selamat idul adha

Selamat Hari raya idul adha,

mudah2an menjadi motivasi untuk berkorban dan memberikan yg terbaik untuk islam dan bangsa.

 

musafir,

 

The future and Application of E-Govt

Abstract

E-government or electronic government were defined as web-based service to the delivery of national or local government information and services through the internet or any digital means to citizens or businesses or other governmental agencies. Recently, The underlying goal of e-government is to integrate all government agencies to create a “digital nervous system” where communication and the exchange of information take place at very high speed, facilitates relevant government information in electronic form to the citizen, create better service delivery, empowering people through openness access to information without bureaucracy, improved productivity and cost savings in doing business with suppliers and customers of government; and participation in public policy decision-making.

Idea

Internet or Web application for supporting government mission is being widely used nowadays and having important implication to ensure success of interaction between government agency and outside constituencies. The outside constituencies could be citizen, businesses, or other governmental agencies itself. To perform all the activities efficiently and effectively, government should implement information and internet technology in the good manner. As the internet users is growth significantly in every region (more than 60% /year according to internetworldstat  source), then the used of internet application will have important effect to promote good governance.

According to Sheridan and Riley (2006), e-government have different focus with e-governance, where the e-government more emphasizes to the development and usage of online service while e-governance mostly dealing with application of ICT’s in general.

The future and development of internet application to support e-government goals (networking with constituencies and stakeholder outside of organization) can be described as follow:

1.       G2C (government to citizen)

Activities where the government provides one stop, on-line access to information and services to citizens that would enable citizen to get information, pay taxes, renew driver license, pay traffic ticket, change address, and watching traffic situation, etc. Government may provide downloadable form online, provide tourism and recreation information, provide advice about health and safety issues.

 

2.       G2B (government to business)

Government deals with business that used internet and other’s ICT’s tools. It is includes two way interaction and transactions: government to business (G2B) and business to government (B2G). B2G refers to businesses selling product and services to government                                                                while G2B such as

E-procurement and tendering.

3.       G2G (government to government)

It deals with creating network between different government organization or agencies                in order to be more efficient and effective in their operations, such as interlink network to bridge the information between different units in  agency.

4.       Government to constituents (E-democracy)

It is refers to online activities of governments, elected representatives, political parties and citizen for democratic process. Nowadays, most of political member have their own information websites and portals and using email to text the message to potential voters.

 

Paper output

I’m still thinking how it gonna be, probably by emphasizing more on the importance of internet application to support government mission through e-government policy in order to link with external constituencies regarding information. Moreover, probably i could get to identify the risk of internet application to e-government which i hope can give more inside for future better development of ICT in general.

well, how is ur idea friends?

 

 

 

 

 

 

References;

Rexed, Knut. “The strategic importance of e-government to good governance”. OECD research paper.

Cordella, Antonio.” E-government: towards the e-bureaucratic form?”. Journal of Information Technology. 2007.

 

Webber, Allan. “From E-Gov to I-Govt. What next for the leading edge government in the digital edge”. Forrester research publication. 2006

Shailendra , Jain Palvia^, , Sushil S. Sharma. “E-Government and E-Governance: Definitions/Domain Framework and Status around the World”.  International conference on e-governance proceeding. Hiderabad , India, 2007.

 

Is Capital Asset Pricing Model (CAPM) the best way to estimate cost-of-equity for the lodging industry?

what do you think?

The paper was discussing about whether capital asset pricing model (CAPM) is the best way to predict cost of equity for lodging analysis and finding how another methods can be improved to in order to provide more reliable way in estimating cost of equity.  The result revealed that Price-forward- earnings (PFE) methods with implied cost of equity (ICE) approach is better estimating the result and having reliable result compared to CAPM.

The question that were raised is whether implied cost of equity (ICE) is belong to unsystematic risk or not, since there are two big classification of risk, which is systematic risk (Relates to the variability in the returns due to interest rate changes, inflationary changes, recessions and natural disaster, etc) and unsystematic risk (Relates to the variability in the returns from loss of a key manager, patents, strikes).  

Since the central principal of the CAPM is that systematic risk, as measured by beta, is the only factor affecting the level of return, so I assumed the author considered not only systematic risk, as they mentioned based on their literature studies on Botosan (1997); that revealed there are another factor that influence expected return, therefore Botosan used implied cost of equity (ICE).  It makes me concluded that PFE is belongs to unsystematic risk.

CAPM formula:

ER_j = R_f + b_j (ER_m – R_f)

ER_j   = the rate of return that investors require on security j

R_f     = the return on a risk-free asset

b_j      = expected return on the overall market

ER_{m =} the Beta coefficient for security j          

So, base on above formula, it is obviously mentioned that CAPM consider beta which is symbol for systematic risk

Another reason that explained during the discussion was the effectiveness of new method implemented in. As CAPM is  device for explaining how markets price capital assets and also explain how an efficient capital market sets a price on individual securities by taking into account their respective risks and the expected returns from holding them, but still the result from CAPM still considered not really significant. Therefore the author developed price to forward earning to make it more reliable.

 

 

 

 

 

 

 

                                               

Picture. Security market line

According to presenter, PFE methods can make the result more close to the security market line compare to CAPM result. This  were cited from the paper’s result.

Moreover, another question was whether price to forward earning (PFE) method also suitable for private companies instead of lodging industries. The presenter said it does be implemented in another industry, but they didn’t mention further. According to the literature, cost of equity can be estimated by using another method also, such as weighted –average cost of capital (WACC). The company’s WACC will be the discount rate that will be used to discount the expected future cash flows from their investments.

My comment is it was too complicated to use many methods in estimating cost of equity. The author mentioned 6 level of methods and all of them having different result. I was wondering if such particular methods were used to non-lodging industry, were it be produce different result also? Let say, the PFE is the best methods to estimate cost of equity for lodging industry, but were the result would be the same if I use non-lodging industry, and PFE is still considered as the best methods also?  

 

The effect of cash flow and size on the investment decisions of ICT firms : a dynamic approach

Topic : The effect of cash flow and size on the investment decisions of ICT firms : a dynamic approach

The paper was discussing about sensitivity of firm investment to set their financial investment using flexible adjustment dynamic model. Author set up  the method by examining the degree to which firm’s liquidity  influences firm investment and also investigated whether  firm size and firm specialization having additional effects to firm investment. The result show that all the firm having sensitivity to the availability of internal funds, investment intensity will decrease along with firm size and leverage having negative effect on ICT firm’s investment.

 

Being emotional during decision making- Good or Bad? An empirical investigation

 

The paper entitled “ being emotional during decision making- Good or Bad? An empirical investigation”, written by dennis page, Myeong-Seo and Lisa Feldman Barret were investigated the role of emotions in stock trading via simulation involving 101 traders recruited from investment clubs and paid $100 to $1000 based on performance during simulation. They conclude that:

1. traders who experience more intense emotions while trading tend to outperform
2. traders who keep their emotions from affecting trading decision tend to outperform.
3. Traders who are better able to identify the intensity of their current negative emotions tend to outperform based on superior ability to control the possible biases induced by these emotions. Those are less able to identify their specific feeling at the moment decision underperform due to the influence of emotions they ignore or do not understand

During the discussion there several question were asked such as the influence of another factor instead of internal factor coming from the traders.

