Ratih Puspa and Bernard McKenna
This chapter addresses issues surrounding the corporate social responsibility (CSR) practiced by the tobacco industry, widely considered as a “tainted industry,” in Indonesia, and the consequences for the people who benefit—either directly or indirectly—from those CSR initiatives. Situated within the dominant global discourse of healthy living, this research investigates the local community’s responses toward the tobacco industry’s CSR initiatives. Of special interest is how local people are caught up in a complex and complicit situation in which feelings of gratitude, nationalism, and dependence emerge from their relationship with the tobacco industry. Using a critical perspective, the chapter considers the imbalanced power relations between corporations and the communities, particularly because the corporation is “tainted,” their ethical business practice is questionable.
Companies in controversial industries frequently find their organizational legitimacy in question (Palazzo and Scherer 2006 in Du and Vieira 2012). A controversial industry sector is defined as “products, services, or concepts that for reasons of delicacy, decency, morality, or even fear elicit reactions of distaste, disgust, offence, or outrage when mentioned or when openly presented” (Wilson and West 1981, in Cai et al. 2012, p. 468). Controversial industry sectors, which are typically characterized by social taboos, moral debates, and political pressures that include so-called “sin” industries, such as tobacco, gambling, alcohol, and adult entertainment as well as industries involved with environmental, social, or ethical issues, that is, weapons, nuclear, oil, cement, and biotech (Cai et al. 2012). Lindgreen, Maon, Reast, and Yani-De-Soriano (2012) for instance, question how organizations in controversial industry sectors, which often are marked by social taboos, moral debates, and political pressures, can maintain reasonable, socially responsible standards. Similarly, Cai et al. (2012) question whether a firm in a controversial business practice can be considered socially responsible while their products may harm people, society, or the environment. Yet, the general consensus among academics and practitioners is that these topics have been little explored and need more comprehensive investigation, especially regarding how organizations in controversial business practice gain legitimacy through their CSR practices (Lindgreen et al. 2012).
Legitimacy is essential for a firm’s survival and growth (Hendelman and Arnold 1999; Scott 1987; Suchman 1995, in Du and Vieira 2012). Legitimacy is defined as “a generalized perception or assumption that the action of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman 1999 p. 574; in Du and Vieira 2012). Today’s consumers, employees, investors, local communities, government, nonprofit, other stakeholders, and the media expect companies to be socially responsible (Maignan and Ferrel 2004). Through CSR actions, a company enacts and upholds the sociocultural norms in its institutional environment and attains legitimacy (Handelman and Arnold 1999; in Du and Vieira 2012). In turn, legitimacy drives the business outcomes of CSR as stakeholders are willing to offer their support for companies that have achieved legitimacy (Luo and Bhattacharya 2006; Maignan and Ferrel 2004).
Companies embrace CSR practices as a strategic means to counter negative public sentiments, build reputational capital, and ultimately attain legitimacy essential for their long-term prosperity (Du and Vieira 2012). The tobacco industry also turns to CSR to promote their reputation in the eyes of their publics (Barraclough and Morrow 2008). The tobacco industry, along with gambling, alcohol, and pornography, is one of the most controversial legal industries that still exist today (Cai, Jo, and Pan 2012; Yoon, Gurhan-Canli, and Schwarz 2006). Since research has proven that tobacco products are linked to serious health problems and unhealthy life styles, many studies focused on the tobacco industry oppose its continued existence (Osaki et al. 2006; Cortese, Lewis, and Ling 2009; Capella, Webster, and Kinard 2011; Davey and Zhao 2012). As part of a controversial business practice, which is said to be doing more harm than good to society, the tobacco industry is very concerned with its image and reputation (Cai et al. 2012). Controversial businesses, including the tobacco industry, often turn to CSR to save their business interests when faced by threats of losing their business legitimacy.
Indonesian Tobacco Industry’s Contribution to the Country’s Economy
Cigarettes and smoking are embedded in Indonesian culture. It is even said that smoking, especially smoking cloves cigarettes (known as “kretek” in Indonesia), is an important cultural signifier and is a powerful symbol of Indonesia (Hanusz 2002; in Lawrence and Collin 2004). The World Health Organization estimates that Indonesia has 57.6 million male smokers—the world’s third highest—and 2.3 million female smokers, with 70 percent of Indonesian smokers being from low-income groups (Aritonang 2012). According to the 2010 Basic Health Survey, 17.5 percent of all smokers in Indonesia are between 10 and 14 years old (Tobacco Firms Use CSR to Target Minors 2012). Officials from the Indonesian Health Ministry state that most smokers in Indonesia are addicted by the time they reach 18, and an eighth of adults started before they were 15 (Ashtray Nation 2012).
Indonesia provides a relatively stable market for the tobacco industry to continue to grow. Indonesia’s cigarette market is considered the world’s fastest developing market and according to the World Tobacco website, Indonesia is the fifth-largest cigarette market in the world (Ashtray Nation 2012). Indonesia is therefore an attractive market expansion target for multinational corporations (MNCs) such as Philip Morris and British American Tobacco (BAT), and explains the purchase of two local tobacco companies Sampoerna by Philip Morris in 2005, and the purchase of Bentoel by BAT in 2009 (Ashtray Nation 2012).
