The Ministry of Environment, Indonesia Public Disclosure System as an effective tool for pollution control The Implementation of PROPER in Indonesia Hermien Roosita The Ministry of Environment, Indonesia Paris, 2-3 December 2004

Environmental Management in Indonesia Shifting from end-of-pipe to clean production No regulation No environmental institution Lack of government & corporation interest End of pipe management Environmental regulation Government intervention Clean production Public Disclosure System Economic instruments Integrated environment management Ecological efficiency Partnership between government & corporation 1982 1995 PRESENT 1 2 3 4 FUTURE

Environmental Compliance Implementation Monitoring tools for Industrial Pollution Control : PROKASIH, Blue Sky Program, Hazardous Waste Management Program Litigation 7 steps for dispute resolution : Surveillance for information and data collection Investigation for evidences Legal brief Trial Appeal to high court Appeal to supreme court

Current Situation: Good Environmental Law But Weak Implementation Weak monitoring system : Human resources capacity Financial supports Lack of coordination between agencies. Lack of knowledge on environmental issue by stakeholders.

Alternative solutions for industrial pollution control NGO and community have function as a “watch-dog” to control industrial activities. ISO 14001. A voluntary scheme for company’s environmental management system. A commitment to improve environmental performance of companies. ISO 14001 does not reflect a real companies’ environmental performance Public Disclosure system (PROPER) An instrument to improve industries’ environmental performance through information dissemination to public.

Distribution of Industries Paper Textile Rayon Mining Automotive Cement Petrol Chemical MSG Consumer goods Fertilizer Pharmacy Electronic Chemical Industry Food & Drink Electro Plating Sugar Leather Tanneries Lubricating Oil Basic Chemical Iron & Steel Smelting Industry Petroleum Refined Recycling Cigarettes Pulp & Paper Crumb Rubber Crude Palm Oil Coal Mining Sugar Tapioca Petroleum Refined Cement Fertilizer Crumb Rubber Coal Mining Petroleum Refined Plywood Adhesive Gold Mining Ferro Nickel Copper Cement Gold Mining Ferro Nickel Copper

? What is PROPER PROPER (Program for Pollution Control, Evaluation and Rating) is an alternative instrument to control pollution based on sustainable development principle through environmental compliance and performance of companies’ improvement in environmental management through the introducing disincentive and incentive reputation by disclosing environmental performance of industries to public and stakeholders.

PROPER RATING SYSTEM 2002 GOLD GREEN BLUE RED BLACK Pollution level 5% of the legal standards and near zero emissions level PROPER rating system consists of five colors designed to represent the entire spectrum of environmental performance. Ratings are based on performance in all aspects of environmental management within and outside a company Unlike PROPER 1995, PROPER 2003 methodology includes water, air and hazardous waste and other factors. GOLD Better than legal standards by 50%, uses clean technology, waste minimization, pollution prevention, and resource conservation GREEN BLUE Efforts meet minimum legal standards RED Efforts don’t meet standards No pollution control effort, Serious environmental damages BLACK

National Environmental Act Mandates Information Dissemination to the Public Environmental Management Compliance Monitoring Companies’ obligation for information dissemination Community Right for participation in environmental management Right on environmental information KEY WORDS ActNo. 23/1997 Article 22 (1) Act No. 23/1997 Article 5 (2) Act No. 23/1997 Article 5 (3) Act No. 23/1997 Article 7 (1) Act No. 23/1997 Article 6 (1)

PROPER’s Core Strategy-Strengthen Environmental Politics How to create public demand for cleaner environment? Empower external stakeholders Public Disclosure NGOs Communities Media Business Local Govt. Empower NGOs with superior information Legitimize public perception about env. issues Promote social responsibility & educational journalism Establish credibility and strategic alliance Recognize and reward high performance local agencies

Rating Methodology : RATING ISSUES Environmental ratings are based on performance in seven areas: Compliance with water pollution regulations Compliance with air pollution regulations Compliance with hazardous waste management regulations Compliance with AMDAL (EIA requirements) Quality of environmental management system Resource management and use Community development and relationship

PROPER’S 4 PRINCIPLES FAIRNESS ACCOUNTABLE PUBLIC PARTICIPATION TRANSPARENCY

Qualitative Information Rating Analysis Qualitative Information Quantitative Analysis Visual Analysis

New Implementation Approach: Strong Local Participation Involvement of Provincial and District/City level Regular Monitoring Sampling Evaluation Database system

PROPER Supports Strategic Policy Analysis Sector Benchmarking Province Level Benchmarking Analysis of Key Performance Weaknesses Set National Targets

COMMUNICATION STRATEGY Disclosure of companies’ rating : Press Conference Information of the PROPER : Booklet Leaflet Socialization to local governments and industries

PROPER 2002 - 2004 60 51 50 40 33 30 32 NUMBER OF INDUSTRIES 30 25 23 20 20 14 8 8 8 10 3 2002 2003 2004 Black Red Blue Green Gold

Administration cost of programs No Litigation *) PROPER **) Description US$ Description US$ 1 2 3 4 5 6 7 Surveillance Investigation Legal brief Trial Appeal to high court Appeal to supreme court 4,000 8,000 2,800 11,000 Inspection and laboratories analysis Coordination meeting Dewan PROPER Peer Review Press briefing 38,000 5,600 1,100 5,500 TOTAL 31,400/ case 61,400 / 43 industries = US$ 2,362/industry *) Cost needed for litigation for an environmental pollution case **) Cost needed for PROPER to evaluate 43 manufacture industries

ADMINISTRATION COST Budget of US$ 31,400 must be provided in order to resolve an environmental case, not to mention the long period of time to go through. Cost needed by PROPER to increase the environmental performance of one industry is approximately US$ 2,362 (60% of 43 manufacture industries has improved its performance).

Compliance cost Pollution control equipment investment from a pulp and paper industry Wastewater US$ 5.0 million Air emission (Continuous Emission Monitoring) US$ 0.6 million Solid waste (landfill and remediation) US$ 5.6 million TOTAL US$ 11.2 million

Limitation PROPER is only effective for large scale companies because they are concern with the image to market. PROPER cannot apply to all scale of industries.

SUMMARY Based on administration cost approach, PROPER is a more effective program to be carried out compared to litigation. PROPER is especially effective for large scale industries. PROPER is a complementary instrument in controlling pollution to other environmental law enforcement programs. Indonesia still needs strong environmental agencies.