24476 - TVS Motor-ASEAN

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Environmental & Social Review Summary

Project Number

24476

Company Name

TVS MOTOR COMPANY INDONESIA, PT

Date ESRS Disclosed

Jul 5, 2007

Country

Indonesia

Region

East Asia and the Pacific

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Sep 13, 2007
Signed : Sep 21, 2007
Invested : Sep 28, 2007

Sector

Motor Bicycle (Including Bicycles)

Industry

Manufacturing

Department

Regional Industry - MAS Asia & Pac

Project Description

The proposed project consists of the establishment and start-up of operations of a green-field, two-wheel motor vehicle manufacturing plant in Karawang, about 55 km east of Jakarta, Indonesia, by PT TVS Motor Company Indonesia (PT TVS, or the company). The plant has been established in a major industrial development known as Suryacipta City of Industry (industrial zone), which includes a number of major automotive-related manufacturing concerns such as Bridgestone and GS Battery among its tenants. The initial phase of project construction is complete and facility will have an initial annual capacity of 300,000 vehicles. The vehicles manufactured will comply with emission norms of EURO II ECE R40. The project sponsor, TVS Motor Company Limited, is one of the largest two-wheeler manufacturers in India.

PT TVS has long term usage rights on a 20 hectare lot in the industrial zone, which has been established since 1997. The main assembly plant and all related facilities including paint shops, powerhouse, LPG and diesel storage areas, waste water treatment plants, staff canteen, administrative block and test track have recently been completed and the plant is gearing up for full production by July 2007. The assembly plant occupies an area of 16,500 m2 area inclusive of a self-contained engine assembly unit and two automated paint lines of German manufacture – a solvent-based paint line for plastic components and a metals coating line. Major engine parts and gearboxes are currently imported from the Company’s parent factories in India. Frames, fuel tanks, clutch assemblies, plastic parts, tires and tubes, paints and solvents are procured from Indonesian suppliers.

Overview of IFC's Scope of Review

IFC’s appraisal consisted of:

- a review of project documentation and discussions with PT TVS management regarding the establishment and operations of the manufacturing plant;
- discussions with plant management regarding corporate environmental, health and safety standards, and corporate social responsibility initiatives; and
- a physical inspection of the manufacturing plant and support facilities.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems;
- PS 2: Labor and Working Conditions;
- PS 3: Pollution Prevention and Abatement; and
- PS 4: Community Health, Safety and Security.

The findings of the of the project review confirm the application of these performance standards and indicate that there are no impacts related to Involuntary Resettlement (PS5), Biodiversity Conservation and Natural Resources Management (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8).

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines.

Environmental and social impacts associated with this project are typical of light manufacturing projects including; management of air emissions and liquid effluent discharges; solid and hazardous waste minimization and management, observance of workplace health and safety standards including managing exposure of the workforce to hazardous chemicals; and community health, safety and, security.

PT TVS has demonstrated the capacity, and has committed the resources, to implement comprehensive environmental, health, safety and quality management systems consistent with international standards (ISO) as well as IFC environmental and social performance standards throughout its entire operation.

Environmental and Social Mitigation Measures

The company has systems in place to address potentially adverse impacts to ensure that the activities financed by IFC will comply with host country laws and regulations and IFC’s performance standards on social and environmental sustainability, and the applicable environmental, health and safety guidelines. Information concerning how these potential impacts will be addressed by the company is summarized in the paragraphs that follow.

- Social and Environmental Assessment and Management Systems:

IFC’s assessment considered the company’s management of its environmental, health and safety performance in the establishment and operation of its facilities; compliance with national and local permitting requirements; and the company’s engagement with local communities regarding environmental, health and safety performance and corporate social responsibility.

- Environmental & Social Assessment:

Construction of the PT TVS facilities was carried out under the environmental license of the Suryacipta Industrial Zone authority, which requires compliance with national environmental and health and safety standards.

An environmental impact assessment (EIA) of the proposed PT TVS facility was completed in April 2007 by a qualified independent consultant using standard EIA methodologies. This Analisi Dampak Linkungan (ANDAL) evaluated the project according to the environmental assessment requirements of the Indonesian Ministry of Environment, Mining and Energy. The analysis considered construction impacts and their mitigation as well as the impact of operations, including water and wastewater management, solid waste management, energy consumption and emissions to the atmosphere. Detailed environmental management plans, inclusive of recommended mitigation measures, are included in the EIA documentation covering both construction and operation phases of the expansion project. The company was awarded an operating license in April 2007 based on an assessment of its proposed production activities (UKL/UPL = Upaya Pengelolaan Lingkungan dan Upaya Pemantauan Lingkungan / Environmental Management Study and Environmental Controlling Study).

