SEA: Indonesia :Artha Graha Network – Artha Graha Peduli

ARTHA GRAHA, MAKING LIFE BETTER

Recent years have witnessed increasing importance on corporate social responsibility (CSR) among the business society in Indonesia. The economic crisis and reformation era have brought about a new spirit of transparency, democracy, and social awareness. Initiated by multinational companies such as, Artha Graha Network, now, more and more enterprises operating in Indonesia are adopting CSR because they believe it is the right thing to do.

Created by prominent business man Tomy Winata in the early seventies, Artha Graha is one of Indonesian largest conglomerates. With more than 40 registered businesses and several dozen affiliated companies under its umbrella, Artha Graha has diversified interest’s in general trading, property development, logging and plywood plants, agro business, real-estate development, information technology, banking and finance.

Tomy Winata, also known as TW, started doing business from the very bottom and now is one of Indonesia's most successful, powerful and well-connected businessmen. Winata started by founding the Artha Graha Group (currently is known as Artha Graha Network), Jakarta International Hotel Development (JIHD), PT Danayasa Arthatama, the SBCD and the Stock Exchange Building.

Tomy Winata wants his business empire to contribute to the country. He believes
that by carrying out its commitment to social responsibility to the fullest, Artha Graha Network will grow and prosper alongside the Indonesian people and their nation.

It is for this reason that, through Artha Graha Foundation, Winata has implemented a large CSR program that addresses economic, social and environmental issues simultaneously.

The foundation focuses its activities on developing the villages of the nation. There are some examples that speak for themselves; After the tsunami had hit Aceh and Nias Island, the Foundation deployed more than 500 people, logistic, equipments and a transportation fleet consisting of special planes, a Ferry Ro-Ro (roll on roll off), a Landing craft tank, Motor bikes and Cars to the disaster areas in Aceh Besar District, Meulaboh District, Bireun District and other areas in Aceh and Nias Island.
After the Merapi Mount eruption and Jogjakarta’s earthquake, Artha Graha also deployed more than 100 people, logistics and other equipment to the destroyed areas.

The Hybrid rice project

In 2004, the foundation expanded to the food sector embarking on a business endeavour that included the conversion of thousands of hectares of prime rice land to hybrid rice production; a move that will probably revolutionize Indonesia’s agricultural industry.

“Indonesia is an agriculture country but it still imports rice so we started a new food company in producing hybrid rice. We started to talk with a Chinese company supported by the Chinese government and launched together the hybrid rice project. We started in 2004, without any license and approval by the Indonesian government regarding the hybrid seed. We did all that only to feed the people and we fed them and helped the government until it became self-sufficient,” says Winata.

Winata is proud of the Hybrid rice program’s success, but it hasn’t always been easy,
 “ In 2005, in South East Sulawesi, an issue occurred when there were paddy hybrid seeds planted in Konawe that had not gone through proper procedural process. The Director General instructed to remove all the plants. Thankfully the chief of the local police and the local government were encouraged by the national chief of police and the ministry of agriculture not to destroy the plants as the project was considered a social welfare project. The problem happened till 2006 when the government considered the seeds legal”, says the businessman.

Winata’s pride is understandable just by looking at the figures. The total investment for this project was US$ 30 million and could feed up to 5,000 people and in turn solve a national problem. “We became a new player admired by international companies. At that time they did not want to import the seed from China as it was considered illegal. Together with our project the government launched a program to increase 2 million tons of the national rice production and our company managed around 60% of the program.”, he adds.

Tony Winata  is determined to help Indonesia to return to self-sufficiency in rice production within the next few years. In this direction, Artha Graha Network, through PT Penta Prima Pusaka, along with the Sichuan Guohao Seeds Industry (SGSI) of China agreed to establish the Integrated Hybrid Seed Center in China, which will develop various new varieties of hybrid seeds. PT Guohao Penta Prima, the joint venture between Artha Graha and SGSI, also sealed an agreement with the Indonesia Center for Rice Research, a government agency, to develop hybrid rice seeds and exchange germ plasma and other expertise.