The tobacco industry’s contribution to Indonesia’s economy cannot be underestimated. In 2015, the Indonesian government, it is estimated, pocketed Rp. 145.7 trillion (US$ 11.2 billion) from the excise tax of the tobacco industry, 20.9 percent higher than its initial target of around Rp. 120.5 trillion (Amin 2015). In 2012, Indonesian government reaped Rp. 79.9 trillion (approximately US$ 8 billion) (Natahadibrata 2013) in cigarette tax revenue, whereas in 2011 Indonesian government reaped Rp. 77 trillion (US$ 7.98 billion) from tobacco taxes (Aritonang 2012). The exports of tobacco-related products were valued at $508.8 billion in 2008 and increased to $596.9 billion in 2011; accounting for almost 1 percent of the country’s GDP (Yulisman 2012). The tobacco industry in Indonesia also provides many jobs. The labor-intensive clove cigarette industry creates jobs for around 6 million Indonesian workers (Yulisman 2012).
Corporations’ CSR Practices in the Developing Country Context
Within the developing country context, the private sector is expected to play a more active role in contributing to the development process (Jenkins 2005). This perception comes from the concern that governments in developing countries are still struggling to perform their obligations to the people (Jamali and Mirshak 2007). There is a debate that CSR can be optimized as a development tool and help to solve many societal problems faced by developing countries.
Business is playing an increasingly important role in development (Newell and Frynas 2007). There is a growing interest in CSR not only from corporate managers, but also from governments, academics scholars, and particularly from development practitioners and agencies. Some argue that CSR plays a positive role in contributing to international development goals such as poverty alleviation and health improvements (Jenkins 2005) meaning that equity and equality have become the central concerns of the international development community. Hence, CSR is perceived as a kind of a bridge that connects business with development issues (Jenkins 2005; Blowfield and Frynas 2005; Frynas 2008).
However, the practice of CSR in developing countries is not without its problems. Four major issues have been raised by scholars (e.g., Blowfield 2007; Frynas 2008): the lack of real impact of CSR practices on the development process; the predominantly Western perspective adopted within CSR studies; the preoccupation with CSR practiced by MNCs operating in developing countries; and, partly as a result of this, the lack of diversity in addressing other CSR efforts such as those practiced by local companies. Frynas (2008) argues that there is a lack of empirical evidence to support the claims that CSR makes positive contributions to development issues. So the question remains as to whether CSR produces real societal benefits.
Blowfield (2007) argues that much more is known about CSR’s impact on business itself and the benefits for business than about how CSR affects the major societal issues it was intended to tackle. There are even strong grounds for assuming that CSR reinforces corporate power. By practicing the business case of CSR, corporations and business elites are able to fend off criticism and regulatory threats. In this way, they reinforce their power and influence by accommodating certain oppositional demands, intervening proactively in the CSR arena, and attempting to lead the CSR movement (Utting 2007). It has been argued that a market-embedded morality (Shamir 2008) has emerged as a widely applied business practice. That is, corporations engage in CSR practices because not only it is the morally right thing to do, but also it is a sound business strategy (Shamir 2010). Although this is an instrumentalist approach (Kaler 2003), there is still support for the proposition that the benefits of applying the business case for CSR policy for corporations include: improving corporate reputation (Schnietz and Epstein 2005), strengthening stakeholder relationship (Sen, Bhattacharya, and Korschun 2006), having a positive effect on employees (Luo and Bhattacharya 2006), increasing share value (Burke and Logsdon 1996), and serving as an important role in the risk-management strategies (Husted 2005).
On the other hand, such an approach to CSR practice is that it is “ceremonial” (Whelan 2013) since corporations will only ever engage in such initiatives for profit-focused reasons (Blowfield 2005). Evidence from developing countries such as Lebanon (e.g., Jamali and Mirshak 2007), Latin America (Schmidheiny 2006), and Nigeria (Idemudia 2011), show that CSR practices in those areas have not met development purposes. From the studies conducted by Jamali (2007, 2010), and Jamali and Mirshak (2007) within Lebanon, the evidence reveals that CSR serves more as window dressing. Those studies revealed that rather than focusing on significant social problems faced by the country, the CSR initiatives were practiced more as an attempt to gain symbolic legitimacy. In Latin America, according to Schmidheiny (2006), pressing issues such as poverty reduction and capacity building are typically not considered core CSR concerns by MNCs. As Frynas (2008) noted, there is little empirical evidence to support claims that CSR positively contributes to development in developing nations. In sum, little is known how CSR is practiced by companies in developing nations, specifically whether it is mostly used as “window dressing” or whether it does in fact, address significant social problems. There is even less research on CSR activities practiced by local Indonesian companies. Specifically, little is known about whether CSR produces real societal benefits to those communities that are targeted with CSR activities.
CSR Practices in Indonesia
Since Indonesia faces the typical problems of a developing nation in dealing with societal problems, it is understandable that it endorses corporations to take more active roles in social policy issues. The Indonesian government continues to struggle with how to provide its citizens with reliable health and education services and to alleviate poverty and to address many other social and economic problems (Koestoer 2007). This situation led Indonesia to make CSR mandatory in Indonesia through the implementation of Law No. 40/2007 on Limited Liability Corporation (Rosser and Edwin 2010). However, Waagstein (2011) argues that, although CSR is mandatory in Indonesia, one problem is the question of the transparency of monitoring mechanisms, which involves the participation of different elements of society: so far, little is known about CSR impacts on Indonesian society. According to Hendarto (2008, in Hendarto and Purwanto 2012), most firms in Indonesia implement CSR in the form of donations. Very little effort is directed toward issues of environment, human rights, and other social matters (Maemunah 2007, in Waagstein 2010). The tobacco industry in Indonesia, part of one of the biggest conglomerate groups in the country (SEATCA 2013), may see this as an opportunity to contribute through their CSR initiatives.