- Management Systems:

PT TVS has adopted the prevailing quality management systems and EHS Policy of its corporate parent. These systems include Total Quality Management (TQM) protocols based on the Six Sigma “continuous improvement” practice as well as EHS management systems that are ISO 14001 compliant. The company plans to obtain the automotive sector-specific ISO quality management certification (TS 16949) within two years of reaching full operations. The TVS EHS policy also commits the company to conservation of resources such as water, energy, paints and packaging materials and minimization of waste streams through recycling.

- Organization:

Each of the plant’s component operations – Vehicle Assembly, Engine Assembly, Paint Shop and Quality Assurance – maintains a uniform EHS monitoring and management structure per ISO standards, inclusive of regular staff training and emphasis on continuous improvement of performance. Each operation is organized into self-monitoring and reporting work units consistent with TQM procedures, which also monitor occupational health and safety as well as resource efficiency within the work station. The EHS performance of all units is supervised by an EHS Manager.

- Monitoring & Reporting:

The company’s EHS Management team monitors all operations on a routine basis and files monthly reports – including details of corrective actions, staff EHS training, regulatory compliance and accident statistics – to the company’s senior management. Samples of effluent discharge from the plant’s two wastewater treatment plants and emissions from the plant’s boiler stack are analyzed quarterly by an independent laboratory. The EHS unit files a comprehensive report on its compliance with all EHS permitting conditions to the regulating authority twice each year.

- Community Engagement:

The company occupies a section of a large industrial development zone. As such, it is considerably isolated from surrounding communities and does not engage in any formal information sharing with those communities regarding its EHS performance. However, it does engage surrounding communities to recruit employees and to assess appropriate corporate social responsibility initiatives.

- Human resources and working conditions:

IFC’s assessment considered the company’s operations with regard to fair, safe and healthy working conditions in construction and operation of facilities. PT TVS currently employs 171 people, 20 of whom are Indian nationals who fill positions of senior and mid-level management in the company. The total anticipated staff strength under full operations is 300.

- Human Resource Policy and Management:

PT TVS implements a comprehensive Human Resources policy that governs the terms of employment and working conditions including procedures for hiring, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, leave and vacation, and retirement, which are consistent with the national labor laws. As the Company is a start-up operation, it has pegged salary levels and benefits above the national minimum to attract workers.

Company management has established a “Parents Contact Program” to provide an orientation to the work and workplace environment to parents of newly recruited staff who may be unfamiliar with industrial working conditions.

- Worker’s Organizations:

The PT TVS employment policies are consistent with the ILO declaration on fundamental principles and rights at work. In the absence of labor union representation, company managers meet informally with small groups of employees to discuss suggestions for improving workplace and employment conditions. Under this “Employee Contact Program”, management will meet with the entire workforce over a one year period and repeat the process in each successive year.

Company employment policies and practices must be approved by the national Ministry of Manpower.

- Occupational Health & Safety:

PT TVS combines adherence to the national industrial safety program (Departemen Tenaga Kerja dan Transmigrasi, www.nakertrans.go.id) as well as the TVS corporate standards for workplace health and safety. The company has convened a Safety Committee for the purpose of ensuring high standards of occupational health and safety awareness and practice in all operations. The Safety Committee is represented by the company’s safety, health, fire/emergency response and environmental sections.

Housekeeping throughout the plant is of high standard in keeping with the TQM protocols. Noise levels, workplace air quality, temperature, and lighting levels are well within national limits and World Bank Group guidelines for workplace environment. Ambient and workplace air quality in the plant is monitored on a quarterly basis by an independent laboratory and reported to the government authorities on bi-annual basis. While not a national requirement, the company will monitor TWA exposure to solvents in the metal coating line as part of its annual monitoring and reporting to IFC. All electrical and mechanical equipment has been inspected and certified by the provincial Ministry of Manpower authority. Appropriate Personal Protective Equipment is provided to, and worn, by all employees in the Paint Shop and component assembly areas.

