Coal Business and Local Political Dynamics

Andi Tenri Sompa

Ilmu Pemerintahan FISIP Unversitas Lambung Mangkurat, Banjarmasin

Keywords: coal, decentralisation, local politics, mining

Abstract: Coal is not just economic goods, but also political "stuff". As economic goods, coal is one form of natural

wealth of Indonesia which became the object of business because it has a high selling value. In a number of

areas in Kalimantan and Sumatra, investment activities are based on natural resources, in general coal. This

study attempts to answer three questions. Firstly, is the regional authority in mining business licensing

consistent in formal procedures or are there also informal procedures? Secondly, whose interests are

primary in coal-based investment activities in Tanah Bumbu? Thirdly, how is the involvement of coal mine

operators in the political process, especially the 2005 and 2010 elections in Tanah Bumbu District following

the implications in the context of local power?

1 INTRODUCTION

As an economic good, coal has its own political

values and implications. Business and investment in

coal are related to political practices, especially at

the local political level (As'ad, 2015). Beginning

with permission from clearance for exploration and

exploitation to marketing results, there are the

interests of local political elites (and bureaucratic

officials) which cannot be separated in coal business

and investment. In various districts/municipalities in

South Kalimantan, for example, where there is a

booming coal business, it is clear that there is a

strong political dimension in it (As'ad, 2015).

The interests of the local political elite (and

related bureaucracy officials) in the coal business are

in line with the level and scope of regional authority

in natural resource management (Dinas

Pertambangan dan Energi Kalsel, 2011). In UU No.

4 of 2009 on Mineral and Coal Mining, regional

(provincial and district/city) positions in natural

resource management (minerals and coal) are

important and strategic, ranging from local

regulation, business licenses, guidance, settlement

conflicts, inventories, research, exploration,

geological information management, resource

potential information, development and

empowerment of local communities, delivery of

inventory information, guidance, supervision of

post-mining land reclamation, and others (Dinas

Pertambangan dan Energi Kalsel, 2011).

The wide scope of authority allows for regions

(local political elites and related bureaucratic

officials) to do many things both for the benefit of

regional progress and other interests. For potential

areas of natural resources, such as Tanah Bumbu

District, South Kalimantan, local governments are

eager to encourage investment activities in the coal

mining sector as a substantial natural resource in the

district. In Tanah Bumbu District, most of the

investment activities are based on the coal industry.

Conditions in early 2011, for example, showed that

more than 90% of investment activities were in the

coal sector with the company amounted to about 176

pieces, while in 2007-2008 only around 46 Mining

Business Licenses (IUP) for coal were granted.

Coal-based investment activities are basically

required to drive the economy and earn revenue in

order to build the region and create people's welfare.

But, is this always, in fact, policy? There is an

indication of the exchange of interests – between

political elites and businessman – concerning

investment activities in the coal sector in Tanah

Bumbu. These indications look from the process of

licensing to marketing results.

In the seasons of the election of regional heads, it

is clear that there is a certain proximity between

political actors (regional head candidates) and coal

mining businessmen. The closeness is certainly not

Sompa, A.

Coal Business and Local Political Dynamics.

DOI: 10.5220/0008816800660070

In Proceedings of the 4th International Conference on Contemporary Social and Political Affairs (ICoCSPA 2018), pages 66-70

ISBN: 978-989-758-393-3

something just plain, but implies a special

relationship which, in turn, has broad implications

(Sung and Richter, 2007).

This study attempts to answer three questions.

Firstly, is the regional authority in mining business

licensing consistent in the formal procedures or are

there also informal procedures? Secondly, whose

interests are primary in coal-based investment

activities in Tanah Bumbu? Thirdly, how does the

involvement of coal mine operators in the political

process, especially the 2005 and 2010 elections in

Tanah Bumbu District, follow the implications in the

context of local power?

