PS5 on Land Acquisition and Involuntary Resettlement does not apply to the project since all land acquisition is conducted through willing buyer-willing seller transactions (i.e., market transactions in which the seller is not obliged to sell and the buyer cannot resort to expropriation or other compulsory procedures if negotiations fail). However, large-scale land acquisition usually involves social risks and therefore the process is assessed under PS1 below.

The project area is zoned for future industrial development with current land use being mostly agricultural (e.g. rice paddy, fruit orchard and rubber plantation), hence the land is considered as modified habitat and PS6 on Biodiversity Conservation and Sustainable Management of Living Natural Resources is not considered as applicable.

PS7 on Indigenous Peoples is not considered applicable since no Indigenous Peoples’ lands are affected by the project. PS8 on Cultural Heritage is not applicable, albeit, chance find procedures will be implemented during construction activities.

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Key ESHS risks and aspects associated with this investment include: (i) management capacity to ensure ESHS performance of third party construction contractors; (ii) labor and working conditions, including HR policies and occupational health and safety (OHS) provisions during construction and operation; (iii) impacts on communities including road safety and stakeholder engagement; (iv) willing buyer-willing seller land acquisition; and (v) management of wastes and effluents from industrial tenants.

 Environmental and Social Assessment and Management System and Policy: SCS has in place an environment and social management system (ESMS) for its existing operation at SCI Park. The ESMS is modelled on the framework of ISO14001 that focuses on: (i) policies and procedures related to environment, waste and water management; (ii) defined roles and responsibilities for implementation; and, (iii) data capture, continual improvement and review. 

The parent company -SSIA- has in place a corporate-level policy commitment to ensure that compliance with the relevant ESHS national regulations are followed. This policy includes commitments to: (i) complete ESIAs/AMDALs for all construction locations with related permits issued prior to initiating construction; (ii) conduct all land acquisition in accordance with local regulations and without coercion or force; (iii) notify all contracting companies of statutory ESHS regulations; (iv) ensure that security and basic requirements for site management are compliant with national regulations; and (v) give preference for contracting established and well-managed construction companies. 

Identification and Management of Risks and Impacts: As part of the environmental licensing process for SIE Phase I, SCS contracted a certified consultancy firm to develop the ESIA/AMDAL based on national regulations, which was approved by the government in 2016. The ESIA/AMDAL includes: (i) environmental impact statement or Analisis Dampak Lingkungan (ANDAL); (ii) framework reference environmental impact statement or Kerangka Acuen Analisis Dampak Lingkungan (KA-ANDAL); and the environmental monitoring and management plan (EMP) or Rencana Pengelolaan Lingkungan Hidup Dan Rencana Pemantauan Lingkungan Hidup (RKL-RPL).

The ESIA/AMDAL covers the following aspects of project construction and operation: (i) impacts from land clearance and ground preparation; (ii) basic infrastructure construction; (iii) construction of utilities connections; and (iv) movement of heavy vehicles. The operational phase of the site includes requirements on waste water treatment and management of wastes. The implementation of the ESIA/AMDAL and management of OHS aspects during the construction phase is delegated by SCS to the contracting construction company through a set of legal clauses in the engagement contracts.  

During operation, SCS will be responsible for the ESHS performance of common areas and utilities (e.g. water supply, wastewater treatment plant, etc), but future industrial tenant will be responsible for obtaining their own environment approvals and ensuring ESHS compliance of their operations.

In addition to the ESIA/AMDAL, the company has commissioned the preparation of a Sustainable Master Plan for the development of SIE based on good international practices and sustainability principles. The Master Plan includes an overview of economic and environmental conditions and proposes strategies to, among other: (i) foster energy efficiency; (ii) improve waste management; (iii) ensure efficient internal transportation flows; (iv) adequate recreational facilities; and, (v) ensure green spaces are integrated in to the industrial estate development. 

Organizational Capacity and Competency: A total of 23 staff under SCS Environment and Water (E&W) Department are responsible for ESHS aspects of operations, mainly related to the SCI Park.  SCS’s will build on the experience gained to date and will establish a similar structure and appoint a ESHS manager and supervising staff for SIE Phase I.