The company maintains its own firefighting and emergency response operation. Paint booths are outfitted with duplicate fire/heat detection and control systems, including sprinklers. Paint booths are not equipped with explosion relief panels, as it is not required and they are open from all the sides. Fire exits and the location of fire extinguishers are clearly marked. Secure access to LPG and diesel fuel storage areas is maintained around the clock. Paint booths, LPG yards, electrical fittings are fitted with fire proof materials.

The company also requires that all construction and other service contractors who access the plant premises undergo in-house training in basic EHS procedures.

- Pollution Prevention and Abatement:

IFC’s assessment considered the company’s operations regard to efforts to optimize resource inputs, including energy efficiency and waste minimization practices as well as the storage, handling hazardous materials used in the construction and operations of facilities.

- Pollution Prevention and Resource Conservation:

The company’s integrated manufacturing plant is constructed with a unique, multi-layered, insulated roofing design that maximizes natural light and ventilation and reduces demand for air conditioning. All resource inputs are monitored closely to maximize efficient use, and waste streams manage to minimize the discharge or disposal of hazardous substances. As an example, the company’s parent – TVS Motors – has developed metal coatings free of Nickel, thus eliminating that heavy metal from process wastewater streams. These coatings are being used in the PT TVS plant. Metal coating paint is water soluble.

- Water Supply and Effluent:

PT TVS sources process water from a central water treatment plant operated by the Suryacipta industrial zone authority. Estimated consumption at full operation will be 150 m3 per day. Process waste water from the plastic components Paint Shop is treated separately to remove solids and solvents. Process waste water from the plastics coating Paint Shop is discharged to a settlement tank. Treated wastewater from these tanks is recycled for process use in the plastic painting unit. Treated wastewater quality is monitored prior to discharge to the Suryacipta main sewer line. Monitoring results from initial production runs indicate that wastewater quality is well within national limits but exceeds World Bank Group limits in some parameters. This wastewater is further treated in a wastewater treatment facility serving the entire industrial zone.

- Energy Supply and Air Quality:

The company sources its electric power from the national grid and maintains a 1026 kVA diesel-fired generator for emergency use. The plant operates an 800,000 kcal/hr LPG-fired boiler to power its paint drying units. Boiler stack emissions are well within national and World Bank Group air quality standards.

- Solid and Hazardous Waste:

PT TVS complies with all national regulations for the storage, handling and disposal of hazardous materials used in the production process such as paints, solvents and other chemical additives. Hazardous waste, including sludge from the metal coating waste water and chemical storage containers, is removed from the site by a government certified contractor for disposal in a managed landfill. Non-hazardous waste is removed by a contractor to a solid waste facility maintained by the industrial zone authority. Packaging material is sold for recycling.

Community Health Safety and Security. IFC’s assessment considered the company’s operations with regard to the impacts of the construction and operations of facilities, including: movement of vehicles to and from construction sites, operation of construction equipment, containment of dust, noise and other nuisance factors; and control of public access to construction sites.

Plant construction operations were undertaken in compliance with the overall development regulations of the Suryacipta industrial zone authority. There is direct access to the zone from a national highway and residential communities are far removed from the plant premises so that the impact of construction and operations on surrounding communities is inconsequential.

The company contracts with a nationally certified security agency for 24 hour surveillance of the facility perimeter. Access to the facility is controlled. Security guards are not armed. The security service is linked to the security apparatus of the entire industrial zone to provide access to the fire fighting and emergency response capabilities of the industrial zone’s operation.

Stakeholder Engagement

PT TVS has been developing its facility at Karawang since 2005. In keeping with the overall Corporate Social Responsibility (CSR) ethos of the corporate parent, PT TVS has initiated contact with communities neighboring the Suryacipta industrial zone to determine appropriate CSR initiatives. The company has contributed to the renovation of a primary school in Kutanegara village and has begun a community health awareness program focusing on bird-flu and dengue fever. PT TVS plans to add local development and income generation activities to its CSR activities as its business becomes established and grows.

This Environmental and Social Review Summary is the sole public document describing the environmental, health and safety, and social aspects of the Karawang plant. Additional such information can be obtained by contacting:

Ahmad Afdhal, Senior Manager - HR
PT TVS Motor Company Indonesia
Gedung Wirausaha Lantil 3
Jl. HR Rasuna Said Kav. C5
Kunungan, Jakarta 12920, Indonesia
Tel: +62 21 300 20570

E-mail afdhal@tvsmotor.co.id

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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Environmental & Social Review Summary

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Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

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