Dr Poppy Winanti on Meeting the Challenge of the Resource Curse

Many resource-rich regions in Indonesia are plagued by income inequality, high levels of corruption and rent-seeking, and relatively poor performance in poverty alleviation. Through learning from and drawing on other regions’ experiences in dealing with the resource curse,  Bojonegoro District in East Java has implemented a series of policies in an attempt to avoid the resource curse. These policies include efforts to ensure that job opportunities, knowledge transfer, and the economic multiplier effects from oil and gas revenues are enjoyed locally and contribute to sustainable development for the district in the future. Dr Poppy S Winanti has examined these developments, looking in particular at the political dynamics of the region and how committed local agents adopted international governance norms in the management of non-renewable resources.

Poppy is a lecturer at the International Relations Department of the Faculty of Social and Political Sciences at Gadjah Mada University (UGM). Her work focuses on global political economy, natural resource and conflict management, and the politics of international trade. She has published widely and recently served as one of the project coordinators in the Asia-Pacific Knowledge Hub for Better Governance on Extractive Industries. Poppy visited the University of Melbourne from 19 March-8 April as part of the Faculty of Arts Indonesia Initiative, and delivered an Indonesia Forum public seminar on her research on 3 April. The Indonesia Forum interviewed her about her work.

Although many resource-rich regions in Indonesia face problems with income inequality and high levels of corruption and rent-seeking, you have looked at a counter-trend. Your research has focused on a case study where the international civil society network Publish What You Pay (PWYP) worked with local actors to promote values of good governance, like transparency and accountability, in the extractive industries sector. What were the challenges for international networks like PWYP to begin working in Indonesia?
For a long time, especially at the national level, the extractive industries were highly secretive. Nobody knew about the details of the contracts between the government and the major mining and oil and gas companies. There were efforts from international and national civil society organisations to demand more transparency from the government. Around this time, the government of President Susilo Bambang Yudhoyono committed to complying with Extractive Industries Transparency Initiative (EITI) standards. This was further helped by the fact that there were some firms whose headquarters in their home countries required them to be transparent, regardless of what the Indonesian government required. So, for the first time, we saw the national government, big mining companies and civil society activists having similar goals for more transparent and accountable processes in the extractive industry.

Were there drawbacks for industry in committing to these norms? Why kind of resistance have CSOs faced in pushing for these norms?
There hasn’t been a great deal of resistance and I think that is because they are introducing very specific global norms – transparency and accountability. What is required for the diffusion of these norms is for the government to reveal how much money it receives from the company and how it uses this money. Likewise, the company has to report how much money it gives to the government. I believe these requirements are quite specific and manageable. The ‘norm-takers’ at the local level don’t have that much difficulty accepting these requirements. But if the norms CSOs were trying to introduce were broader, for example, strict requirements around respect for human rights, I suspect they would face more resistance.

Your research has looked at the district of Bojonegoro, where these norms around transparency and accountability have been adopted relatively successfully by the local administration.
Bojonegoro in East Java is an interesting case study because the discovery of natural resources in the region was quite recent. Large oil and gas deposits were discovered in 2001, and ExxonMobil began operating there in 2005. The region has been in the spotlight because the local government has tried to learn from the experience of other resource-rich regions in Indonesia that have often seen conflict with local communities, which rarely gain any benefit from the resource wealth. In 2008, when District Head Suyoto and Deputy Setyo Hartono came to power for their first term, they were assisted by transnational advocacy networks [such as PWYP] and passed a series of regional regulations to establish better governance processes for the extractive industry in the region. The district head also introduced regulations that aimed to provide the people of Bojonegoro with more benefits, especially regarding employment. Companies were, for example, required to hire local people for low-skill positions. The district head also required all extractive industries operating in the region to collaborate with local state owned enterprises. He was also able to gain popular support by issuing another regulation that dictated that each village that was affected by the extractive industry must receive financial support. He also introduced public meetings with the public each week immediately after Friday prayers.

This sounds like a case of win-win: the government is popular, the people are happy and the industry does not have problems with conflict. Are there other examples that have followed the lead of Bojonegoro, or is it an exception to the rule?
There is another region, Banyuwangi, also in East Java, which is trying to follow the example of Bojonegoro. Large gold reserves have recently been discovered in the district and the district head has tried to implement similar policies to deal with the extractive industries. By contrast, it is much more difficult to reform existing practice in regions that have had natural resource wealth for many years, before about 2000 or earlier, in the Soeharto era. Regions that have only recently discovered natural resource wealth are much more open to influence from civil society. Maybe I am too optimistic that the lessons from Bojonoegoro can be applied in other regions, in many other regions, the damage has already been done.

Listen to Poppy discuss her research with Dr Dirk Tomsa on the Talking Indonesia podcast.