This research aims to understand the power

relations that occur between the political elite and

coal mining businessmen in the local political sphere

of Tanah Bumbu Regency. This research is placed

within the local political sphere and touches on

political economy.

2 DECENTRALIZATION AND

LOCAL POLITICS

In political studies, decentralisation refers to the

distribution of power based on territory.

Decentralisation is concerned with the extent to

which power and authority are handed over through

a geographical hierarchy within the state and also

with respect to the institutions and processes that

permit such divisions (Balmas et al., 2014).

Smith mentioned at least 6 (six) promises of

decentralisation in the context of development.

According to Smith, the state mobilises support for

development plans. Popular energy needs to be

utilised for economic tasks or regeneration

(Whitford, 2007). Plans and goals must be delivered

in difficult physical and cultural conditions. Local

institutions can provide local data, interpretations of

local needs, indoctrination (into benefits of health

programs, for example), inputs (such as savings and

direct labour), and community self-help projects.

Profits can be derived from what is believed to be a

willingness to pay locally greater than the central

tax.

Local governments allow the maximum use of

local resources that have efficiency value quite apart

from other benefits, such as political education,

which may be brought to the community. Therefore,

it is very closely related to democratic

decentralisation and development that seeks to

utilise the capacity to help oneself with the aim of

improving the economic and social welfare of the

"community" (Patnaik, 2013).

In the meantime, local politics at its baseline

cannot explain and photograph problems within the

scope of the administration of local government and

legal-formal relationships between government

institutions, but more so than that concerning the

dynamics of politics, social and economic factors in

the local sphere which suggest the occurrence of

seizure interests, intergroup competition, conflict,

behaviour of actors, and others (Boulding and

Gibson, 2009).

3 RATIONAL CHOICE

The rational choice theory, sometimes called the

public choice theory, explains the close relationship

between public choice and public goods (Lehtinen

and Kuorikoski, 2007). This theory focuses on the

individual who makes the choice, the choice and the

behaviour of the maximization that he does. The

individual's decision or choice affects the public,

though the public itself understands that they are not

the select actors (Schotter, 2006).

Buchanan examines how to organise society to

be able to enlarge opportunities freely, both in the

context of the economy (market) and in the political

(state) context. According to Buchanan, the political

system is judged desirable to the extent that it

facilitates voluntary exchange and proportionate

relations between private costs and public provided

(but privately) benefits (Whitford, 2007).

This theory departs from the assumption of

utility maximisation. It is understood that the pillars

of society are individuals, rational actors who

always act to achieve their own interests. Taking

advantage of the concept borrowed from micro-

economic discipline, the theorists of this theory are

going to explain what is often called the micro

foundation of politics (Edlin, Gelman, and Kaplan,

2007).

4 RESEARCH FINDINGS

4.1 Playing on Mine Licensing

Mine clearance does have a clear procedure, but

often the procedure is only a formal way to go. In

practice, the informal procedure is more decisive.

Lobbying is usually done by investors, and it is part

of its informal procedures. Not infrequently,

Coal Business and Local Political Dynamics

informal procedures have their own strength in the

issuance of permits to control mining land to

investors. As stated and experienced by Kustono,

there are a number of companies whose licensing

application documents are incomplete but who

suddenly already have land and run mining

activities. Engineering always seems to exist. They

mine firstly take care of the permit then because

there is already a signature or recommendation of

the regent. In Tanah Bumbu, many officials,

including police officials, are involved in the coal

mining business.

4.2 Elite and Mine Businessmen

Interests

On the one hand, of course, the contribution of the

coal mining business in the development of Tanah

Bumbu Regency cannot be denied. On the other

hand, there are many complaints from various

circles where there are less positive implications of

business and the mining industry. The prosperity and

welfare of the people are not improving greatly even

though the exploitation of natural resources (coal

and oresbesi) continues to be done and contributes a

lot to the Original Revenue.