I also post the question about how we can prevent from being knocked off track by our negative emotions during trading. I found the answer that we should try to enhance of our degree of self conscious, we should try to make choices not only based on what the stock market telling us and what other people were doing, but also we have to put big attention on basis of rules that we are putting in advance.

Another question were should we discard our first impulses altogether since I assume in every starting of transaction we will be influenced by a lot of factor that might be come together in the same time, for instance we look for something we like and then we want to buy it and in the same time other people didn’t like it and they sell it. It means we have to involve our emotions to make our decision in the same time to face with external factor that have high possibilities to influence our decision. I conclude that we have to make policy and try to limit and under control of our self therefore it will help to decide right decision.

 

Hedging with the gold dinar : Ahamed Kameel Mydin Meera

 Hedging with the gold dinar
The 1997 East Asian currency crisis made apparent how vulnerable currencies can be.
The speculative attacks on the ringgit, for example, would have devastated the economy if not for the quick and bold counteractions taken by the government, particularly in checking the offshore ringgit transactions. The need for firms to manage their foreign exchange risk also became apparent.
Many individuals, firms and businesses found themselves helpless in the wake of drastic exchange rate movements. Malaysia’s being among the most open economies in the world in terms of international trade reflects the degree of its exposure to foreign exchange risk. The Economist magazine’s Pocket World in Figures (2002 edition) ranks Malaysia the second-most trade-dependent country in the world. Trade as a percentage of gross domestic product is 92 per cent for Malaysia, even higher than for Singapore, which ranks third with a figure of 78.8 per cent.
Today, exchange rate risk is a marked phenomenon in the floating exchange rate regime. Many international investment, trade and finance dealings are shelved due to the unwillingness of parties concerned to bear the foreign exchange risk. It is, however, imperative for businesses to manage this foreign exchange risk so that they may concentrate on what they are good at and eliminate or minimise a risk that is not their trade.
Elsewhere, traditionally, currency derivatives — forward, futures and options contracts — have been used for this purpose. However, in many nations including Malaysia, futures and options on currencies are not available. The Malaysian Derivatives Exchange (MDEX) makes available a number of derivative instruments — Kuala Lumpur Composite Index Futures, Index Options, Crude Palm Oil Futures and Kuala Lumpur Inter-Bank Offered Rate Futures — but not ringgit futures or options.
Even in countries where currency derivative markets exist, not all derivatives on all currencies are traded. At the Philadelphia Stock Exchange in the US for example, derivatives are available only on selected major world currencies like the yen, sterling and Australian dollar — against the US dollar, mostly. For most other currencies of the world, including those of almost all developing nations, there are no formal tools for hedging the foreign exchange risk that has become immensely significant in today’s global business environment.
Recently, Prime Minister Datuk Seri Dr Mahathir Mohamad mooted the idea of a gold payment system — the gold dinar — to settle bilateral and multilateral trades among countries and thereby eliminate foreign exchange risk. In this mode, gold is to be used as a medium of exchange and as a unit of account instead of the national currencies. Prices of exports and imports are to be quoted in units of gold weights. It is important in this structure that gold itself, and not national currencies backed by gold, is used for pricing, for otherwise it would not then be different from the gold standard of the past. Instruments backed by gold are vulnerable to easy abuse — which is what brought on the failure of the gold standard.
In the gold dinar system, the central bank would play an important role of keeping national trade accounts and providing a secure place to keep gold. When Malaysia trades with Indonesia, for example, the gold accounting is kept through the medium of the central banks of both countries and only the net difference between the two is settled periodically. Nevertheless, every transaction in essence involves gold “movement”.
Since bilateral and multilateral trades are ongoing processes, any gold that needs to be settled can always be brought forward and used for future transactions and settlements. On the ground, commercial banks that support gold accounts are viable partners in the implementation of the gold dinar system.
International trade and finance participants would deal with the commercial banks that provide such gold accounts. These commercial banks would in turn have gold accounts with their respective central banks. The above structure may sound a lot like the gold standard, but it is not. Gold, and not gold-backed instruments, is the medium here.
As an example, consider that Malaysia exports 100 bullion gold worth of goods and services to Indonesia while importing 80 bullion worth. Hence, Malaysia has a surplus trade of 20 bullion. Indonesia needs to settle only this difference of 20 bullion. However, this amount could be used for settling future trade imbalances between the countries and hence a physical gold movement between the countries is not necessary. Note that this simple structure eliminates exchange rate risk.
This means there is no need for forward, futures or options trades on the currencies. All countries, including those without such derivative markets, can enjoy this benefit. After all, developing a derivative market is costly and time-consuming. It also introduces inefficiency to the market since additional transaction costs need to be incurred.
Unlike the forward, futures and options markets, the gold dinar does not depend on speculators for increased liquidity. By being a global currency, it is capable of providing the needed liquidity without bestowing any “unfair” seigniorage on any particular currency. Also, unlike imperfections of hedging that are likely to happen with forward contracts, futures and options due to the standardised nature of these contracts, the gold dinar does not introduce such imperfections.
With the gold dinar, the hedging cost is fixed against gold, but note that even when hedging is done in any currency denomination, there is still risk in the fluctuation of that currency. Gold is superior here because it has intrinsic value. A hedger also pays neither the initial margin nor daily variation margins, as is the case with currency futures. Such margins are potential cash flow burdens on hedgers.
Even though the international gold price may fluctuate, the participants in a gold dinar system realise that unlike national currencies, gold has a stable intrinsic value that can be depended upon for continuous trade into the future. Even though with the existence of national currencies speculation and arbitrage on the price of gold could tempt a participating country to redeem or sell its gold, it should resist such temptations for the sake of stable and continuous future trades.
A regulation requiring that the gold stock with the central banks be used only for settling real transactions may be necessary. At this juncture, one may ask the question: How does this structure differ from a simple barter trade between countries? The advantage is that gold acts as a unit of account and thereby eliminates problems associated with barter.
The gold dinar would also reduce speculation and arbitrage between national currencies. For example, if three countries agree to use the gold payment system, then it is akin to the three currencies becoming a single currency. Accordingly, speculation and arbitrage among these three currencies will be reduced or even eliminated. This “unification” of the three currencies through the gold dinar provides diversification benefits.
It is like obtaining diversification through a portfolio of shares. Individual currencies face risks that are unique to the issuer country. For example, political turmoil can cause a national currency to depreciate, but in a unified currency such risks would be reduced. In fact, since people of all races, creeds and nationalities treasure gold, it is a suitable global currency that will enjoy global acceptance.
This means no single country’s unique risk may be significantly embedded in gold. However, the gold dinar system entails legal obligations between the parties concerned, just like the forward and futures contracts; and it may not be easy for a trader to remove this obligation easily as is possible with futures.
In my opinion, the gold dinar if implemented is similar to the forward contract but with its problems of “barter”, speculative and arbitrage elements removed; and is also a superior tool for managing foreign exchange risk compared to the futures and options contracts.
The gold dinar is likely to reduce transaction costs too, since only accounting records need to be kept. Transactions can be executed by means of electronic media with minimal cost. Hence, for international trades in this system, one no longer needs to open a letter of credit with a bank, incur exchange rate transaction costs (that is, the different buying and selling rates for currencies) or even face exchange rate risk.
The gold dinar system also reduces the need to create large amounts of national currencies through multiple deposit creation in the banking sector. This therefore reduces the possibility of excessive speculation and future attacks on the ringgit like the one in 1997. The banking sector can compensate for this “implied” loss by viewing the gold dinar system as an opportunity and thereby providing the necessary services in collaboration with the central bank.
The current global financial system is showing signs of instability, which in my opinion is partly but significantly due to the fiat nature of money. The problem lies with its attribute that it is created and destroyed in the financial system. Such instability is currently observable in the US. The financial distress depicted by a number of huge firms lately is bound to destroy a large sum of fiat money that in turn can be expected to bring about a banking crisis just like that experienced in Malaysia in 1997-98.
Gold, on the other hand, has all the characteristics of a good currency; it is desired and highly valued for its own sake, homogenous, stable, durable, divisible and mobile; and can neither be created nor destroyed. It can thus play the role of a stable international unit of account that is profoundly missing in the current floating exchange rate system since the demise of the Bretton Woods in 1971.
Perhaps we can take our cue from Nobel laureate Robert Mundell, who predicted that gold would again be part of the international monetary system in the 21st century.