Nowadays, many companies in Indonesia implement CSR practices not only as a response to government regulations but also as a part of companies’ concern for the social and environmental problems in the country (Wibowo 2012). Corporations in manufacturing, consumer goods, and mining in Indonesia for example, have a high commitment to implementing CSR programs, both internally and externally (Hidayati 2011). The Indonesian government has specifically called on the country’s biggest companies to use the now-mandatory CSR initiatives to help small and medium enterprises (SMEs); to eradicate poverty and lack of job opportunities, as well as to help human capital development (Big firms asked to help SMEs through CSR programs 2007; Rudijanto 2005; Triwadiantini 2015). Ever since the CSR Law was enacted in 2007, observers agreed that local awareness of the importance of CSR initiatives as integral part of business has improved, although Indonesia is still behind other countries in the region and most CSR practices still took the form of charities and donations (CSR improving, more work ahead, say experts 2010).
While CSR is a relatively new concept in Indonesia, it has already made good progress among multinational corporations and large national companies (Lokollo 2010). MNCs operating in Indonesia and large national companies have shown their commitment to CSR by increasingly implementing CSR programs throughout Indonesia, and, in order to make a more concerted and coordinated effort, these companies formed a foundation, Indonesian Business Links (IBL), to promote CSR practices among its corporate members (Lokollo 2010). Today, the concept of CSR has started to gain acceptance among the business community in Indonesia; many companies from various products and services such as mining, telecommunication, pharmaceutical, food and beverages, and others have begun to pay serious attention to the need to protect the environment and support local communities (Abe 2011; Sirait 2014). As for the government, they keep stressing the importance to integrate CSR initiatives with efforts to solve societal problems such as poverty, education, people empowerment, empowering local economy, and environmental protection (Firms urged to empower 2007; Wayansari 2011; Fadillah 2012; Faizal 2012; Engaging private sector 2011).
The Indonesian Tobacco Industry’s CSR Practices
The Directorate General of Customs and Excise claims that there are 3,800 cigarette companies in Indonesia, including home industries, making Indonesia the world’s largest cigarette production hub (Tampubolon 2010). Kretek (the clove-flavored cigarette) accounts for more than 90 percent of the cigarette market (BAT buys Bentoel to challenge Big Three market domination 2009).The biggest players in Indonesia’s tobacco industry are Philip Morris International’s H. M. Sampoerna (with 31 percent market share), followed by Gudang Garam (22 percent), and Djarum (21 percent) (BAT buys Bentoel to challenge Big Three market domination 2009). In 2009, BAT bought a majority stake in PT Bentoel, Indonesia’s fourth-largest cigarette producer (with 7 percent market share) and entered the competition in the country’s highly lucrative cigarette market (BAT buys Bentoel to challenge Big Three market domination 2009).
Philip Morris’ Sampoerna’s CSR Practices
Sampoerna claimed that its support for CSR programs amounted to over Rp. 19 billion (US$ 19 million) (Sampoerna’s Annual Report 2012). However, according to reports from Southeast Asia Tobacco Control Alliance (SEATCA), a multisectoral alliance established to support ASEAN countries in developing and putting in place effective tobacco control policies, Sampoerna’s spending for their CSR activities in 2012 reached only approximately US$ 6.5 million (SEATCA 2013). The areas of Sampoerna’s CSR programs are: Education, empowering local communities, disaster relief, and environment (Sampoerna Annual Report 2012).
The tobacco giant, through Putera Sampoerna Foundation (PSF), so far has given more than 25,000 scholarships to students of all ages to continue their education either in Indonesia or abroad (Sampoerna to continue its focus on education 2007). Most of the funding is funneled through the PSF (founded by Putera Sampoerna, the ex-owner of Sampoerna Corporations), and the company is one of the largest contributors to the Foundation (Tobacco Industry Profile— Indonesia 2009). Sampoerna is authorized by the shareholders to donate up to 2 percent of their profit to PSF and in 2006 they made Rp. 48 billion (US$ 50 million) donation to education through the Foundation (Sampoerna: From Surabaya to the World 2006). For the empowerment programs, Sampoerna has collaboration and support programs to develop and grow small businesses. In 2006, Sampoerna founded the Sampoerna Entrepreneurship Training Centre (SETC) to develop SMEs; and to facilitate the emergence of new businesses that can provide jobs and improve local economies by training pre-retirement employees and villagers so that they can start their own businesses (Tobacco Industry Profile—Indonesia 2009).
