventional Oil and Gas Development:
Centralised Growth Model
Petrochemical
Plant
New Town
LNG
Fertilizer
Plant
Uncontrolled Development
Issues to manage: Uncontrolled in-migration;
environmental degradation; disenfranchised local
communities.
DIVERSIFIED GROWTH STRATEGY
The DGS manages change by expanding economic
opportunities for local villages but emphasizes the
importance of strengthening sustainable economic and social
development in the broader region, and in other resource
sectors such as forestry, fisheries, agriculture and
manufacturing
The DGS thus discourages in-migration to the Project site – a
major management issue for similar projects elsewhere.
The disbursement of revenues to the Province and to Local
Government creates the first opportunity in the outer islands
of Indonesia for a diversified rather than a concentrated
growth strategy.
DGS LOCAL SCALE: PARTNERSHIP WITH
VILLAGE COMMUNITIES
 Purpose is to ensure that local people benefit from the
exploitation of their natural resource; but are not
overwhelmed by rates of technological, environmental, social
and economic change.
 ·Activities include support for service providers to improve
education, health and infrastructure and to promote economic
opportunities; establishment of systems for community based
security and third party support for development.
 Outcomes include: needs of directly affected villages met;
community-based security successful, and mechanisms
allowing donor sources and investments to fund economic and
social development in place; capacity for local involvement in
LNG workforce
DGS REGIONAL SCALE – CONSTRUCTION PHASE:
PARTNERSHIPS WITH THE PRIVATE SECTOR
 Purpose: To protect environment and the authority of local
adat land owners through the promotion of sustainable
development of industry in existing urban centres.
 Activities: assistance through contracts in District cities and
the sub-district towns, for the provision of goods and services.
(e.g. ITB)
 Outcomes:
 Enhanced capacity of urban centers to provide goods,
support services and training resulting in greater
employment and social and economic opportunities; and
 Minimization of in-migration by non-local people to the
Project site during critical early years
DGS REGIONAL SCALE – CONSTRUCTION AND
OPERATIONAL PHASES: PARTNERSHIP WITH
THE PUBLIC SECTOR
 Purpose: to enhance the capacity of local and provincial government
to provide essential social services and environmental and resource
management as implementation of the Tangguh Project drives
economic change.
 Mechanisms: strategic partnerships with Provincial, Local and
National government and other stakeholders for collaborative work
improving planning and revenue management capacity.
 Outcomes:
 Strategic Growth Plan for western Papua prioritising economic, social and
infrastructure development across a range of sectors;
 improved HR capacity in local governments, including career continuity for
newly trained staff;
 Identification of potential donor-supported projects for further capacity
building.
IMPLEMENTING THE DGS
•BP will not fill a role of de facto government, despite a
long term commitment to Papua and Indonesia.
• BP believes that sustainable development can only be
produced by the people and their social institutions
•Development of social institutions is appropriately the role
of public sector agencies such as the government supported
by organisations such as the UN, the development banks
and bilaterals
•BP does accept that its role is to implement partnership
agreements which facilitate the engagement of these
institutions
MILESTONES TOWARDS PARTNERSHIP
•May 2001 – socialization and debate of planning concepts in BP and the
State Oil Regulating Body (Pertamina)
•July 2001 – introductory meetings of ideas with the Papuan Provincial and
districts governments – identification of key Papuan personalities.
•August 2001 – initial discussion with UNDP concerning potential
partnership opportunities
•November 2001 – National Workshop in Papua to endorse DGS with
financial support from BP, UNDP and Papuan Government
•May 2002 – initial discussions towards an agreement between the national
provincial and local governments, BP and UNDP concerning the
implementation of the DGS
•June 2002 – concept discussed between UNDP Indonesia and UNDP
Administrator at WSSD Final Preparatory Committee meeting in Indonesia
•September 2002 – National Workshop in Papua to draft an MOU
•October 2002 – Papua indigenous people (adat) workshop endorse MOU
•November 2002 –MOU signed between Provincial Government of Papua
and district governments, UNDP, BP witnessed by National Government.
•June 2004 final approvals by Indonesian Government to proceed with 3
vear UNDP-BP Partnership Programme
2) The “Partnership for
Sustainable Development” Programme
The Partnership Programme
 The program reflects a partnership between the local, provincial and
national governments; civil society, UNDP and BP.