Dr Ahamed Kameel Mydin Meera is head of the Department of Business Administration, Faculty of Economics and Management Sciences at the International Islamic University, Malaysia.

 

 

Untuk mu..

Tulisan ini saya dapat dari tulisan salah seorang teman..

Pernikahan atau Perkawinan, membuka tabir rahasia…… Proses pencapaiannya memakan satu perjalanan panjang.. Kadang, untuk menuju ke sana, Tuhan Yang Maha Bijaksana pun justru memberi kesusahan untuk menguji kita.. Tak jarang Ia melukai hati, hingga hikmahnya tertanam dalam.. Tak perlu kita pertanyakan, “apa maksud Tuhan ?” Karena andai kita berbesar hati dan mau mencerna, Tuhan punya alasan tersendiri yang memang sukar dimengerti…   Yang pasti.. jika kita kehilangan cinta, kita harus tetap percaya bahwasanya, ketika Ia mengambil sesuatu, Ia telah siap memberi yang lebih baik..   Menunggu….! itu satu pilihan..! Toh, walaupun suami yang kau tunggu tentunya tidaklah semulia Muhammad… Tidaklah setakwa Ibrahim…. Pun tidaklah setabah Ayub… Atau segagah Musa… Apalagi setampan Yusuf.. Tapi…. setidak-tidaknya, suamimu adalah pria akhir zaman.. Yang bercita-cita membangun keturunan yang sholeh…   Mengapa menunggu..? Karena walaupun kita ingin mengambil keputusan, kita tidak ingin tergesa-gesa… Karena walaupun kita ingin cepat, kita tidak ingin sembarangan…. Karena walaupun kita ingin segera menemukan orang yang kita inginkan, kita tidak ingin kehilangan jati diri dalam proses pencarian itu….   Jika ingin berlari, belajarlah berjalan dahulu… Jika ingin berenang, belajarlah mengapung dahulu… Jika ingin dicintai, belajarlah mencintai dahulu….   Tentunya… tetap lebih baik menunggu orang yang tepat, orang yang kita inginkan, orang yang dicintai dan mencintai, ketimbang memaksa dan memuaskan diri dengan apa yang ada…… karena…hidup ini terlampau singkat untuk dilewatkan bersama pilihan yang salah..   Berani bertindak gegabah, layaknya berani menerima resiko…. Bunga mawar tak mekar dalam semalam, namun bisa layu dalam sedetik… Kota Palestina tak dibangun dalam sehari, namun bisa hancur dalam sekejap.. Perkawinan tak dirajut dalam pertimbangan sesaat, namun bisa saja musnah, juga dalam sesaat….!   Pernikahan atau Perkawinan, bukanlah akhir dari sebuah perjalanan… Itulah yang kelak mengajarkan kita kewajiban bersama… Suami menjadi pelindung, istri penghuninya…. Suami adalah nahkoda kapal, istri navigatornya Suami bagai balita yang nakal, istri penuntun kenakalannya… Saat suami menjadi raja, istri menikmati anggur singgasananya.. Seandainya suami supir yang lancang, sabarlah memperingatkannya…   Akan halnya… Haruskah terus menunggu..? Jawabannya ada pada diri kita… Pastinya, menunggu mempunyai suatu tujuan yang mulia dan misterius… Menguji kadar iman dan takwa…. belajar meniti sabar dan Ridha…. Seribu kali gagal, seribu satu kali mengulangi….   Toh, tak perlu mendambakan yang benar-benar bersahaja…. Karena memiliki suami yang tak cela, justru kamu kan tersentak dari alpa… Kamu bukanlah Khadijah…. yang begitu sempurna dalam menjaga… Pun bukanlah Hajar… yang begitu setia dalam sengsara…. Kamu hanyalah seorang wanita biasa, yang terus berusaha menjadi Sholehah….   Pada akhirnya… Cinta yang agung, terus bertambah selama kehidupan…. Banyak hal yang indah, memang memerlukan waktu yang tak singkat…. dan penantian yang tak pasti…. Akan tetapi…. Walaupun menunggu membutuhkan pengharapan… Namun tetap menjanjikan satu hal yang tak dapat seorangpun bayangkan..   Mari kita kembalikan kepada-Nya… Dia Yang Maha Pengatur, dengan segala keagungan-Nya menuntut kita untuk selalu bersabar dalam setiap penantian….. Lagi-lagi untuk sebuah alasan…. Entah apa…!!

 

Hak Dan Kewajiban Rakyat Atas Pemerintahan

Source: WG Timur Jauh

Hak dan kewajiban umat atas pemerintahan

 

            Rakyat dan pemerintahan adalah dua hal yang tidak dapat dipisahkan satu sama lain.  Mustahil sebuah pemerintahan berdiri tegak tanpa ada rakyat atau umat yang ada di dalamnya. Sebab, kekuasaan pemerintahan seperti itu adalah kekuasaan yang kosong dan tidak memiliki kekuatan apa-apa. 

Rakyat atau umat tidak mungkin juga dapat hidup tanpa pemerintahan yang mengaturnya karena keadaan akan menjadi kacau akibat adanya kehendak-kehendak yang berbeda-beda dan saling memaksa. Hanya umat atau rakyat yang semuanya terdiri dari orang-orang bijak bestari yang tidak memerlukan pemerintahan.  Tetapi, umat yang memiliki karakter seperti ini hanya ada dalam alam mimpi atau alam utopi.

            Oleh karena itu, keberadaan sebuah negara yang terdiri dari pemerintahan dan rakyat adalah sebuah keniscayaan dalam ajaran Islam. Firman Allah SWT dalam Surah An-Nisaa’ ayat 58-59, “Sesungguhnya Allah menyuruh kamu menyampaikan amanat kepada yang berhak menerimanya dan (menyuruh kamu) apabila menetapkan hukum di antara manusia supaya kamu menetapkan dengan adil. Sesungguhnya Allah memberi pengajaran yang sebaik-baiknya kepada kamu.  Sesungguhnya Allah Maha Mendengar lagi Maha Melihat.  Hai orang-orang yang beriman, taatilah Allah dan taatilah Rasul-Nya dan ulil amri di antara kamu.  Kemudian jika kamu berlainan pendapat tentang sesuatu, maka kembalikanlah ia kepada Allah (Al Qur’an) dan Rasul (sunnahnya).”