Emergency Preparedness and Response: The SCS has in place emergency procedures for its existing operations that will be replicated for SIE Phase I and include: (i) management of fire, spill or emergency events; (ii) accident reporting; (iii) evacuation protocols; and, (iv) incident investigation. Additionally, at the project site, SCS will put in place fire suppression systems and teams, and staffed medical facilities.  Per local regulations, all buildings to be constructed within SIE Phase I must incorporate fire protection measures, including: (i) fire proof construction, compartmentation and separation; (ii) firefighting equipment; (iii) alarm systems; (iv) emergency exits; and, (v) evacuation routes in case of fire and/or other disaster. Both SCS and tenants are required to obtain building permits and certificates from the fire department before occupancy of any buildings.

Monitoring and Review: The Environmental License for SIE Phase I requires that the SCS reports to the environmental authorities on compliance with ESIA/AMDAL every 6 months; however, SCS doesn’t have a procedure in place for supervision and monitoring of construction contractor ESHS compliance. During operation, monitoring of ESHS performance will be the responsibility of SIE Phase I E&W Department, focusing on quantity and quality of water supply and effluents at the tenant and industrial estate levels. In addition to the internal monitoring arrangements, the project will be subject to regular external supervision by the district Department of Environment and Forestry.

As set forth in ESAP Action #1, SCS will establish an ESMS for SIE Phase I covering project construction and operation in line IFC PSs, including: (i) ESHS policy; (ii) ESHS procedures, such as: solid waste and wastewater management, OHS, traffic safety, land acquisition, among others; (iii) procedure for monitoring, reporting and management review of ESHS performance; and (v) define ESHS roles and responsibilities and ensure proper staffing. 

Land acquisition: Project-related land acquisition is conducted through willing buyer-willing seller transactions. The Location Permit awarded by the government to SCS in 2014 allows it to develop the industrial estate but land must be acquired through market transactions, with land owners retaining the option to refuse to sell. The negotiation process is finalized by signing an agreement with local government officials acting as witnesses. Sellers are allowed by SCS to continue utilizing the land without any cost until it is required for construction commencement.  Since September 2014 and as of March 2018, SCS has acquired more than 50% of the area required for developing SIE Phase I. No people without legal title or encroachers have been identified to date. 

Within the area of SIE Phase I, up to 334 houses have been identified for potential acquisition. In these cases, SCS offers two options to the seller: (i) cash at the agreed value for land and other assets; or (ii) agreed serviced plot with a new house with access to public and social services. Replacement housing offered to families would be located within the SIE in three locations identified by SCS for future residential settlements. 

SCS conducts land acquisition in good faith with no evidence of coercive, deceptive, or threatening behavior. SCS will need to adopt a procedure to improve documentation and record keeping of efforts related to the negotiation process. The project company will identify potential impacts on sharecroppers using the lands being acquired, as well as vulnerable households, who may require additional support during the land acquisition process.

As set forth in ESAP Action #2, SCS will adopt a Land Acquisition Procedure in line with good practices and relevant objectives of the relevant IFC PSs, including: (i)  objectives and principles; (ii) land and asset valuation criteria; (iii) information and negotiation protocol, including procedure to ensure documentation of all meetings; (iv) procedure for gathering basic socioeconomic information of land sellers, including identification of vulnerable cases (e.g. elderly, female headed houses, sharecroppers losing faming opportunities, etc.); (v) options to assists vulnerable cases; (vi) plan for developing replacement housing areas and supporting families that opt to move to those areas; (vii) roles and responsibilities;  and (viii) grievance redress mechanism for the land acquisition process.

Human Resources Policies and Procedures: SSIA has a Human Resources (HR) division that sets the corporate policy and procedures. These policies cascade down to the HR management at the SCS level. Currently SCS directly employs 400 staff on fixed term and full-term contracts and 300 staff as daily workers.  The gender split of male to female workers is ~95% male, to ~5% female. During construction of SIE Phase I, it is expected that contractors will hire more than 500 workers mainly from nearby communities. During operation SCS could generate approximately 500 direct jobs.