In 2012, the training and entrepreneurship development programs benefited around 1,500 people including the establishment of 47 new small businesses (Sampoerna Annual Reports 2012). Sampoerna also has partnerships with the local community as its subsidiaries in cigarette production. In Central and West Java, Sampoerna runs 32 production units in cigarette production, which employ some 51,000 people involving 9 local cooperatives, 3 Islamic boarding schools, and 20 SMEs (Nugroho 2006). For its environmental conservation programs, Sampoerna donated and planted trees in various parts of Indonesia and also provide training and coaching for tobacco growers to improve tobacco farmers’ productivity and the quality of tobacco in a sustainable manner (Sampoerna Annual Reports 2012). In its partnership program with tobacco growers, where it involves some 2,000 people in the local community and a land measuring 4,820 hectares, every year the tobacco harvest reaches 10,500 tons (Nugroho 2006). In 2009, Sampoerna was asked by the government of the East Java province to help support the region affected by the mudflow eruption including the establishment of business training centers, providing micro credit loans to SMEs, and by setting up supermarkets (Tobacco Industry Profile—Indonesia 2009). Although those CSR initiatives seem impressive, if compared to the net profit that Sampoerna made in 2014 alone, which amounted to Rp. 10 trillion (approximately US$ 10 billion) (Pasopati 2015), the amount of their CSR spending is quite small. The amount of Sampoerna’s CSR spending also seems dismal if compared to their marketing spending, which amounted to US$ 7 billion in 2012 (Philip Morris’ big revenue 2014).
Gudang Garam’s CSR Practices
Indonesia’s second largest tobacco company, Gudang Garam’s CSR programs are mostly local, community-focused, and relief-based, mostly comprising various donations and charity activities in the local Kediri area (Gudang Garam Annual Report 2012). Their CSR areas include: livelihood creation, education, religion, environment, sport, and health care (Gudang Garam Annual Report 2012). In 2010, Gudang Garam reaped net profits that amounted up to Rp. 1.78 trillion (approximately US$ 1.78 billion) (Wibowo 2010), whereas for the first quarter of 2015, Gudang Garam registered Rp. 1.3 trillion in net profits (Amin 2015).
For one of their livelihood creation programs, the company trained the sand miners of the Brantas River in East Java to cultivate freshwater fish, creating a new livelihood in freshwater fish farming (Gudang Garam Annual Report 2012). As part of this program, Gudang Garam, in collaboration with the local government of Kediri, set up a new fish market in Kediri area (fish market is set to be top priority for “Pro Poor” Program 2012). The Kediri mayor acknowledged the contribution from Gudang Garam CSR funding for the realization of this program (fish market is set to be top priority for “Pro Poor” Program 2012). Gudang Garam’s contributions on renovation for places of worship in the Kediri area are part of the programs for their CSR in the religion area (Gudang Garam Annual Report 2012). Similarly, Gudang Garam also contributes to improving school infrastructures by supplying school furniture, uniforms, and other basic necessities for schools in the Kediri area (Gudang Garam Annual Report 2012).
For their environment programs, the company planted trees and restored areas affected by the mudflow in Sidoarjo East Java (Gudang Garam Annual Report 2012). Their sport club houses, trains, and scouts potential athletes of basketball and table tennis and provides sponsorships for many local, regional, and national sporting events (Gudang Garam Annual Report 2012). For the health care area, Gudang Garam helped build a special hospital for patients who suffer from respiratory-related problems (Kediri to build respiratory disease hospital 2009). So far, Gudang Garam has never disclosed the exact amount of their CSR spending. Similar to Gudang Garam, Bentoel’s CSR initiatives are mostly local in the Malang (a small town in East Java) area and in the forms of various donations and charity contribution to the local communities.
Djarum’s CSR Practices
For Djarum, which chooses the area of arts and culture, sports, and environment as their CSR efforts, its CSR initiatives are managed through its Djarum Foundation, which covers five areas: community contribution initiatives (since 1951), sport initiatives (since 1969), environmental initiatives (since 1979), education initiatives (since 1984), and cultural initiatives (since 1992) (Corporate Social Initiatives, n.d.). In 2010, Djarum was reported to reap a net profit of up to Rp. 2.89 trillion (approximately US$ 3 billion) (Wibowo 2010). Its sport initiatives especially are quite popular in Indonesia with its famous Djarum Badminton Club, which houses many of the best Indonesian badminton athletes who won in many prestigious international events including the Olympics, All England, World Championship, and Thomas and Uber Cup. Since 1992, nine Djarum Badminton Club (PB Djarum) athletes have scored Olympics medals for Indonesia (Corporate Social Initiatives, n.d.).
Through their Djarum Apresiasi Budaya (Djarum Cultural Appreciation) programs established in 1992, which is part of the Djarum Foundation, the company has supported more than 1,000 cultural activities such as theater, music, or other traditional performances (“Anak Emas Juragan Batik” shows the colorful tradition of batik in a Chinese-Indonesian Family 2012). Djarum Cultural Appreciation has collaborated with cultural experts, artists, and art groups in realizing their creative ideas (“Anak Emas Juragan Batik” shows the colorful tradition of batik in a Chinese-Indonesian Family 2012). Renitasari, the program director from Djarum Foundation stated that the goal is to attract patrons and to support performing artists to display their arts (Grazella and Mariani 2012). Further, Renitasari said that Djarum would sponsor cultural events as part of their CSR program rather than as part of an investment in marketing (Grazella and Mariani 2012). Since 1979, starting from its own hometown in Kudus in Central Java, Djarum has been planting more than 1,000 million seeds and continue to plant trembesi trees (known by the genus name Albiziasaman and often called “saman” or “rain” tree) on the northern coastal highway of Java island stretching for 478 km (Maryono 2012).
