OIL AND GAS INDUSTRIALIZATION AND
POVERTY ALLEVIATION PROGRAM
IN BOJONEGORO REGENCY
BY :
BOJONEGORO REGENT
H. S U Y O T O
Presented in the discussion
“Contribution of Oil and Gas Industry on Poverty Alleviation”
Ghana, 26 August 2013
GENERAL DESCRIPTION OF BOJONEGORO REGENCY
IN SOCIAL AND ECONOMIC MACRO CONDITION
Oil and gas are found in some areas in Bojonegoro and Bojonegoro is
known as producer of oil and gas
GDP CONTRIBUTION
• Mining sector become the
biggest contributor in the
economy. Followed by
agriculture and trade sector
• GDP of Bojonegoro regency
increase 13,7 Trilliun in 2008
and become 28,7 trillionin 2012
(increase 109,49%)
• Need to sustainable
development strategy to
balance and keep
GDP Contributions (2012)
Agriculture
3.01 3.42
Mining
7.63
19.65
12.84
Electricity
0.43
3.94
5.69
Industry
43.38
Construction
Trading
Transportation
Finance
Services
ECONOMIC GROWTH
14
12
10
BJN District (oil and gas)
8
BJN Distric (non oil)
6
East Java Province
4
National
2
0
2008
2009
2010
2011
2012
• The non oil and gas economic growth is 7,4%, with oil and gas reached
5,68%. This because the decrese of lifting.
• The inflation is stable at 4,05%. This is a good condition to increase economic
growth
ECONOMIC GROWTH
11.84
10.24
10.44
9.19
5.82
5.93
6.45
6.60
7.40
5.68
2008
2009
2010
2011
Economic growth in oil and gas sectors
Economic growth in non-oil and gas sectors
2012
FARMERS ECONOMIC EXCHANGE VALUE
103
102
101
100
99
98
97
96
102
102,45
102,65
102,5
2009
2010
2011
2012
98,74
2008
IN 2012, FARMERS ECONOMIC EXCHANGE VALUE LITTLE SLOW RATHER THEN 2011
BECAUSE THE HIGHER SALARY OF WORKER WHICH CAUSES COST NEEDED BY FARMER
ALSO INCREASE
7
2011
2012
99.11
67.35
77.25
71.77
102.50
67.29
77.35
Life
Expectancy
(Years)
98.88
Index Poverty
Index of
(thousand
Participation in
families)
Primary
Schools
61.90
Index of
Participation in
High Schools
102.65
Farmers’
Economic
Exchange
UNEMPLOYMENT RATE (%)
Axis Title
8
6
2008
4
2009
2
2010
2011
0
2008
2009
2010
Axis Title
2011
UNEMPLOYMENT RATE INDICATE DECREASE TREND BUT IN 2011 THAT WAS AN INCREASE
BECAUSE THERE IS A LACK OF JOBS STABLE, LACK OF SKILLS OF JOB SEEKERS, THE GLOBAL
ECONOMIC THAT CAUSES COMPANIES OR FACTORY EFFICIENCY TO DO WORK FORCE.
HUMAN DEVELOPMENT INDEX
80
HDI
60
Healty Index
40
Life Expectancy
Life Expectancy
20
Buying Power Index
HDI
0
2008
2009
2010
2011
2012
Description
2008
2009
2010
2011
2012
HDI
65,83
69,79
70,57
57,14
66,38
70,02
70,90
58,21
66,92
70,24
71,33
59,19
67,32
70,47
71,38
60,12
67,73
70,58
72
60,61
a. Healti Index
b. Education Index
c. Buying Power Index
10
A PORTRAIT OF POVERTY, IN BOJONEGORO REGENCY
WHO
WHY
TREND
WHO IS THE POOR PEOPLE IN BOJONEGORO ?