            Ibnu Taimiyah dengan tegas menyatakan, “Barang siapa yang tidak bisa diluruskan dengan Al-Qur’an maka diluruskan dengan kekuatan.  Oleh karena itu agama ditegakkan dengan Al-Qur’an dan senjata.”  Sedangkan Imam Al-Ghazali mengatakan, “Dunia adalah ladang akhirat.  Agama tidak akan sempurna kecuali dengan dunia.  Kekuasaan dan agama adalah kembaran yang tidak dapat dipisahkan.  Agama adalah tiang, sementara penguasa adalah penjaga.  Bangunan tanpa tiang akan rubuh dan apa yang tidak dijaga akan hilang.  Keteraturan dan kedisiplinan tidak akan terwujud kecuali dengan penguasa.”

            Kewajiban pemerintahan kepada rakyatnya sangat jelas, yakni menyampaikan amanat dan menetapkan hukum secara berkeadilan.  Sedangkan kewajiban rakyat juga sangat jelas, yaitu tunduk dan taat kepada pemerintah dalam mengelola dan menjaga negaranya.  Amanat dan hukum yang harus dijalankan pemerintah dengan adil mencakup seluruh bidang kehidupan, mulai dari ekonomi, hukum, sosial, budaya, politik dan lainnya.  Rasulullah SAW menyatakan, “Saya lebih utama bagi setiap Muslim ketimbang dirinya sendiri.  Siapa yang meninggalkan harta kekayaan, maka menjadi hak warisnya.  Siapa yang meninggalkan utang atau anak-anak dan keluarga maka saya bertanggung jawab atas mereka.” (HR Muslim).

            Apabila kedua pihak tidak menunaikan kewajibannya maka kedua pihak akan kehilangan hak-haknya.  Hak keadilan dalam segala bidang bagi rakyat dan hak ketaatan dan kepatuhan bagi pemerintahan.  Keadaan ini akan menjadi ancaman serius bagi stabilitas negara dan bahaya yang ditimbulkannya boleh jadi akan melebihi serangan dari negara-negara musuh yang sangat kuat sekalipun. 

Untuk menjaga stabilitas inilah setiap Khalifah yang empat diangkat mereka melakukan pidato-pidato yang memerintahkan untuk mewaspadai kemungkinan di atas, sebagaimana pidato Khalifah Abu Bakar As Shidiq RA dalam pengangkatannya, “Wahai manusia seluruhnya, aku diangkat untuk memimpin kamu dan aku bukanlah orang terbaik diantara kamu.  Jika aku membuat kebaikan maka dukunglah aku.  Tetapi jika aku membuat kejelekan maka koreksilah aku.  Kebenaran itu suatu amanat dan kebohongan itu suatu khianat….. Patuhilah aku selama aku mematuhi Allah dan Rasul-Nya.  Bila aku mendurhakai Allah dan Rasul-Nya maka tiada kewajiban patuh bagi kamu terhadap aku…. ”

           

Masa depan umat bila pemerintah melalaikan kewajibannya

            Kehancuran umat dan rakyat akan menjadi sebuah ancaman yang paling serius apabila pemerintahan tidak melaksanakan kewajiban-kewajibannya, terutama terhadap rakyat dan umatnya.  Pemerintah yang korup terhadap amanat yang diembannya dan yang zalim terhadap ketetapan-ketetapan hukumnya akan menjadi bencana besar dalam seluruh bidang kehidupan: sosial, politik, ekonomi, hukum, budaya, dan akhirnya eksistensi negara itu sendiri. 

Inilah kiamat yang dijanjikan sebagaimana yang dikatakan Rasulullah SAW dalam haditsnya: “Bila amanat disia-siakan tunggulah datangnya kiamat.”  Dikatakan: “Bagaimana bentuk penyia-nyiaannya?” Rasulullah SAW bersabda: “Bila persoalan diserahkan kepada orang yang bukan ahlinya, maka tunggulah kiamat.” (H.R. Bukhari).  Orang-orang yang memiliki sifat korup dan bengis tentu bukan ahlinya (menjadi) penguasa atau pemerintahan. 

            Bermacam-macam model negara yang menyeleweng dari negara ideal akibat tidak dilaksanakannya kewajiban pemerintahan. Ada negara diktator otoriter yang pemerintahannya membungkam segala bentuk kritik dan pendapat rakyat sehingga segala macam aktivitas rakyat dicurigai dan dibatasi.  Bersamaan dengan itu, negara akan bersifat sangat korup dan semena-mena karena tidak ada satu kekuatan pun yang mampu mengingatkan dan meluruskannya. Negara juga akan bersifat sekuler meskipun secara resmi ia menghormati keberadaan agama-agama. Peran agama diminimalisir sekecil mungkin dan akhirnya terpinggirkan tak berdaya. Yang berkembang adalah budaya hedonisme, pragmatisme, materialisme, dan permisivisme.  Pada puncaknya sumberdaya negara akan habis tersia-siakan akibat digerogoti terus-menerus secara tidak bertanggung jawab.

            Hal yang paling sering terjadi dalam negara seperti di atas adalah diterapkannya politik belah bambu oleh penguasa—satu kelompok diperlakukan istimewa, sedangkan kelompok lainnya diinjak-injak. Dua kelompok ini kemudian dihasut untuk saling bermusuhan dan bahkan menyerang satu dengan yang lain.  Maka, dengan itu perhatian rakyat akan terpecah oleh persoalan-persoalan konflik horisontal dan meninggalkan persoalan-persoalan yang terkait dengan kebobrokan pemerintah.  Isu yang dikembangkan kadang persoalan rasial, agama, fasilitas, bahkan sampai-sampai persoalan-persoalan sepele yang kemudian direkayasa menjadi persoalan besar yang dapat menimbulkan bentrokan. 

            Bahaya fitnah yang terjadi dalam suatu wilayah digambarkan Allah SWT dalam firman-Nya : “Dan takutlah terhadap fitnah yang tidak hanya menimpa orang-orang zalim di antara kamu semata.  Dan ketahuilah bahwasanya balasan Allah sangat berat.” (Q.S. 8/Al-Anfaal: 24).  Kezhaliman yang dilakukan oleh seorang rakyat saja dampak buruknya dapat menyebabkan kehancuran seluruh umat, apalagi jika kezhaliman itu datangnya dari rezim para penguasa; pemerintah yang seharusnya memerintah dan mengatur rakyat.  Bahayanya akan jauh lebih besar dan lebih dahsyat lagi.

 

Menuntut hak dengan menunaikan kewajiban

            Masa depan umat di dalam sebuah negara yang pemerintahannya zalim sangat tergantung pada umat atau rakyat itu sendiri.  Ibnu Mas’ud meriwayatkan bahwa Rasulullah SAW bersabda : “Setiap nabi yang diutus Allah kepada suatu kaum sebelum saya selalu punya pendukung dan pembela yang melaksanakan sunnahnya dan mematuhi perintahnya.  Kemudian kaum itu meninggalkan generasi yang mengatakan apa yang mereka tidak lakukan, melakukan apa yang tidak diperintahkan.  Siapa yang melawan mereka dengan kekuatan tangannya, maka dia adalah orang mukmin.  Siapa yang melawan mereka dengan kekuatan lisannya, maka dia adalah mukmin.  Siapa yang melawan mereka dengan kekuatan hatinya, maka dia adalah mukmin.  Selain tindakan itu, tidak ada lagi keimanan sebesar zarrah pun.” (H.R Muslim).