This is basically related to the concession and

impact of the coal mining industry for improving the

welfare of local communities. In reality, more

concessions are given to businessmen. In terms of

business concessions, the authorities will also try to

accommodate the various business concessions of

the businessmen. The Susanto study in South

Kalimantan Province, for example, shows the

granting of concessions from local authorities to

businessmen who can be inventoried in the form of:

[a] awarding of development projects, which can be

done through appointment – even without a tender;

[b] granting mining authorisation to businessmen;

[c] provision of border area provisions between

Banjar Regency and Tanah Bumbu Regency; [d]

issuance of appointment letters in procurement and

construction; [e] provision of concessions to the

process of transporting coal mining products; and [f]

compensation for the cost of the Barito river

dredging.

The role of the state or government is also

reduced (simplification) from protecting the interests

of the whole society to just keep the interests of

businessmen. The task is both simple and vulgar.

This is exactly what is imagined in the minimal

market concept. The powers they hold are merely

used to serve the businessmen, and beat other groups

in society who disagree.

According to Sarman, Haji Kalam – in the

context of the mining business in Tanah Bumbu

District – has emerged as a strongman. But he is a

powerful man who is likely to be created or

deliberately created by someone who is actually

stronger and might be in Jakarta. Thus, Haji Kalam

is a strong man created by a stronger person to

secure his business interests in Tanah Bumbu

District and also in South Kalimantan. That way,

Haji Kalam could be a puppet or an accomplice of

another stronger person.

Presumably, such a reality occurs in Tanah

Bumbu Regency that can be categorised by Studwell

as demonstrating the relationship between money

and power. The money is owned and controlled by

tycoons called godfathers, while power is in the

hands of formal leaders. According to Studwell, the

godfather is a peculiar elite, an economic aristocracy

of outsiders who cooperate half-heartedly with the

local elite. Culturally, the godfathers are chameleons

who tend to be well-educated, cosmopolitan, speak

more than one language and are completely isolated

from the boring attention of people who are

considered to be their relatives.

Under such circumstances it always happens

what Acemoglu and Robinson as extractive political

institutions (extractive political institutions) and

extractive economic institutions (extractive

economic institutions). A power that actually has

roots and traditions in the past, now repeats itself

with the same perpetrator. On a different side

emerge inclusive political institutions and inclusive

economic institutions. Political institutions and

extractive economics are within the framework of

vicious circles, while inclusive political and

economic institutions are placed within the

framework of virtuous circles.

4.3 Coal Businessman and Elections

Every coal miner in Tanah Bumbu Regency,

especially those with a large business, does not want

their business disturbed let alone stagnating and

experiencing congestion. Thus, they deem it

necessary to establish close and friendly relations

with local political leaders. The reason, many things

they can do in the context of business if close and

friendly with political rulers, should be so. Thus,

there is a symbiotic mutualism between the two

forces.

ICoCSPA 2018 - International Conference on Contemporary Social and Political Affairs

This happened in the case of elections in several

districts in South Kalimantan in 2005. The results of

the Indonesian Institute of Science study say,

explicitly, in the form of explicit/explicit indeed

there is no alliance between employers and

authorities. Of course, this can be a form of strong

alliance because they have a double position, namely

as a ruler as well as a businessman. With the

establishment of an alliance between rulers and

businessmen, the expectation of businessmen will be

that they will be able to participate in local

government projects listed in the APBD. Some of

the occurrences of alliance can be demonstrated by

several causes, partly because of the electoral

process in which the role of businessmen is very

large in supporting certain candidates.

Businessmen who provide support for the

election process will certainly collect project

promises in the post-election period. Therefore, it

can be argued that the main mode of businessmen in

politics is to influence the policies of local

governments that will side with the interests of the

businessman in gaining access to the implementation

of local government projects.