INDONESIAN STATISTIC BUREAU USES THE FOLLOWING 14 INDICATORS
OF POVERTY :
HOUSEHOLD POOR STRATIFICATION
:
NEARLY
POOR
FULFILL 9 – 10
INDICATOR
POOR
FULFILL 11 - 13
INDICATOR
VERY
POOR
FULFILL OF ALL
INDICATOR
1. LIVING QUARTER OF LESS THAN 8 SQUARE METERS PER PERSON
2. HOUSE WITH EARTH FLOOR OR MADE OF INFERIOR WOOD OR
BAMBOO
3. HOUSE WALL MADE OF BAMBOO OR PALM LEAVE MATERIAL OR
INFERIOR WOODS OR UNFINISHED BRICKS
4. NO SANITARY FACILITIES OTHER THAN NEARBBY COMMON
FACILITIES
5. NO ELECTRICITY
6. NO RUNNING WATER IN THE HOUSE
7. USE WOOD/CHARCOAL/ KEROSENE AS COOKING FUEL
8. ONLY CONSUMPT MEAT/MILK/CHICKEN ONCE A WEEK
9. ONLY CAN AFFORD ONE PAIR OF CLOTHINGS PER YEAR
10.ONLY CAN AFFORD ONE OR TWO MEALS PER DAY
11.CAN NOT AFFORD MEDICAL EXPENSES AT THE LOCAL MEDICAL
CLINIC
12.SOURCE OF INCOME : FARMING WITH LAND LESS THAN 0,5
HECTARE, OR LABOR WITH INCOME LESS THAN US$ 60 PER MONTH
13.EDUCATION OF THE HEAD OF HOUSEHOLD ONLY PRIMARY SCHOOL
LEVEL OR EVEN LESS
14.NO SAVING OR OTHER PESSESION THAT CAN BE SOLD FOR US$50
(e.g MOTORCYCLE, CATTLE, GOLD JEWELRY)
WHY THEY POOOR
•
•
•
•
•
•
Mostly they don’t have own land
Ownership of land just nearly 0,02%
Low of education grade
Leak of Government’s official capacity
Unsustainable development (instant program)
Less of capacity to create income
POVERTY RATE TREND
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2008
2009
2010
2011
• DECREASE OF POVERTY FROM 2008 – 2011 AS MUCH AS 26,81% OR DECREASE
79.851 JIWA
• IN 2011 DECREASE OF POOR PEOPLE 6,31 % COMPARED IN 2010.
• POVERTY ALLEVIATION HAS BECOME A PRIORITY POLICY
• BOJONEGORO GIVEN NATURAL
RESOURCES DEVELOPMENT FOUND IN
CEPU BLOCK TO POTENTIAL OIR
RESERVES ESTIMATE ABOUT 1.200
MMBOE AND GAS 6 TCF. EXCEPT IT IN
SOME OF AREA ALSO HAS OIL AND GAS
POTENTIAL THERE ARE BLOK TUBAN,
BLOK BLORA DAN BLOK NONA
• ESTIMATED 20% RESERVE OF NATIONAL
OIL AND GAS IN BOJONEGORO
REVENUE SHARING FUNDS OF OIL AND GAS
LIFTING (THOUSAND BAREL)
YEARS
PROGNOSA
REVENUE SHARING FUNDS
(MILLION RUPIAH)
REALIZATION
TARGET
REALIZATION
2006
-
2.241
28.800
49.490
2007
14.700
6.580
21.020
12.750
2008
11.800
9.090
68.500
88.100
2009
17.670
12.370
61.800
37.900
2010
19.200
22.020
131.400
164.000
2011
24.360
22.818
167.900
213.500
2012
24.600
22.690
291.700
457.600
• IN 2008 THE OIL PRODUCTION ARE 9 MILLION BARREL WITH REVENUE 88 BILLION. UNTIL 2012 OIL PRODUCTION REACHED
OUT 22 MILLION BARREL MORE THAN REVENUE 457 BILLION. THIS CONDITION ESTIMATED INCREASE THREE TIMES FOR THE
NEXT YEAR BECAUSE OF “PEAK PRODUCTION” ESTIMATED REACH OUT 165 – 180 THOUSAND BOPD ESPECIALLY ONLY FOR
BLOK CEPU.