The HR policies and procedures are based on Indonesia labor regulations and are communicated to SCS workers during the hiring and induction process. Although SCS’s worker handbook is compliant to the labor law and approved by the local Government labor authority, it lacks specific guidance and communication on policy and worker rights relating to: (i) nondiscrimination; (ii) freedom of association and right to collective bargaining; (iii) grievance redress; and, (v) gender-based violence and harassment. The HR policy also sets a maximum age for recruitment at 45 years.

The group of workers classified as daily workers (or temporary workers) are not generally provided with any form of written agreement specifying terms and conditions, with a verbal presentation given to these workers at time of engagement.  All temporary workers have social insurance paid by the SSIA in accordance with national regulations, with medical coverage included within these payments. This social insurance system funds medical costs for all SSIA temporary workers, as well as contributes towards retirement funds.

In terms of workers engaged by third parties (e.g. construction contractors and subcontractors), SCS includes specific clauses in the contracts requiring third parties to ensure compliance with applicable labor regulations. There is no procedure in place to monitor labor compliance on behalf of third parties or a grievance process for their workers.  

As set forth in ESAP Action #3, SCS will update its HR policy in line with IFC PS2 and include: (i) principles related to nondiscrimination (including removal of maximum age limits for employment), freedom of association and right to collective bargaining, and zero tolerance to gender-based violence or harassment; (ii) procedure to screen and avoid risks related to child and forced labor; (iii) procedure to ensure that all employees, including temporary workers, receive written information about working conditions, entitlements, benefits, rights and responsibilities; (iv) a workers’ grievance redress procedure; and (v) mechanism to ensure compliance with labor laws by  engaged  contractors. 

Occupational Health and Safety: SCS includes in construction contractor’s agreements OHS clauses covering the following aspects: (i) compliance with national and local OHS regulations and reporting in case of major incidents; (ii) provision and use of personal protective equipment (PPE); and (iii) application of reasonable standards in the development and management of workers’ accommodations and work place utility areas.   As set forth in ESAP Action #4, SCS will develop a OHS Procedure based on IFC PS2 and relevant aspects of WBG EHS Guidelines, including: (i) OHS clauses and requirements for third parties; (ii) supervision and enforcement of OHS requirements, including data capture, audits and corrective measures in cases of non-compliances; and, (iii) adopt internationally or locally recognized standards for workers accommodations.

The government-approved ESIA/AMDAL includes an EMP/RKL-RPL, which identifies potential pollution risks (e.g. noise, erosion, air, etc) and defines corresponding mitigation measures and parameters associated to the construction and operation of the common areas of SIE Phase I. Future tenants will be responsible for managing pollution prevention as per their environmental licenses. 

Pollution Prevention: During construction the project will generate noise and dust; particularly, during excavation and movement of materials by truck. The impacts to nearby communities are expected to be moderate and temporary.  The project’s EMP/RKL-PPL includes dust suppression and erosion and noise control measures that will be implemented by the construction contractors, as defined in the contracts based on AMDAL regulation. Pollution risks during operation of SIE Phase I common areas is limited.

Solid and Hazardous Waste Management: Waste generated during construction are expected to include domestic waste, inert waste, recyclables and small quantities of oil and oil-contaminated materials. The EMP/RKL-PPL includes measures to manage such wastes during construction. During operation SCS will provide waste collection services to industrial tenants and send waste for disposal by the local authority. During operation SCS will store and handle small quantities hazardous materials and waste in the form of chemicals used in the waste water treatment process, and in handling of the waste water sludge, for the management of which the EMP/RKL-RPL also includes specific requirements aligned with good practices.

Wastewater Treatment: For the operation of SIE Phase I, SCS will build up to 20,000 m3/day capacity waste water treatment plant (WWTP) designed to be in line with regulatory requirements and within WBG EHS parameters. The WWTP will treat effluents from industrial tenants who have the legal obligation of ensuring that effluents meet minimum parameters and, in some cases, will be required to install pre-treatment facilities in accordance to its operations. SCS will monitor on ongoing basis the quality of the effluents of each tenant and inform if there are any exceedances, in which case the tenant is required to correct them or, if there are systematic violations, engage the environmental authorities. The WWTP will discharge treated water in to a tributary of the Cijengkol river and, as required in the EMP/RKL-RPL, will monitor water quality upstream and downstream from the point of discharge.