            Terpeliharanya negara dari penyelewengan para penguasanya merupakan hasil kerja dari orang-orang kritis yang mengelilingi penguasa tersebut.  Mereka bisa berasal dari golongan wazir (menteri), ulama, atau bahkan rakyat kecil sekalipun.  Oleh karena itu, umat tidak boleh tinggal diam melihat kezhaliman yang merajalela di depan matanya.  Para pemimpin pemerintahan itu adalah saudara Muslim mereka sendiri sehingga terkena kewajiban di antara pribadi Muslim satu dengan lainnya. Salah satu di antaranya adalah saling menasihati dalam kebenaran, kesabaran, dan kasih sayang. 

Imam Muslim dan Ahmad meriwayatkan, pada suatu hari seorang sahabat, ‘Aidz ibn Amru (wafat 61 H) datang menemui salah seorang gubernur yang bernama Ubaidillah ibn Ziyad dan menasihatinya: “Wahai anakku, sesungguhnya aku mendengar Rasulullah SAW bersabda bahwa seburuk-buruk pemimpin adalah mereka yang bengis.  Maka hati-hatilah engkau agar tidak termasuk ke dalam golongan mereka.” Ubaidillah ibn Ziyad kemudian menyahut: “Duduklah, sesungguhnya engkau hanyalah seorang yang tidak diperhitungkan (nukhoolatun) dari sahabat-sahabat Muhammad.”  ‘Aidz ibn Amru kemudian berkata: “Adakah orang-orang yang tak diperhitungkan pada atau di antara sahabat-sahabat Muhammad?  Sesungguhnya orang-orang yang tak diperhitungkan itu ada pada masa sesudah mereka dan di dalam masyarakat selain mereka.”

Dalam sebuah pertemuan di Istana Baghdad Al Hasan bin Zaid, gubernur Madinah, meminta seorang ulama shalih bernama Ibnu Abi Dzuaib yang ada di ruang pertemuan itu untuk menilai Khalifah Abu Ja’far Al Manshur.  “Apa yang engkau katakan tentang diriku ?” tanya  khalifah Abbasiyah itu.  “Engkau bertanya kepadaku seakan-akan kamu tidak tahu tentang dirimu sendiri?” Abi Dzuaib balik bertanya, “Demi Allah, engkaulah yang memberitahu aku,” kata Abu Ja’far menegaskan.  Abu Dzuaib akhirnya berkata, “Aku bersaksi engkau telah mengambil harta benda dengan cara tidak benar, lalu engkau memberikannya kepada orang yang tidak berhak atas harta itu. Aku juga bersaksi bahwa kezaliman merajalela di pintu rumahku.” 

Mendengar hal itu Abu Ja’far bangkit dari tempat duduknya lalu memegang tengkuk Ibnu Abi Dzuaib seraya berkata, “Demi Allah, andaikata aku tidak sedang berdiam di tempat ini, tentu sudah kuambil negeri Persia, Romawi, dan Turki dengan jaminan tengkukmu ini.” Abi Dzuaib dengan tenang berkata, “Wahai Amirul Mukminin, Abu Bakar dan Umar telah menjadi pemimpin.  Mereka berdua melaksanakan kebenaran, berbuat dengan adil, mencengkram tengkuk orang-orang Persia dan Romawi serta dapat menonjok hidung mereka.”  Abu Ja’far melepaskan tangannya dari tengkuk Ibnu Abi Dzuaib seraya berkata, “Demi Allah, kalau bukan karena engkau orang yang jujur, tentu aku akan membunuhmu.”  Abi Dzuaib berkata, “Demi Allah wahai Amirul Mukminin, aku memberi nasihat kepadamu lantaran anakmu, Al Mahdi.” (Diriwayatkan oleh Imam Asy-Syafi’i).

            Dengan mengembangkan tradisi kritis terhadap pemerintahan yang merupakan kewajiban rakyat, insya Allah para penguasa pun akan terketuk hatinya untuk menunaikan kewajiban-kewajibannya sebagai pemimpin. Jika pemerintah yang berlaku zalim tak mau menerima kritik, maka akan terjadi sunnatullah dimana akumulasi ketidakpuasan rakyat akan memaksa terjadinya perubahan-perubahan pemerintahan secara lebih tidak terkendali.  Kekacauan dan fitnah memang sesuatu yang mengerikan tetapi, sebagaimana terjadi pada masa-masa lalu, hal itu tidak dapat dihindari dalam mengiringi kemunculan terjadinya perubahan yang lebih menjanjikan masa depan.

 

How Central Bank Control Money supply ??

How Federal Bank control the money supply??

Answer:

The money supply contains coins and currency in the hands of the public, controlled by the central bank (in USA, it is the Federal Reserve or FED), and deposits accounts controlled by the interaction of the households and firms that use money and the banks that create money.

 

Central banks in different countries (Fed in USA) control the money supply (M1) : M1 can be increased if the coins and currency in circulation increase or the checking account balances (demand deposit) increase.

There are four ways that this can happen:
1.required reserve rate is lowered:

 The Fed can lower required reserve rate which raises the multiplier effect of high powered money (cash). The cash stays in the banks and each dollar can support more loans/demand deposits. For example, it the required reserves went from 20 percent to 10 percent, bank ACM would only need to hold $10,000 in reserves for the initial injection of $100,000. The other $90,000 would be loaned out so at each stage in the multiplier chain, the banks would be loaning out more funds and the eventual increase in the money supply would be larger.
2. discount interest rate decreases:

The Fed can lower the discount rate and lower the costs for banks holding low excess reserves which will lower the excess reserve rate. If the Fed lowers the discount rate, or sets a lower federal funds target, this can be accomplished if the Fed injects funds into the system which will drive down the price of those funds – interest rates. To see how it could increase the level of cash in the system, we can turn to the next Fed tool – open market operations.

3. publics’ holding of cash changes:

The Fed can raise confidence in banking system which will lower public’s desire for holding cash. If you look at the high-powered money the Fed can inject into the system, a dollar in the hands of an individual is simply a dollar of money supply. A dollar in reserves at the banks, however, can support some multiple expansion of checking accounts. For example, when the required reserve rate was 10 percent, the $100,000 cash injection the system ultimately resulted in a $500,000 increase in checking account balances. Thus if the Fed can move dollars from people’s pockets to banks, this will increase the money supply. In the Great Depression, one of the real problems was people lost confidence in the banks and took their cash out of the banks, a pattern that caused the money supply to decrease. When people want cash, the reserves in the banks fall which creates a bigger drop in demand deposits. The result is a net decrease in the money supply. For this reason you would expect every Christmas season the money supply would decrease as consumers want to hold more cash. To offset this the Fed will need to get more cash into the system. The same will happen as the Fed attempts to offset the public’s hoarding of money at the turn of the millennium.