Findings: Appreciation and Gratitude for the “Benevolent” Controversial Industry?
This case study research focuses on the tobacco industry’s CSR efforts in three Indonesian towns, two with a strong tobacco presence: one is a big city (Surabaya) where the company Philip Morris’ Sampoerna (an MNC) is located; the other one is a small town (Kediri) where the locally owned tobacco company is located (Gudang Garam). The third site (Jogjakarta) has no tobacco industry presence. The data were collected using interviews (47 interviewees from 3 research settings) and 6 focus groups with smokers and nonsmokers (data was recorded, transcribed, and analyzed in Indonesia as one researcher is Indonesian: English translations occur at the point of analysis). For the purpose of this study, a content/thematic analysis and critical discourse analysis (CDA) are employed to analyze the data derived from the focus groups’ discussion and interviews.
Three main themes emerged from the three research settings although with different emphasis. The “Dialectic” theme occurs when the research participants addressed the issues surrounding the business of the tobacco industry in Indonesia with narratives that showed the complex and often conflicting situations of where and how the business is situated under the current competing local and global discourses. This understanding then seems to lead to the prevalence of the research participants’ ambivalent responses in which they often took negotiated positions and even presented contradictory statements when addressing the issues surrounding the tobacco industry in Indonesia. Second, the “Blame the Government” theme occurs where the research participants connect the often controversial issues of the tobacco industry business practices in Indonesia with the performance of the government in their service to the Indonesian people. Third, we identified the “We are From a Developing Country Apology” theme, where the research participants contextualize the situations of Indonesia being dependent upon the existence of the tobacco industry by virtue of their country being a developing country that is undergoing development processes.
Theme One. Most answers in the “Dialectic” theme are situated within the current debates and controversies surrounding the business of the tobacco industry. In expressing their views about the tobacco industry, these research participants often presented their opinion by acknowledging the many sides of the story surrounding the tobacco industry in Indonesia. While admitting that the tobacco industry is a controversial industry with products many believe are harmful to our health, the research participants did not limit the discussion on the issues of health alone; instead they offered all kinds of angles on how to look at the picture of the tobacco industry in Indonesia. In their answers, the research participants often presented the contrasting situation of the existence of the tobacco industry in Indonesia simultaneously, with admitting that smoking is bad for our health. Given the tobacco industry’s importance for the country’s economy, they expressed ambivalence. All three groups often presented their opinion in terms of the dominant presence of the tobacco industry in Indonesia. They considered the tobacco industry as “big,” and connected its dominant presence (or “big-ness”) with issues related to: the “contribution” that the tobacco industry makes to the country in terms of providing jobs or employment for many people; and, its significant role to the country’s economy in terms of the tax paid to the government.
This understanding of the dominant economic position of the tobacco industry in Indonesia provides a frame for their answers when addressing the often controversial issues about the continuance of the tobacco industry. That is, the participants were aware of the controversial position that the tobacco industry has in relation to the issue of healthy living. They noticed that the number of campaigns against tobacco has continued to increase, and they believe that the health activists are behind those campaigns and expressed concerns about the government’s new regulation about smoking, further restricting the space of the tobacco industry. However, some pointed out that the tobacco business keeps growing in Indonesia even under this kind of pressure, and identified the contradictory nature of the industry significantly contributing to the country’s economy but having limitations placed on them. Other participants saw these dialectics from a more global point of view. They saw this situation as some kind of a war zone between two global interests and one local position. In their opinion, the local tobacco industry is being caught up between two giant global interests: one is the increasing concern about health issues and the other being the financial interest of the MNCs, which has agendas to co-opt and replace the significantly large market of the clove cigarettes industry with their own Western-standard cigarettes. These participants openly showed their concerns about the future of the tobacco industry in Indonesia. They wondered if the government or the tobacco industry itself has some kind of a plan or solution toward these kinds of situation.
Apart from seeing the situation as a global dialectic, the research participants who adopted a global dialectic perspective tended to view the local tobacco companies in relations to identity, since for these people, smoking, especially smoking clove cigarettes, is believed to have been part of the local culture for hundreds of years ago. Hence, they saw the threat toward Indonesian tobacco as a threat toward Indonesian identity, something they treasured, feared would soon be lost due to the imbalance between powerful global interests versus the inadequately equipped local opponents. They believe that the global trend of “healthy” living will soon impact the tobacco culture in Indonesia such that the country would have no other choice but to succumb to the international pressures. Thus, within the context of Indonesia, one perception is to view opponents of the tobacco industry as coming from outside the country. In this sense, it is often attributed to the increased international pressure faced by Indonesia.
Theme Two. The second theme, the “Blame the Government” theme, emerged because when discussing the presence of the tobacco industry in Indonesia and their CSR efforts, the research participants often addressed the issues in connection with the roles performed by the government. In their responses related to the government’s roles, the participants often framed their opinions in terms of the performance (or the lack thereof) of the government in their service to the people. Hence, the government is portrayed as lacking in competence, weak, dependent (toward the tobacco industry), confused, lacking firmness/strictness in addressing problems or enforcing the law, and even hypocritical. The orientation is that of “blame.” The tobacco industry is properly understood as vital for the government to provide even rudimentary social and physical infrastructure. This perceived imbalance between the government and the tobacco industry contributes to the government being perceived as weak in enforcing the laws or regulations regarding the tobacco industry and thus hypocritical. Conversely to the disappointment regarding the government’s performance is an appreciation of the CSR practices performed by the tobacco industry. Not surprisingly, most of the research participants also acknowledged the tobacco industry’s CSR initiatives with a sense of gratitude.