 The goal of the programme is to ensure that the growth resulting from
the Natural Gas investment is sustainable, equitable and can help
achieve the Millennium Development Goals. It engages BP’s
commitment to corporate responsibility and development, as a lead
member of the Global Compact.
 Through cooperation between BP, UNDP, civil society and the
Government, the “Diversified Growth Strategy” (DGS) has been
adopted as Papua’s new policy framework. The partnership project sets
out to implement the policy through the production of a strategic
development plan, enactment of new regulatory frameworks, and
capacity building. The construction of the plan is an exercise in capacity
building – learning by doing
Programme outputs and activities
 An initial three-year Phase I (2004-2006; US$1million) is commencing
in July 2004 to reach four specific outputs. This will end with support to
design of Phase II (2007-2015) to move towards achievement of MDGs
by 2015. The four Outputs of Phase I are:
Output 1: Enhanced partnerships among government,
civil society and business:
 Dialogues, consultations, research and advice on means to improve
role of civil society and indigenous peoples groups, and local business
development to serve as a basis for all other outputs.
 National Advisory Council with 15 agencies to support roll-out of
capacities to local government
 Provincial Steering Committee with government, business and civil
society to guide programme activities and monitor progress
 District Committees to lead execution of programme outputs
Output 2: A long-term Regional Development Plan
(2005-2015) for achieving MDGs through equitable and
sustainable growth.
– Developing a basic strategy for development – a “Diversified
Growth Strategy” (DGS) focusing on diversification of local
economy, equitable revenue sharing, local business development,
and manage risks associated with Tangguh such as migration, etc.
– Identify critical development priorities towards 2015 based on a
human development perspective and outline a development plan
whereby government revenues from the Gas operations go to
achieve development objectives.
– Identifying critical ecosystems and conservation areas, Papua
holds 60% of Indonesia’s biodiversity) and review land and water
use policies to adapt systems to new drivers of change from
Tangguh.
Output 3: Develop regulatory systems to manage the
social, environmental and economic impacts of
Tangguh and compliance with the Social and
Environmental Impact Assessment (AMDAL) :
 In the context of the new Special Autonomy Regime for Papua, this
includes a rights-based approach, focusing on three pillars –
-
Access to Participation: inclusive administrative decisionmaking processes related to local development, land and water
use management and delivery of public services (including
synergies between state and traditional governance systems),
– Access to Information: public information required to understand the
risks and benefits from development activities and public
programmes, and capacities needed to meaningfully contribute to
decision-making processes, and take part in monitoring impacts of
Tangguh,
– Access to Justice: improved dispute resolution mechanisms among
government, civil society and business that address issues of
compliance with Social and Environmental Impact Assessment
(AMDAL), and local customary norms of indigenous peoples.
Output 4: Design of Phase II (2007-2015) capacity
building programme to implement the Development
Plan:
Based on the issues outlined in the Development Plan, a
long-term programme will be designed and launched in
2007 as Phase II to build capacities needed to ensure
achievement of MDGs.
This includes integrated approach also covering
governance reform, conflict prevention, and environmental
protection activities.
Includes establishment of Trust Fund with Government
revenues from Tangguh, and support for mobilizing any
supplemental resources needed from the donor community.
Thank you
Comments during local consultations, Papua
And issues for Break-out Groups?
“BP is being very careful with the community. We know the eyes of the world are on
it...so perhaps because of that BP is working very closely with us.” (villager)
“I don’t know yet if the idea of mutual benefit is possible. All that’s clear now is that BP
will benefit….Our visions differ from BP, as does our understanding of the issues, so
how can we have a constructive relationship?” (NGO)
“There are two very different legal systems at work – the traditional system and the
national system. Which one does BP say it is respecting?” (NGO) “If promises are
made, it’s taken as legally binding according to our traditional system.” (villager)
“In ten years time, Papuans should be running the project – from the engineering side
of things to the social and environmental. That’s enough time to have developed local
capacity, and will provide an indicator of success for BP’s approach.” (government
official)
Work of Hugh Attwater,
Researcher with BP. 2000