• ALL THE DIRECTION MINDED, BOJONEGORO WILL BE RICH REGENCY.
Key benefits from Oil & Gas exploitation
• Generating local government income from
revenue sharing, tax and participating interest
• Generating economic value chain
• Next Strategy..??? Does the poverty rate
would Increase or Decrease?
How we can managed its in the peak
production (revenue windfall) and after??
How can oil & gas exploration not just producing
externality & environmental impact but also bringing the blessing
• My key Challenges
•
•
•
Successed the construction of production facilities and reach to the peak
production in timely manner (2014), and keep requirement of environmental
standard
Maximize opportunity to creating jobs, increasing economic value added, and
sustainable economic development
Utilization of revenue for sustainable development and poverty reduction
POLICY AND STRATEGY IN MANAGING OIL AND GAS TO
ALLEVIATION POVERTY
BASIC PRINCIPLE IN MANAGEMENT OF OIL AND GAS
1. SUPPORT OIL AND GAS PRODUCTION BEING SUCCESS
2. OIL AND GAS DESCENDING INDUSTRY HAVE BE BUILD IN BOJONEGORO (FERTILIZER
FACTORY)
3. SMART PLANNING, RIGHT AND EXACTLY ALSO PARTISIPATIVE (PEOPLE PARTICIPATION) ,
ACCOUNTABILITY AND TRANSPARENT MANAGEMENT
4. BASE ON SUSTAINABLE DEVELOPMENT PRINCIPLES
5. HUMAN RIGHT APPROACH
6. THE POTENTION HAVE TO GIVE PROSPHERITY FOR BOJONEGORO PEOPLE
ACTUALIZATION ALL OF MACRO POLICY IN DEVELOPMENT PLANNING DOCUMENTS,
BOTH LONG-TERM PLANNING, MEDIUM OR YEARLY
MACRO POLICY AND STRATEGY STEPS HAVE BEEN DONE IN THE MANAGEMENT
OF OIL AND GAS FOR SUTAINABLE DEVELOPMENT
FIRST :
ON ENVIRONMENTAL PROTECTION AND THE DECLINE OF AGRICULTURAL YIELD DUE TO MASSIVE LAND
CONVERSION :



ALIGNMENT OF PLAN OF DEVELOPMENT (OF OIL AND GAS FIELDS) WITH REGENCY SPATIAL
LAYOUT PLAN (ZONING) AND DETAILED SUB-DISTRICT ZONING PLAN
OPERATOR’S COMMITMENT TO MANAGE SOCIOECONOMIC ISSUES IS PUT FORWARD AS A
CONDITION BEFORE LOCATION AND CONSTRUCTION PERMITS ARE ISSUED
ON GOING PROGRAM TO BUILD 1,000 WATER PONDS FOR IRRIGATION, AS AN EFFORT TO
INCREASE AGRICULTURAL PRODUCTIVITY TO COMPENSATE THE MASSIVE LAND CONVERSION
FOR OIL AND GAS OPERATIONS
REGULATORY:

LOCAL REGULATION NUMBER 26/2011 ON SPATIAL PLANNING YEAR 2011-2031, THE FOLLOWING DETAILS