The participants, especially those who benefited directly from the CSR initiatives of the tobacco industry, acknowledged that the tobacco industry in Indonesia contributes to reducing societal problems. These participants were often beneficiaries of the tobacco industry’s CSR scholarship programs, the business training programs, and the art philanthropic programs. For these people, participating in the tobacco industry’s CSR initiatives has made them feel empowered, skillful, knowledgeable, and more informed. When asked whether they felt obliged to return the favor, they said that they would return the favor by always supporting the tobacco industry’s CSR initiatives. Notwithstanding this, many said that they would not buy the product or become a smoker, but would encourage whenever they can and often by word of mouth, other people to participate in their CSR activities. Many showed their support by participating whenever invited by the tobacco industry to attend an event or to give testimonials about the CSR initiatives. Furthermore, research participants connected their responses with the roles performed by the government, either in terms of their expectations on how the government should serve the people or whether the government itself should be grateful toward the tobacco industry.
In these kinds of responses, some of the research participants seem to also highlight certain areas where they think the government is failing in performing their roles where their performance is quite poor, suggesting instead how the tobacco industry had taken over those roles that are supposed to be carried out by the government. In this second theme, the narratives presented by the research participants suggest a picture where, on one hand the government is represented as disappointing in performing their roles, while on the other the tobacco industry is often presented in a more positive light. Praise for the tobacco industry’s CSR practices exhibited appreciation and even gratitude in terms of its overall reputation. They were perceived as being capable and competent in taking over some of the supposed roles of the government.
Theme Three. The third theme, the “We are From a Developing Country Apology” theme, is related to the second in the sense that in responding to the issues surrounding the CSR practiced by the tobacco industry in Indonesia, the research participants situated the issues within the context of Indonesia as a developing country. Hence, in addressing the situation, the research participants often pointed out the state of country in terms of its undergoing development processes. Most participants connected the CSR practices performed by the tobacco industry with actual development problems that Indonesia is currently experiencing. Several examples given were the problems in infrastructure development, improvement in education, and providing the local communities with empowerment programs.
Overall, the tobacco industry itself was perceived as having contributed to addressing typical problems faced by developing countries, namely the problems of employment and urbanization. From the research participants’ point of view, the relationship between the country and the tobacco industry—a controversial industry—takes place due to the position of Indonesia as a developing country, or in other words, it is inevitable. In their opinion, Indonesia has no other option but to receive help from this tainted industry because the country desperately needs their help, as a developing country that is still unable to find solutions for many of its societal problems. The way they understand this context is important, since, in their opinion, developed countries wouldn’t want to receive help from a tainted industry. The research participants believe that the tobacco industry plays an important role in reducing societal problems or contributing in some way to improve them. They presented several examples of how the tobacco industry had tried to help the situation with their CSR practices (help with the infrastructure improvement, provide scholarships, give various skill trainings for the local community). Of course, by being a labor-intensive industry, the tobacco industry provides employment to many people in several towns, thereby reducing the numbers of people going to the cities to find jobs.
In their understanding or awareness of the current state that Indonesia is in today, the research participants’ responses connote a need to be understood, to be empathized with for their current situation, as if they wanted to apologize for being part of a country where so many societal problems still need to be fixed. These responses situate Indonesia as a developing country that depends on the tobacco business. The apologetic response may be interpreted as the need for their welcoming the CSR initiatives given by the tobacco industry to be understood in context. The research participants show their awareness of the negative attributions that the tobacco industry is experiencing in today’s dominant discourse of healthy living.
Apart from gratitude, some of the research participants admitted that receiving the CSR initiatives from the tobacco industry bestows them with a feeling of pride. The direct beneficiaries qualified their sense of pride not because the initiative came from the tobacco industry, but because the program that they participated in is very competitive. It is perhaps not surprising then, that under the circumstances of being a developing country that still needs improvement in many areas of people’s lives, most of the research participants admitted to have no problems with the existence of the tobacco industry in Indonesia or to continue having a relationship with them. Hence, in terms of the community’s support toward the continuing existence of the tobacco industry in Indonesia, the research participants said that it depends on whether Indonesia as a developing country can find a way to solve its many existing societal problems without involving the government. They stated further, that as long as problems such as unemployment prevail in Indonesia or if the government could not create an industry that can bring significant contributions the way that the tobacco industry does, and if the tobacco industry continues to give significant contributions to the country’s economy, the tobacco industry will always be accepted by the people.
