17 February 2020 (closed)
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Indonesia's business community rejects the proposal of the House of Representatives (DPR) to impose mandatory corporate social responsibility (CSR) programs on Indonesian companies. A proposal that is being discussed among the DPR stipulates that companies need to allocate about 2 - 3 percent of their annual spending for their CSR programs. Hariyadi Sukamdani, Chairman of the Indonesian Employers Association (Apindo), informed that Indonesian employers generally reject the proposal. Instead the government should focus on improving companies' tax compliance (which remains very low).
Sukamdani said a CSR program should remain fully voluntarily as it is in most economies around the globe. If the government would turn the program into a mandatory program then it basically constitutes a new tax and this could be a too big burden on the companies that are still recovering from the economic slowdown. Moreover, the plan could hurt the investment climate of Indonesia by making investment in Southeast Asia's largest economy more expensive (thus undermining the nation's competitiveness). In fact, this would be in stark contrast to the central government's recent economic policy packages that aim at making 'doing business' in Indonesia less expensive by offering tax incentives and deregulation.
Globally, however, more and more companies are committed to their CSR programs amid the world's income inequality, social conflicts and environmental challenges. A CSR program shows that a company is committed to the "larger good" and thus it has a right to exist. Still, such programs tend to be a voluntary act. Only in India the CSR program was written into legislation (in April 2014), hence becoming mandatory, despite business leaders being split about the matter.
Currently, Indonesian companies are eligible for a tax deduction for expenses made under their CSR programs (including the schooling of their employees). The government offers this tax incentive in order to make it more attractive for companies to implement such programs.