STRENGTHENING AGRICULTURAL POLICY STRATEGY, OIL AND GAS IN THE LONG TERM DEVELOPMENT PLAN (20052025) AND INTERMEDIATE (2013-2018) IS CURRENTLY IN THE FINAL STAGES OF COMPLETION

LOCAL REGULATION NUMBER 23/2011 ON REGIONAL ECONOMIC GROWTH ACCELERATION IN THE IMPLEMENTATION
OF OIL AND GAS EXPLORATION AND EXPLOITATION
SECOND :
THE ISSUE OF SOCIAL CONFLICT IN VILLAGES AND RURAL PRODUCTION AREAS TO EMPOWER
LOCAL POTENTIAL OIL AND GAS ACTIVITIES :
• NURTURING A CONDUSIVE ENVIRONMENT FOR OIL AND GAS OPERATION BY BUILDING
AWARENESS, ENCOURAGING AND, MOST IMPORTANTLY, ENABLING THE HOST
COMMUNITY TO GROW
• IMPROVING HUMAN DEVELOPMENT INDEX BY EMPOWERING AND STRENGTHENING THE
AVAILABLE POTENTIALS
• EFFORT TO PROTECT LOCAL POTENTIALS TO MINIMIZE SENSITIVE AND VOLATILE ISSUES,
WHICH CAN LEAD TO SOCIAL UNREST
REGULATION TOOLS:
LOCAL REGULATION NUMBER 23/2011 ON REGIONAL ECONOMIC GROWTH ACCELERATION IN
THE IMPLEMENTATION OF OIL AND GAS EXPLORATION AND EXPLOITATION
THIRD :
REGARDING THE ISSUE OF CAPACITY BUILDING ENTIRE VILLAGES AND PRODUCTION SITES :
A STRATEGIC MOVE THAT I DID WAS ISSUED REGENT DECREE NUMBER 31/2009 ON THE
ALLOCATION FUND VILLAGE. PRODUCING VILLAGE IS NOT ONLY REQUIRED PROVIDING SOCIAL
SUPPORT (PARTICIPATORY JUSTICE), BUT ALSO THINK ABOUT HOW THEY ARE "EMPOWERED"
THROUGH THE PROVISION OF REVENUE-SHARING STIMULANTS (DISTRIBUTIVE JUSTICE)
FOURTH :
CONCERNED TO ACHIEVE SUSTAINABLE ECONOMIC GROWTHH AND STRONG REGIONAL
ECONOMIC STRUCTURE BASED ON LOCAL COMPETITIVE ADVANTAGES ESPECIALLY THE
CONTRIBUTION OF OIL AND GAS NATURAL RESOURCES SUSTAINABLY, INCLUDES :
• FINE TUNING THE ACTION PLANS WITHIN THE ANNUAL, MID-TERM, AND LONG-TERM
REGENCY DEVELOPMENT PLANNING, WHICH IS GEARED TO STRENGTHENING THE QUALITY OF
PUBLIC PARTICIPATION IN LOCAL DEVELOPMENT PLANNING
• CAPITAL INVESTMENT (ENDOWMENT FUNDS) TO GENERATE LARGER ECONOMIC BENEFITS
FOR FUTURE GENERATIONS
FIFTH :
ON TRANSPARENCY AND ACCOUNTABILITY OF THE USE OF OIL AND GAS REVENUE WE MADE THE REGENCY DEVELOPMENT PLANNING
AND ANNUAL WORK PROGRAM AND BUDGET AS PUBLIC DOCUMENTS. THIS IS DONE TO ENSURE THE GENERAL PUBLIC PLAY A ROLE
IN CONTROLLING THE PROGRAMS FROM PLANNING TO IMPLEMENTATION PHASE IN THE “PUBLIC SPACE”, INCLUDING DURING
WEEKLY PUBLIC DIALOG AT THE TOWN HALL EVERY FRIDAY.