4. open market purchases:

this is the Fed’s primary tool of monetary policy. The Fed can buy or sell government securities. Let’s look at the situation when the Fed wants to increase the money supply. The Fed will contact its broker and announce it wants to buy $100,000 of government securities. To make life easy we will assume the securities the Fed buys are sold by Herschel Perot who deposits the cash in his bank – ACM National Bank. The increase of $100,000 cash into the system will result in an increase in the money supply of $500,000. Now you know why the Fed uses this policy to manage the money supply. If the Fed wants to increase the money supply it will buy government securities, while if it wants to decrease the money supply it will sell government securities.
Although all of the above are policy tools of the FED, Open Market Operations tend to be the favored tool. Their popularity stems from the fact that the decisions are reversible, flexible, and timely.
How do we show the Fed’s policies in the money market where interest rates are set? If the FED increases the money supply, then the money supply curve shifts outward. The outward shift could be accomplished by a reduction in the discount rate, open market purchases, or lower required reserve rates.

 

Applying Ethic To Corporate Social Responsibility:Study On Lapindo Brantas Inc-Indonesia Mud Flow Disaster-

By: Azman Muammar, B.Eng

Abstract

 Ethic has wide view of perspective to meet with many business case in the world. Applying ethic in business should followed by great consciousness to all of stakeholder in company. Neglecting ethic in real business world would make numerous negative effect that also can make huge effect on business continuity in the future. .

 

 

I. Introduction

 

Ethic is principles or standards that govern the conduct of communities, groups,  organization and individual. It is more than morality which is primarily concerned with general outcomes of good and bad, or right or wrong. (Pricewaterhousecoopers).

Nowadays business climate, where company compete rapidly to attract customer’s attention and gained new talent, where reputation as important thing that influence financial outcomes, where social and environmental issues  becoming directly influence to company’s operational continuity, companies are being pressured both implicit and explicitly to take into account about ethic program into business mission and strategies to be implemented.(Rees, 2006).  In order to perform true commitment to corporate responsibility, firm was needed to consider and review more seriously to their policies and practices to be aligned with across wide spectrum of their operations.

Recently, good corporate governance which is popularly applied by many government in the world, also impact to urge company to play the rules, acting in responsible manner, and paying more attention on business ethics and integrity (Rees, 2006). Moreover, the evolutionary notion of business strategy and due to the increasing pressure either from employees and public in general, had been encouraging company to be more commitment on addressing social responsibility, instead of making profit. As a indicator for measuring socially responsible item, recently company were evaluated on their performance to increase shareholder values, but these days, company were also evaluated on how their company’s operation affect positively to the others stakeholders at large.  That included consumers, creditors, supplier, employees, government, the community, and natural environments (Spillane, 2007).  The way company translating various social issues in their operating areas either individually or collectively, are known as corporate social responsibility (Koestoer, 2007). Some call it socially responsible investing that related to sustainable development in long term (Spillane, 2007).

 

II. Corporate Social Responsibility Practices in Indonesia

 

As the increasingly demand for more ethical business process in international global business, therefore pressure is applied to industry to perform business ethic through many new public initiatives and laws. The effect is making driving force of corporate social responsibility implementation increase simultaneously. In Indonesia, such corporate social responsibility term in earlier 90’s was quite foreign to local companies (including state owned companies), although it is commonly practiced  for many company in Indonesia to do charitable activity. Different with multinational company which had already adopted of corporate social responsibility policies deriving from their headquarter after major report on Nike case, Levi Strauss manufacturing plants related to labour and human right issues, in 1992.

Following on that case, various progressive action was taken into account, including the establishment of National committee on corporate governance that working mostly on establishing a code of conduct for good corporate governance, and also encouraged many public activist to form corporate forum on corporate social responsibility triggered by various social issues and natural disaster. Unfortunately, due to the national guidelines on community development that are still in progressed and revised, multinational companies tend to adopt international guidelines as it used and adopt also through national guidelines with several adaptation that fit to Indonesian’s national culture.

As we explain above, corporate social responsibility should emphasize on sustainability for a long run, embracing internal as well as external-oriented policies. However, there is organization still translating corporate social responsibility terminology  only on common basis rather than fit it into their business strategy and goals, so it was not surprising that still there is company notion that corporate social responsibility practice is similar to charitable or community development activities (PIRAC,2002) or seen as tools for avoiding external pressures or public relation gimmicks (BWI, 2006).

In addition, several environmental incident as effect on lack of corporate social responsibility practices such as on Newmont Minahasa-mining company or Buyat case which produced metal pollution to water, The Freeport-mining company case in Papua, and  recently case was sidoarjo mud flow case or namely Lapindo Brantas case in east Java that still exist until today  and suffering many people and environments. 

Due to earlier stage of corporate social responsibility concept in indonesia, it is needed more efford and commitment from management, to consistently running  policy setting and enforcement covered with good and accountable program development, also monitoring program which is conducted in effective way in order to ensure its success.

            In addition, many companies often still constrained in implementing corporate social responsibility because some factor such as avaibility of corporate social responsibility expertise and company structure didn’t meet with corporate social responsibility concept instead of another factor, like unwillingness to take part in social responsibility. Anyway, they are several factor that is identified important to determine the success of corporate social responsibility implementation (Malkasian, 2004), such as :

1. the intensity of its motives for being socially responsible
2. the vision of its leadership at headquarter and locally
3. the time and enery willing to spend to understanding stakeholder issues

Looking to be more understand to what communities needed is very crucial for companies, particularly for those operating in remote areas, in the areas of mining, oil/gas, forestry, or other natural resources related industries  (Kemp, 2001, :31), such as Lapindo Brantas Co, it is due to possibility of appearing high tension between communities and mining companies that can’t be solved unless there was genuine intent to respect local culture. (Kemp, 2001).

 

III. Lapindo Brantas Mud Flow Case

On 28 May, 2006, a mining site namely the “Banjar Panji 1 exploration well” in East Java exploded and it started disaster of spurting mud in East Java, its happened after another disaster which just began two days prior to in Yogyakarta and Central Java, Indonesia. The mining site is operated by PT Lapindo Brantas, owned collectively by three main national conglomerates who also holds power in Jakarta (capital city of Indonesia), and a mining company from Australia (Santos). These three conglomerates are  Jusuf Kalla, now served as Vice President of Indonesia and own Bukaka company,  Aburizal Bakrie, now served as coordinating Minister of Social Welfare and own Bakrie-linked company, and Medco Group a company owned by a Opposition party politician and Former president- Suharto-linked families.

Thousands of people have been forced from their homes since May 29^th. Since then villages were submerged, farmlands destroyed, factories and schools were closed and the sources of livelihoods of the people lost. Infrastructures around the area were also damaged and disturbed transportation of goods and people from and to Surabaya (capital city of east java) from Southern direction. The gas pipeline was damaged that caused lost billions of Rupiah for the Electricity Company and the National Gas Company. The livelihoods around the mudflow areas almost totally disturbed.

The disaster was mainly caused by human error. The Lapindo Brantas Banjar Panji I gas exploration well had reached a depth over 3,000 m when the mudflow started. The police investigating the cause of the disaster said that there was a blow-out in the well-shaft and that the company failed to cap the hole properly. The experts said that the company had not installed casing around the well to the levels required under Indonesian mining regulations.

The impact of the mudflow is severe and immediate. These include the effects of the spread of hydrogen suphine containing toxic gas and the spread of intestinal diseases. In early August 2006 there were about 1,500 people hospitalized because of the toxic gas and diarrhea. 