CSR and the Tobacco Industry in Indonesia: Between Nationalism, Conflicting Power Relations and Dilemmas
From the overview presented previously, the picture that emerged is quite complex. From the way most of the research participants discuss the issues surrounding the existence of the tobacco industry in Indonesia, their understanding seems to be situated as a triangle between the tobacco industry on one side, the performance of the government, and the context of Indonesia as a developing country. Predominantly, instead of looking at the issues from the health perspective, a dominant Western discourse, the research participants look at the issues from the local economic perspective. Thus, their response is framed within the discourse of economic development or progression. The word “development” is quite contested (Heryanto and Lutz 1988). Many studies of development are now questioning the positive valence normally ascribed to it. The dominant Western economic model used to measure human development employs economic growth as its major indicator. However, recent literature has contested the notion that economic growth is a useful proxy for more general welfare associated with human development (Ranis 2006). Although the debate has broadened the definitions and goals of development, there is an important interrelation between economic growth and human development where income growth clearly strikes one as a contributor to directly increasing the human development since it encapsulates the economy’s command over resources (Sen 2000). It is a reasonable premise that effective states are essential for promoting economic and social development. However, what constitutes an effective state and what roles it should perform are issues still debated within development studies. On one hand, there are scholars and practitioners of development who prefer limited government, both as an end in itself, and as a means to more prosperous economies. On the other hand, a variety of critics hold that strong, interventionist states are needed instead to facilitate political order, economic growth, and greater equality in the development world (Kohli 2006).
Indonesia, as a developing country is caught in the neoliberal ideological vortex that valorizes small government and the role of corporations in generating wealth. Thus, the continuing relevance of the issues of development for the Indonesian government is eventually linked to the importance of CSR as perceived solutions to address the country’s social problems. The concern is that governments in developing countries are often unable to perform their social tasks because of neoliberal injunction against raising taxes or seeking long-term loans, and so are asking the private sector to contribute more. In many cases where state agencies in developing countries are unable to provide services and facilities, corporations begin to assume a state-like role of protecting, enabling, and implementing citizenship rights (Matten and Crane 2005). However, this leads to a further problem where governments fail to regulate the economy or deal with transnational and environmental problems (e.g., malnutrition or deforestation), nor do they provide public goods (e.g., public health, education, infrastructure). This means that they do not adequately serve the public interest (Scherer, Palazzo, and Matten 2009). This failure is particularly true when the public institutions lack the necessary resources or enforcement mechanisms or do not have the willingness to take care of these issues (Scherer, Palazzo, and Matten 2009). Under these conditions, private actors often step in and fill the governance void (Scherer, Palazzo, and Matten 2009).
During the New Order era under President Suharto, the term “Development” with the capital “D” was first introduced in Indonesia, which subsequently became so immersed in the country’s life that it still plays an important role in how the people see themselves as citizens. The regime itself was not only known as the New Order era, but also as Development Order era. For 30 years (from 1960s to 1990s), Development became the all-encompassing “reality” of how the nation defined its history and its future. Development became the vision and the mission of Indonesia, as something to strive for, to reach for, as the process that defines the day-to-day practices in the people’s lives. This strong sense of being part of a developing nation and the feeling of disappointment toward the performance of the state explain many Indonesian’s appreciation of a “benevolent” industry, albeit a “tainted” one, that seems to fulfill some of the state’s roles.
Apart from the economic reasoning, the issues of culture and identity also emerged as other factors that shaped the research participants’ reactions. The research participants were aware of the global trend to “healthy” living that would soon impact the tobacco culture in Indonesia leaving them with no other choice sooner or later but to succumb to international pressures (Margana et al. 2014; Abhisam et al. 2014). One of the first steps undertaken in this global scenario is to substitute Indonesian tobacco with imported tobacco and to replace clove cigarettes with “white” cigarettes (Margana et al. 2014; Abhisam et al. 2014). This situation is perceived as part of a bigger conspiracy to eliminate clove cigarettes and its labor-intensive capacity altogether and to be substituted with a “white,” machine-produced cigarettes—a “Western” product with a “Western” mode of production (Margana et al. 2014; Abhisam et al. 2014; komunitaskretek.co.id). The elimination of tobacco culture would mark another loss for Indonesia, after losing the war on commodities for other local products such as palm kernel oil, sugar, and even salt due to their being labeled as “unhealthy” (Margana et al. 2014; Abhisam et al. 2014). The “international conspiracy” is seen to use the same tactics to win the war on tobacco, by labeling those commodities as “unhealthy” and replacing them with “healthier” substitutes supplied by Western countries (Margana et al. 2014; Abhisam et al. 2014).
In terms of the level of nicotine in the clove cigarettes, the Indonesian government issued Government Regulation (PP) 109/2012 to regulate products containing addictive ingredients (Ayuningtyas 2013). The regulation required the testing of tar and nicotine content in tobacco through an accredited laboratory (Ayuningtyas 2013). However, it was deemed impossible for local farmers to meet because it was too expensive (Ayuningtyas 2013). If the regulation were effective, then the local tobacco products that currently account for 90 percent of cigarette products in the country would have been replaced by imported tobacco, which presently only contributes 7 percent to the country’s cigarette products (Ayuningtyas 2013). This situation was perceived as an example of maneuvers committed by the international conspiracy to destroy Indonesian tobacco (Abhisam et al. 2014; Margana et al. 2014). Within this kind of context, the presence of the tobacco industry in Indonesia may be seen not only as a provider in the place of government, but also as a symbol of heroism resisting the international agendas perceived as planning to destroy Indonesian culture.