“We have to thank the Chinese Government who have always supported our seeds program.  The Chinese government through the Ministry of Agriculture has helped to select six parent hybrid seeds during 2005 and 2006. Since then we started our CSR program. We had lots of high profile projects, but our priority was CSR. Through these projects, we can influence the medium and small sized farmers to increase their income and improve their quality of life”, says Winata

Artha Graha`s rice venture covers 260,000 hectares, mainly in Lampung, producing quality rice out of hybrid seeds. But Indonesia’s food problems are not just rice related. Due to incapability in fulfilling its own national demand, the country imports increasing amounts of cattle, mainly from Australia. Through its network PT. MultiAgro Pangan Lestari, Artha Graha is trying to reduce import of live cattle and increase local production. “The target is to increase the meat consumption in Indonesia, currently it is only around 1.4 kg per year. We have plans to have meat substitution for the people to reduce meat price. Our program is to reduce the import of live cattle and frozen meat and ultimately increase the local live cattle production through fattening and breeding programs.”

“Our present strategy is to import 30% of live breeder cattle. We can breed them and this will help our farmers to increase their income. If we do that we will have 150 thousands natural birth of the cattle, which means that in six years we can be self sufficient. It is not enough, but we will be able to survive”, says Winata.

The strategy is clear, to cut the costs of meat and to make it accessible to people
“Indonesians are poor; to eat meat they must spend around more than 55 thousand rupiah or US$ 5.5 per kilo whereas in Malaysia, they only spend US$ 3 per kilo. We want to cut the cost down to US$ 4.5 per kilo until we have our own breeder. In the next two years we want to support the government so the middle and small lower class can purchase meat bellow US$ 3.5 per kilo”, adds the businessman.

The International Community has often accused Indonesia of illegal exploitation of the country’s natural resources. A recent study of FAO stated that Indonesia is not tapping its fisheries potential and is suffering from illegal fishing, loss estimated around US$ 3 billion per year. Tommy Winata defends Indonesian people and claims that those who accuse Indonesia are at the same time benefitting from the exploitations “My country has a population of 250 million people and 50% of them are underpaid, underfed with a poor health system. The population is accused of illegal cutting, having illegal mining exploitations and illegal fishing, while foreign observers say we are destroying our lands. However, we have been exporting coal, wood and fish for over twenty years to developed countries at a low cost. Even though Indonesia only used 20% of our coal and iron, the rest was used by the developed countries.”

To further promote the importance of Artha Graha’s commitment to social responsibility, their role in environmental preservation is one that must not go unnoticed.

Due to its geographical location, Indonesia and its collection of 17,000 islands have served as a natural barrier to prevent the mixture of hot and cold water fronts in the Indian ocean that could lead to the exacerbation of the melting southern polar ice caps. Its role in regulating oceanic temperatures has acquired Indonesia the unofficial moniker of the “Worlds Break Water”. But it is through more land based efforts that Artha Graha has managed to add to the country’s importance in environmental protection.

Spearheading an operation known as the Tambling Wildlife Nature Conservation (TWNC), the Artha Graha Network through its foundation Artha Graha Peduli has been maintaining and protecting 45,000 hectares of forest in West Lampung area of the island of Sumatra. Claiming that the TWNC is the best of its kind in forest protection and conservation the Artha Graha Network also boasts its importance in the conservation of wildlife both on land and sea. Its efforts culminating in a heavy contribution to the reduction of Global Warming Mr Winata is quite proud to extol the programs praise “Some Ministers, Governors, Government Officials, High Rank Officials from World’s Institutions, World’s experts in Tigers and Conservation, National and International Media, High Net-worth Individuals, NGOs, and many others have come to visit TWNC and have been amazed by what we are doing.”

Artha Graha Network’s existence is not only to make profit. Once the profit has been earned, a portion of it would be set aside to fully realize AGN’s Corporate Commitment to Social Responsibility through Artha Graha Foundation.

Besides the good corporate image, Winata’s obsession for CSR has brought direct and indirect benefits to Artha Graha. By caring for the surrounding community, the company has minimized social unrest and gained a better reputation amongst the farmers, as well as improved relations with the Government.

“We had lots of high profile projects, but our priority was CSR. By these projects, we can influence the medium and small sized farmers to increase their income and improve their quality of life. Everywhere in Indonesia  Artha Graha Network is well considered by small farmers since we help them. The implementation of CSR has become the soft security approach. All companies and neighboring countries must be told that this is the way to implement the soft approach of the security image. My message is very clear: what is important is the perception of the top decision maker by the simple people”, concludes TW