IV. Conflicting Problem

Problem exist whenever deciding who will responsible for this disaster, company or government. Commonly,based on fact, due to company’s activity, so company must be responsible for all of effect caused from the operational. Lapindo argued that prior to eruption, there were 6.3 Richter earthquake had triggered the mud flow eruption and therefore company should be exempt from paying compensation damage to the victims. If then the cause of the incident is natural, then the government of Indonesia has the responsibility for the damage instead. This argument was further recurrently echoed by Aburizal Bakrie, the Indonesian Minister of Welfare at that time, whose family firm controls the operator company PT Lapindo Brantas.

According to the latest research that conducted by geologist, they disregarded that the natural cause and mentioned that the earthquake is merely coincidental. The earthquake possibly have generated a new fracture system and weakened strata surrounding area of the Banjar-Panji 1 well, but it does not support the formation of a hydraulic fracture to create the main eruption vent 180 m away from the borehole. Apart from that, there was no other mud volcano reported happened on Java island after the earthquake and the main drilling site is 300 km (186.5 miles) away from the earthquake’s epicenter which was estimated to have only magnitude 2 on Richter scale at the drilling site (the same effect as of a heavy truck passing over the area).

The mudflow still continues, but the responsibility to the affected people has been delivered to the hands of the government and not by the company. This disaster that was caused by human error is now becoming a political scandal. Those who are associated with the company have high political leverage both in the Parliament and in the Executive body. Pressures by the local communities and the NGOs to the Parliament and the Government seem to be in vain, since the big political parties in the Parliament (Golkar and PDIP) have close links with the owners of the company. Bukaka group is owned by the Vice President Jusuf Kalla who is also the chairman of Golkar Party or Party of Functional Groups with dominant votes in the Parliament; Bakrie Brothers (the holding company of Lapindo Brantas) is owned by the Bakrie Family, the family of the Coordinating Minister of Social Welfare, who is also a chairman of Golkar Party; Medco Group is owned by Arifin Panigoro Family; Arifin Panigoro is one of former chairman of PDIP Party or Indonesian Democratic Party-Struggle (one of the biggest party in the Parliament) and has close relationship with Former president-Suharto family. Although Arifin Panigoro is from PDIP (the opposition party in the Parliament), the political party could not do any significance action to approve demand of affected people about the disaster considering that Arifin Panigoro is also a big contributor to the party financing.

Conflict of interest possibly happened to this Lapindo Case. Instead of the people involved, also government had to think it dilemma. Another perspectives that made this case dilemma are through the fact that East Java is rich of mining resources: natural gas and oil. The reserves of oil and gas range from the mainland of East Java to the northern parts of Bali, both inland and offshore. The multinational companies such as Exxon Mobil (US) and Santos (Australia) and Petrochina (China); Monsanto (US) on agriculture and Philips Morris on tobacco plantation have put strong feet in these areas. Once the government takes wrong decisions regarding the Lappindo Brantas, this might also affect to the companies operating in the area. Bakrie Group has close relationship with Exxon Mobil and Medco Group has close relations with Santos. 

Recently, untill now there is no independent court has established once and for all whether the mudflow is a natural disaster or the result of a drilling accident. Similar with, also Indonesia‘s President Susilo Bambang Yudhoyono seems to be torn between two conflicting interests: the interests of the people and the interests of Lapindo Brantas Inc., which is a subsidiary of Energi Mega Persada, a company controlled by the Indonesian welfare minister Aburizal Bakrie.

However, Government agreed to finance the cost of repairing or rebuilding infrastructure, which could run into billions of dollars, instead of ordered Lapindo Brantas to pay US$ 435 million in compensation to victims and for efforts to halt the mud. (Antara, 2007)

Later on, no such information were provided to the the public how that amount of money was arrived at, or if Lapindo Brantas has actually agreed to provide that amount of money at that time. And there is no sign that infrastructure work in the area will get underway anytime soon. As the people of communities getting suffered and hold many heavy demonstration to catch a large of public attention, therefore finally Lapindo Brantas agreed to provide money payment as compensation to the affected people stage by stage. Similar with that, the government has trouble securing approval from the House of Representatives for funds to finance the construction of major infrastructure submerged by the mudflow , because majority of legislators keep asking the government to demand Lapindo Brantas to bear all the costs, including for rebuilding infrastructure. Legislator didn’t want to approve government proposal to finance the rebuilding infrastructure program because it should goes to Lapindo Brantas as the operator.

Legislator also asking explanation from the President Yudhoyono on why he could not press welfare minister Aburizal Bakrie to at least take care of the the 3,500 displaced families and pay compensation sooner for 11 buried villages. Later on, these issues were performing as cabinet reshuffle to fall down Aburizal Bakrie from minister position. Although  it didn’t happen.

Lapindo, meanwhile, continues to claim that the mudflow was not caused by its drilling.

 The mudflow in numbers

Average amount of mud flowing from the volcano	over 300 days: 150.000m³/day
Distance of the mud to the city limits of Sidoarjo (population 1.5 Mio.)	3.8km
Number of patients registered at Sidoardjo hospital as affected by gas (hydrogen sulphide – H2S) from the mud volcano	1,500
Estimated area covered by mud	Approx. 360 (3,6km²)19 – 600 ha (6km²)
Estimated thickness of the mud layer (Feb 2007)	10m 21 – 18m22
Estimated number of displaced people	11,00023-50,00024 (average estimation: ~ 15,000

Source: http://mudflow-sidoarjo.110mb.com/index.htm

The mudflow in US$ dollars

US$
277 million	December 2006 estimation of compensation costs: In December 2006 the Indonesian president Yudhoyono said Lapindo Brantas will have to pay around US$ 277 million in compensation to 6,000 families in four villages.
422 million	March 2007 estimation of compensation costs: In March 2007, Yudhoyono said again that Lapindo should pay the compensation in cash for more than 13,000 families, based on new data provided by the National Team for the Lapindo Mudflow on March 22.
144 million	December 2006 estimation of costs for stopping the flow: In December 2006 the Indonesian president Yudhoyono said that in addition to compensation, Lapindo Brantas also will have to spend some US$ 144 million to stop the mud flow.
330,800	February 2007 estimation of costs for stopping the flow: The costs for the concrete ball method of stopping the flow are estimated to be much lower than any other method at $330,800.
664,800	May 2007 estimate of costs for stopping the flow: The costs for the Japanese proposal to use a counter-weight technique
1.2 million	Loss to fisheries industry: The Marine Resources and Fisheries Ministry has estimated a financial loss of 10.9 billion rupiahs (US$ 1.2 million) to the fisheries business in Tanggulangin and Porong subdistricts
823 million	Total cost for repairing the damage (March 2007): At the beginning of march 2007, the government’s estimate of the total costs had increased to Rp 7.6 trillion, more than half for compensation.
435 million	Amount Lapindo is demanded to pay up: President Susilo Bambang Yudhoyono ordered PT Lapindo Brantas to pay US$ 435 million to victims and for efforts to plug the mud flow (May 2007)
1,2 billion	Estimated personal wealth of Aburizal Bakrie: The American business magazine Forbes in September 2006 listed Aburizal Bakrie as the sixth-richest man in Indonesia, with an estimated personal wealth of US$ 1.2 billion.
22 million	Net profit of Energi Mega Persada (2006): In 2006 the company realised sales with a total value of Rp 1,647 billion (US$ 181 million), resulting in a net profit of Rp 203 billion (US$ 22 million).
38.2 million	Net profit of Medco Energi Internasional (2006): Over the year 2006, Medco Energi Internasional realised sales with a total value of US$ 792.4 million and a net profit of US$ 38.2 million.
485  million	Net profit of Santos (2006): In 2006 the company realised annual sales of A$ 2,769 million (US$ 2,087 million), resulting in a net profit of A$ 643 million (US$ 485 million).