THROUGH ANY AVAILABLE MEDIA, ANYONE CAN RAISE QUESTIONS REGARDING THE DEVELOPMENT AND GOVERNANCE, WITHOUT
CENSOR. EACH INQUIRY HAS TO BE ADDRESSED DIRECTLY BY THE RELATED LOCAL GOVERNMENT OFFICIAL. TO SUPPORT
TRANSPARENCY AND ACCOUNTABILITY, A LOCAL REGULATION NUMBER 28/2012 ON TRANSPARANCY OF GOVERNANCE IN
EXTRACTIVE INDUSTRIES WAS PASSED AT REGENCY LEVEL. THE REGULATION IS NOW UNDER EVALUATION PROCESS WITH HIGHER
LEVEL GOVERNMENT
SIXTH :
WITH REGARD TO THE PROBLEM OF JUSTICE, PARTICIPATION AND OPENNESS. FUNDAMENTALLY I WANT TO SAY THAT IN EVERY
STRATEGIC MOVE THAT I SET AS SET FORTH IN VARIOUS REGULATIONS ABOVE, CONSCIOUSLY PERFORMED IN ORDER TO
REALIZE THE ACHIEVEMENT OF THE HAPPINESS INDEX. THEREFORE, THE EXPLORATION AND EXPLOITATION OF OIL AND
GAS IN BOJONEGORO ACTUALLY A TOOL / DEVICE THAT WILL HAVE A ROLE IN PROVIDING VALUE HAPPINESS TO THE
PEOPLE, BOTH PERSONAL HAPPINESS (INTELLECTUAL AND SPIRITUAL) AND SOCIAL HAPPINESS
Key Policies (Based on Six Pillars)
1.
2.
3.
4.
5.
6.
Developing sustainable economic development policy, based on oil & gas
industries, agriculture, and non-oil industries (avoid Dutch deseease)
Improving quality of environment and community right
Improving social capitals : quality of participation, equality, index of happiness,
and competitive and excellent culture
Improving good and clean local government
Developing local fiscal capacity for sustainability economic
Promoting sustainable leadership
Note : Releasing local regulation and policy framework on : (1) Transparency of revenue
and EI operation,(2) Local investment and petroluem funds; (3)Revenue sharing to local
community in the villages; (4) Optimizing local content in the EI operation, (5)
Participatory and sustainable development planing, (6) Midterm and rm and long term
devlopment planing where incuding poverty reduction strategis
MACRO POLICY IMPLEMENTATION, MANAGEMENT OF OIL
AND GAS FOR POVERTY ALLEVIATION THROUGH MEDIUMTERM DEVELOPMENT PLANNING
• Bringing multi-stakeholder sector to
integrated poverty reduction strategy
PUBLIC PARTICIPATION IN REGIONAL DEVELOPMENT PLANNING
• COMMUNITY INVOLVEMENT IN DEVELOPMENT PLANNING MEETING HELD FROM THE
VILLAGE TO THE DISTRICT LEVEL. IN THIS FORUM, PEOPLE PROPOSED DEVELOPMENT
PROGRAM IS NEEDED WITH PRIORITY CONSIDERATION BECAUSE OF BUDGET CONSTRAINTS
• ALLOCATED BUDGET FOR SUB-DISTRICT. IT IS A CONCRETE STEP TO ACCOMMODATE THE
PROPOSED DEVELOPMENT
• AS AN EFFORT OF TRANSPARENCY I PROVIDE “FORUM” FOR PEOPLE TO EXPRESS THEIR
ASPIRATIONS THROUGH PUBLIC DIALOGUE FORUM, SMS CENTER AND OTHERS
REGIONAL PLANNING PROCESS IS OPTIMALLY DONE THROUGH THREE APPROACHES:
POLITICAL, PARTICIPATIVE, AND PROFESSIONAL APPROACHES
CASE : PUBLIC PARTICIPATION IN FORMULATION
OF MEDIUM TERM DEVEOPMENT PLANNING
1.
2.
3.
4.
5.