In order to influence local government policy,

businessmen also formulate "shadow cabinets" and

place their people to occupy certain positions. With

people who have close relationships (with partners)

with employers occupying the cabinet seat area, they

can do "escort projects". In this case, the

businessman escorts the superior project through his

"hands" in the legislature – the executive, who is

allied with the employers' partners. Some

businessmen do not engage in direct contact with the

head of the region who are important actors outside

the formal structure of government, or through the

regional secretary.

Large businessmen are usually directly related to

the candidate, while middle-level businessmen and

small businessmen, in addition to dealing with

successful teams are also associated with undercover

or disguised teams. Usually disguised teams come

from families, are younger siblings or children of

businessmen commonly referred to as "ring one", or

because the candidate is an incumbent, then the one

ring is the heads of service, the echelon one, and the

two echelons.

5 CONCLUSION

The regional authority in licensing coal mining, in

addition to making it easier for investors to secure

their business and investment activities, also has its

own implications in the context of local politics. On

the one hand, local governments need investments

and financial resources as a force in mobilising

regional development; on the other hand, mine

businesspeople need land and local government

support to grow businesses and scale businesses.

Business licenses issued by the local government, on

the one hand, provide economic benefits for the

region and increase regional income; on the other

hand, they become "goods" that have a political

meaning of their own. In Tanah Bumbu District, the

coal mining business license becomes a political

business field involving the political elite and related

bureaucratic officials.

Coal mining investment activity in Tanah Bumbu

Regency is quite large and produces a lot of income

for the region but it does not have many implications

for the improvement of people's prosperity. The high

income of the region from mining business results

does not go hand in hand with efforts to improve the

welfare of the community. Physical development

looks more as if it prioritises local government

rather than accelerating community empowerment.

The interests of businessmen as well as the financial

benefits of the political elite and bureaucratic

officials seem more advanced. Thus, investment

activities in the coal sector are more prominent as

the arena of interest and profit for local businessmen

and elites than the interests of development and

regional progress.

Another political dimension of the coal business

in Tanah Bumbu is evident in the political event of

the Regional Head Elections. In the 2005 and 2010

elections, for example, a number of mining

businessmen provided support to certain candidates,

not only moral and mass support but also financial

assistance for the various needs of candidates in the

electoral process. The interests of mining

businessmen in the elections are not limited to the

candidates who support the winning candidate, but

also later business interests of the businessmen still

occur after the candidate has been elected as

regional head. Policies are formulated and enforced

by elected regional heads. Therefore, every

candidate who wins an election is never separated

from the support and involvement of coal mining

businessmen.

The support provided by mining businessmen to

regional head candidates in the pilkada is certainly

not free. They expect a reward, and when elected,

the reward will be given in the form of facilities in

the development of the coal mining business as

required by the mine itself. Thus, the cooperation

and relationship between regional leaders and coal

Coal Business and Local Political Dynamics

mine businessmen not only lasts during the political

process (pilkada) but also in later periods; in fact, in

later times, the closeness is far more important than

ever. That is why many of the local leaders' policies

in the coal mining sector in Tanah Bumbu Regency

are heavily influenced by and follow the will of coal

mine businessmen.

Departing from these conclusions, this study

recommends three things. Firstly, the issuance of

coal mining permits should only follow official

procedures in accordance with the provisions of the

regulation. This is not only to strengthen the

institutionalisation of the business licensing system,

but also to avoid unhealthy practices in investment

activity as well as to prevent the occurrence of

environmental damage. Secondly, coal mining

investment activities still have a main commitment

to increase local revenue in order to move the local

economy, to achieve regional progress, and

accelerate the creation of welfare for the people of

the region. Thirdly, the political participation of

businessmen (coal mines) in the political process,

especially the pilkada is certainly permissible and

legitimate, but the assistance provided by the heads

of local chief candidates should be institutionalised

and follow election regulations and the rules of the

General Elections Commission. This is to make the

elections fair, and the elected candidates need not

have a moral and political obligation to mine

businessmen.

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