Source: Financing of the three Brantas PSC Companies, June, 2007.

 

V.  Solving Action

According to Lapindo’s case, we can make general assuming that, the decreasing of environmental quality is caused by humans themselves who have not seen themselves as a part of both an economic subject and an ecosystem. The business activities that pay the most attention to profit-making frequently cause the environmental problems.

Company in term of doing business, were created to make profit and not merely focused to social entity.  Therefore, all of its strengths are used to make the biggest profit. However, the corporation should take social corporate responsibility for its surroundings because corporations can not be separated from the series of rules for social interactions, which include moral rules. As a consequence, the corporation should not only rely on economic, legal, and political points of view but also on humanistic and ethical points of view. 

As the suggestion that might be done such as law enforcement to investigate the case, demanding PT Lapindo to take full accountability for resolution of the hot mud problem, audit all the exploration and exploitation activity and the last is revise all legislation related and make it more community safety orientation instead of business orientation.

VI. Legal Perspectives

 

According to explanation on discussion held by the Regional Legislative Council (DPD) and Radio Smart FM and then published in ANTARA newspaper, several environmental law expert at Airlangga University made opinion about legal perspectives of Lapindo mud flow disaster.

Gas exploration of Lapindo Brantas that causes mud flow, might violate 12 of indonesian law  as it has caused disaster to the people. Beside violating Law No.23/1997 on the environment, Lapindo has also violated the Law on Industry which clearly stipulates that all industrial operations must avoid environmental problems to the best they can.

Lapindo also violated Law No.5/1990 on conservation and Law No.5/1960 on agrarian affairs as the company has converted an agricultural conservation area into a hotmud terrain and failed in preserving the quality of land. As for information, the salt content in the hotmud is 4000 times above normal standard, therefore made the land not productive anymore.

Similar with, Lapindo has broken Law No.24/1992 on Spatial Layout as it has changed the function of agricultural conservation into a mining area without revising the original use of the farmland. Moreover, Lapindo Lapindo failed to comply with Law No.22/ 2001 on oil and gas, and Law No.11/1967 on mining, because it did not conduct exploration of agricultural products based on an environmental concept. As it has caused damaged on roads and distrupted traffic, Lapindo also could be charged for violating Law No.38/ 2004 on roads and Law No.14/1992 on traffic.

Lapindo also must responsible for decreasing quality of water and deterioration of the people’s health with will violate the Law No.23/1992 on health and Law No.7/2004 on water resources.

Moreover, Lapindo also facing law No.15/2003 on anti-terrorism, because Lapindo is considered to have been involved in environmental terrorism.  Under this law a person or group of people found guilty of causing suffering to huge number of people and large scale destruction deserve a criminal sanction.

In fact, based on factual situation in the field, Banjar Panji-1 well were existed in Brantas area which is belonged to PT.Lapindo Brantas. But, unfortunately that some of drilling job were not done by Lapindo, but were assigned to another third party, namely PT.Media Citra Nusantara (MNC).

As for Brantas Field operational authorities were under control of PT. Lapindo Brantas, Santos Ltd, PT. Energy Mega Persada and PT. Medco Energy, so these company should be responsible for whole operational effect, including mud flow disaster according to Law No.22/2001 about Oil and Natural gas. Moreover, Lapindo Brantas could be charged for Corporation crime act due to their activity in endangering the public welfare. (Shelley, 2005).

 

VII. Ethical perspectives

 

In order to be successfully running the business, company need to full fill at least three things, according to Richard george, namely, a qualified product, good management, and ethics.(Endro, 1999).  Each other items had its own specialized, but if company only has good and qualified product and is managed well but lacks of ethics, this lack will lead to the collapse of that corporation. There must be an interaction between the corporation as producer and people as consumer, and those are bounded by certain norms or ethics. As a consequence, the interaction between people and corporations will be successful if it is based on those norms and ethics.

Lapindo’s case is related to company responsibility that directly related to environmental ethics. This ethics is a discipline that discusses the norm and moral principles that regulate and underlie human behavior in relation to their environment. As what lapindo did that cause mud flow, show that they are still conducted business based on the egoistic paradigm of satisfying economic need as it similar to Business philosophy that only profit oriented and avoids responsibility for the environment.

This indicates has shown that that business stakeholders still operate under the old paradigm of anthropocentrism which is identified as the main cause of the current environmental crisis (Keraf, 2002). In  anthropocentrism perspectives, said that humans deplete resources for the sake of their own needs without paying attention to preserving nature. Humans are only preferred with nature merely for the sake of their own needs rather than preserving nature for its own value. This attitude toward nature is an egoistic form of species chauvinism, which is in economic terminology called as economic paradigm. It is means that business only has the responsibility to consider cost-benefit ratios and centered merely on the goal of gaining short-term profits and is not aware of and does not care about future effects.(Nugroho, 2001).  

The degradation of environmental quality would not have occurred if the business institutions had applied corporate social responsibility practices (Tjager,2003). Reconstructing ethics to synchronize the value of corporate ethics and environmental ethics will provide guidance for business stakeholders. The reconstruction can change the corporate ethic, which is currently a shallow ecological paradigm based on anthropocentrism and economic perspectives, into a corporate ethic that has a deep ecology paradigm based on biocentrism and ecology centrism perspectives. Therefore, it is important that corporations improve themselves by reconstructing corporate ethics to include the environmental ethic. This reconstruction is important because if the corporation still has the wrong paradigm about the universe, there will potentially be more destruction of  the environment. The main aim of corporate ethics reconstruction is to change the paradigm of the interaction between humans and nature into a corporate ethic that involves environmental ethics. (Djalil,2003) With this paradigm, the application of corporate ethics will provide an action platform from which corporations can respect nature. Corporate ethic were perceived as long-term objectives that include the next generation as stakeholders in the business because they will also need to live comfortably by utilizing natural resources.

  

VIII. Conclusion

 

In today worlds, where values were created from profit, people and planet so it is very fundamental to implement of corporate social responsibility practices. In addition, while many companies are sincerely making efforts to implement good corporate social responsibility practices, there are allegations that corporate social responsibility is “cosmetics” or to gain legitimacy that can influence public opinion about the company. Companies that are merely seeking profit, find the voluntary nature of corporate social responsibility coupled with the weak law enforcement upon ethical misconduct, as a reason for avoidance of implementation. On the other hand, companies that are genuinely endeavoring social justice find this situation very frustrating.

Several barriers prevent businesses from fully implementing corporate social responsibility, driven from the external environment as well as the internal system. Lack of understanding about corporate social responsibility definition is a primary barrier to build understanding between business, government, and civil society. There is a real need of continuous efforts to educate and train business leaders, employees and other stakeholders to be more commitment on implementing corporate social responsibility.

External barriers generally include government related factors (legislation, and governance), customer and community behavior, and the influence of civil society organizations. On the other hand, companies also face internal problems including limited corporate social responsibility’s expertise, unsupportive local management structure and attitude, as well as difficulties in adopting operational standards as mandated by their management boards.

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