PUBLIC CONSULTATION WITH THE PEOPLE IN SEVERAL VILLAGES
PUBLIC CONSULTATION WITH COMMUNITY LEADERS / RELIGIOUS LEADERS
PUBLIC CONSULTATION WITH PRACTITIONERS / EXPERTS FROM VARIOUS
UNIVERSITIES
PUBLIC CONSULTATION WITH ENTREPRENEURS
PUBLIC CONSULTATION WITH POLITICAL PARTIES
IN DEVELOPMENT PLANNING, THE PEOPLE HAS TO BE POSITIONED
AS THE SUBJECT, INSTEAD OF THE OBJECT OF DEVELOPMENT
STRATEGY AND POLICY TO OVERCOME POVERTY
A. SOCIAL PROTECTION PROGRAM FOR HEALTH , EDUCATION, PROPERTY, FINANCE AND FOOD FIELD
THROUGH :
- HEALTH INSURANCE PROGRAM FOR THE POOR PEOPLES
- SCHOLARSHIP PROGRAM FOR POOR CHILDREN WHO ATTEND SCHOOL
- FOOD AID OF RICE
- SOCIAL ASSISTANCE FOR THE POPULATION AGED 65 YEARS AND OLDER
- SOCIAL ASSISTANCE FOR PEOPLE WITH SOCIAL WELFARE ISSUES, THE ELDERLY, HOMELESS,
PROSTITUTIES AND DISABLED
- LIVABLE HOUSING PROGRAM
- SANITARY FACILITIES AND PURE WATER SANITARY PROGRAM
B. EMPOWRING PROGRAMS :
- ENTERPRENEURSHIP TRAINING
- STRENGTHENING THE CAPACITY OF HUMAN RESOURCES AND INSTITUTIONAL
- CAPITAL ASSISTANCE FOR MICRO,SMALL AND MIDDLE
- PEOPLE SOCIETY OF NATIONAL EMPOWERING PROGRAM (PNPM)
- STENGTHENING FOR AGRICULTURE AID PROGRAM , LIVESTOCK (LIVESTOCK AID), FISHERY
(FISH HELP), AND FORESTRY
STRATEGY AND POLICY OF POVERTY OVERCOME (CONTINUE)
C. ACCELLERATION OF POVERTY REDUCTION :
-
-
-
DEVELOPING ROAD INFRASTRUCTURE, HEALTH AND EDUCATION FACILITIES, AGRICULTURE
INFRASTRUCTURE (RESERVOIR, IRRIGATION, FARMER’S
EFFORTS ), CHEAP AFFORDABLE
HOUSING DEVELOPMENT, DEVELOP OF PURE WATER, INFRASTRUCTURE, TELECOMUNICATION
TRAINING THAT IS INCREASING THE CAPACITY OF THE INSTITUTIONAL(FARMER,
COOPERATIVE, MEDIUM-SIZED BUSINESS,SMALL AND MEDIUM, BREEDER GROUP, ETC)
POLICIES TO CREATE A FAVORABLE INVESTMENT CLIMATE AS A WAY TO OPEN UP
EMPLOYMENT OPPORTUNITIE AND TACKLE UNEMPLOYMENT. POLICY TOOLS ARE BEING
DEVELOPED ARE REGENT RULE FOR EASE OF INVESTMENT, ESPECIALLY FOR AGRICULUTURAL
INDUSTRIALIZATION
REALIZED GOOD AND CLEAN GOVERMENT THROUGH TRAINING AND PERSONAL COACH IN
GIVING PUBLIC SERVICES THAT SATISFIED OF PEOPLE SOCIETY
POVERTY ALLEVIATION PROGRAMS – EXAMPLES INITIATIVE PROGRAMS
OIL AND GAS REVENUE SHARING,
TAX AND PARTICIPATING INTEREST
PARTICIPATION INTERESTS
1. APPROACH OF “DUAL TRACK” : UTILIZATION OF OIL & GAS REVENUE TO DEVELOP NONOIL&GAS SECTORS
2. CAPITAL INVESTMENT IN JATIM BANK AND LOCAL BANK (BANK PERKREDITAN RAKYAT) FOR
SUPPORTING MEDIUM SIZED BUSINESS, SMALL, AND MEDIUM PERFORMER, STENGTHENING
ECONOMIC AND SUPPORTING ENTERPRENEURSHIP SITUATION
3. SUPPORTING EDUCATION FACILITIES
4. VILLAGE FUND ALLOCATION (ADD)
5. OPTIMALIZATION CORPORATE SOCIAL RESPONSIBILITY (CSR)
MATUR NUWUN
THANK YOU