The clove cigarettes, which is perceived as a key cultural symbol, has been part of Indonesian culture since the mid-17th century when the Javanese started using tobacco in pipes and in indigenous cigarettes, made of shredded tobacco wrapped up in dried cornhusk, banana, or palm leaves and known locally as klobot in Javanese (Arnez 2009). There is evidence that the mixing of tobacco with clove buds in the klobot cigarette has been practiced since the 17th century (Arnez 2009). Clove oil is believed to be a traditional cure for asthma, by rubbing it onto one’s chest and later inhaled from tobacco and cloves (Arnez 2009). It is seen as an authentic and genuine “product” of Indonesia, and even as a symbol of nationalism due to its existence as a “powerful” indigenous business practice during the colonial era (Margana et al. 2014). The need to preserve this unique culture is contrasted with the perceived global maneuvers many fear will be attacked and destroyed. Globalization for many generates a sense of insecurity, where people experience an increasing sense of rootlessness and loss of stability under the powerful transformative forces such as capitalist development, structural adjustment policies, privatization, and other issues related to advanced capitalism (Kinnvall 2004). Following Giddens (1991), ontological security and existential anxiety are essential ingredients in human existence, where there is a close connection between identity and security. The threat toward Indonesian tobacco hence is seen as a threat toward Indonesian identity, something treasured because it serves as a cultural power, that they fear soon will be lost due to the globalization processes (Tomlison 2003).
However, the research participants’ positive alignment with the tobacco industry sits uneasily with the health facts. In 2012, an estimated 260,000 Indonesians died from tobacco-related illnesses (Natahadibrata 2013), and the health cost for tobacco-related illnesses reached up to Rp. 11 trillion per year (approximately US$ 880 million) (Liman and Suharlim 2014). Although the continued existence of the tobacco industry is claimed to be supporting a more “populist” cause in terms of livelihood sustainability for millions of people in Indonesia, those health facts cannot be ignored. Under this kind of situation, the relationships between corporations and their stakeholders are often imbalanced (L’Etang 1994). That is, there is a power-relation at play which, within the context of developing countries, forces national governments to a vulnerable position as they are being forced to urge corporations including MNCs to contribute more to the development process (Jamali and Mirshak 2007). In other words, their national sovereignty is undermined by an economic dependence on large companies, including MNCs. The success of CSR initiatives is often linked to stakeholder dialogue and stakeholder engagement, where those relationships are often represented as being neutral (Blowfield and Frynas 2005), when of course that is not the case. When CSR is seen from the relationship perspective, those participants engaged in CSR activities belong either in the donor or the recipient categories, which may create a relation of dependence between them (L’Etang 1994), which seems to be the case with the existence of the tobacco industry in Indonesia.
One example of this imbalanced power relation is when the health minister once promised that Indonesia will soon join the World Health Organization’s Framework Convention on Tobacco Control (FCTC) (Govt to issue tobacco regulation 2012). Yet, even now Indonesia remains the only country in Asia Pacific, which has not accepted it (Tobacco control will not harm economy: Activists 2014). Another example of the country’s dependence upon the existence of the tobacco industry can be seen when Indonesia increased tobacco taxes starting from January 2015 from 56 to 65 percent (Liman and Suharlim 2014). The government’s addiction to easy-to-get revenue from cigarette tax excise is far less than the cost of the tobacco health-related expenditure (Dharmawan 2012). The tobacco industry so far has succeeded in expanding its market by nearly 9 percent per year, and in 2013 made Indonesia the fourth largest cigarette market in the world (Liman and Suharlim 2014). So much is expected from the continuing existence of this industry that the tobacco industry is likely going to stay for a long time in Indonesia. Under these circumstances, there are clear power dynamics at play between the corporation and the government. These corporations’ CSR practices, hence, may further reinforce their already powerful position (Utting 2007). By practicing CSR, corporations and business elites are able to fend off criticism and regulatory threats (Utting 2007). There are three main objections from those who disagree that controversial business, especially the tobacco industry, engage in CSR activities: that CSR is used by tobacco companies to gain legitimacy; that CSR is used as a tool to forestall regulation; and that CSR is used as a kind of camouflage or a cover up for tobacco companies’ unethical business practices (Dorfman et al. 2012; Fooks et al. 2011; Friedman 2009; Palazzo and Richter 2005).
This complex picture shows that there is an issue of an imbalanced power dynamics between a state incapable of providing for its citizens and a dominant corporation whose contribution to the country’s economic stability is quite significant. This relation of dependence is further complicated when corporations taking over the government roles through their CSR activities have a questionable reputation. In fact, the CSR practices, used by corporations to perform governmental roles, often only reinforce the corporation’s already powerful position. Hence, in this developing country context, taking over governmental roles with their CSR practices may be used by corporations to secure or gain more power. This may seem to be counterproductive when developing countries are the ones that could benefit the most from the practice of CSR. Within the context of Indonesia, this may mean that a powerful tainted industry is becoming more powerful by practicing CSR. Their taking over governmental roles may further serve their own interests; to continue their existence in the still impoverished, economically unstable country.
Questions
- If you are a health activist or an antismoking campaigner, how do you propose to address this kind of situation faced by Indonesia?
- What do you think the Indonesian government should do to improve their credibility in the eyes of the people they serve?
- Do you think CSR, within such context, may dangerously become a new form of colonialism?
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