Resource Efficiency:  SCS will develop common infrastructure facilities for SIE Phase I keeping in mind sustainable design principles such as water recycling and rainwater harvesting, aiming at avoiding use of groundwater completely. LEDs will be used for street lighting at most of the locations. The company will explore opportunities to further promote water and energy efficiency during the operation of the SIE as part of the Sustainable Master Plan that is currently under preparation.

Green-house Gas Emissions: GHG emissions associated with the construction and operations of common facilities for the project are not expected to be significant as the activities are not energy intensive. The project will therefore not be required to quantify and report on the CO2-equivalent emissions as required under this Performance Standard for projects with emissions exceeding 25,000 tCO2 equivalent per annum.

Community Health and Safety: Project-related transport of heavy equipment and materials to and from the construction site may pose some risk to surrounding communities. To manage this risk, SCS has in place a traffic safety procedure that maps out transportation routes to construction sites based on a risk assessment that considers: (i) quality of existing infrastructure (i.e. load bearing capacity of bridges, culverts and the road); (ii) hazardous features such as utilities that may have to be passed under or over; and (iii) presence of stakeholders and other road users. As set forth in ESAP Action #5 the SCS will complement its Traffic Safety Procedure for construction and operation in accordance to PS4 and WBG EHS General Guidelines to include: (i) reduction of project traffic routing through community areas; (ii) speed limits; (iii) signage, visibility and overall safety of roads, particularly near schools; and (iv) rapid survey of properties adjoining access points at risk from vibration-related damage.

Labor influx: Even though it is expected that most workers for the construction phase will be recruited from nearby communities, there could be some influx of workers from other areas, which could generate risks and tensions with surrounding communities. As set forth in ESAP Action #6, SCS will adopt Worker’s Code of Conduct, including aspects on relations with communities and prevention of gender-based violence and harassment that will be communicated to direct and third-party workers upon recruitment.

Security Personnel: Construction and operation of SIE Phase I does not involve security provision by government armed forces. All security guards for SIE Phase I will be unarmed and directly employed by SCS. Security guards employed by SSIA are subject to both background checks in the form of references and police checks for any criminal background. Training is conducted by SSIA and includes training in: (i) mentality; (ii) discipline and use of force; (iii) fire drills; and (iv) emergency situations. 

SCS has engaged with communities and other stakeholders since September 2014 to date through different channels in relation to Location Permit approval, the ESIA/AMDAL process and land acquisition negotiations. 

Per local regulations, as part of the ESIA/AMDAL process, public consultations were conducted on May, September, and October 2016 for three different stages: (i) preparation of ESIA/AMDAL Terms of Reference (ToR); (ii) submission of environmental permit request; and (iii) issuance of environmental permit. During the process stakeholders are invited to submit written suggestion and opinions.

Public consultations were conducted three times in the villages of Wantilan, Sawangan and Kosar, in the Subang District, with the participation of approximately 70 people for each event, including: (i) officials from local government agencies; (ii) village chiefs; and, (iii) community members.  Overall, the consultation process was in line with local requirements and there are no open grievances regarding this process.

Currently, provision of information and management of community grievances if done in an ad hoc manner, with engagement being conducted directly by SCS field staff.  SCS will implement further systematic and ongoing efforts to ensure that stakeholders receive timely information about project development and access to grievance redress mechanism. As set forth in ESAP action #7, SCS shall adopt an External Communications and Grievance Redress Mechanism for SIE Phase I in accordance with the requirements of IFC PS1 to: (i) provide information about project development to nearby communities; (ii) receive and register external communications from the public; (iii) screen and assess the issues raised and determine how to address them; (iv) provide, track, and document responses, if any; and (iv) adjust its processes, as appropriate.

The company will make the relevant ESIA/AMDAL documentation available locally at the following address: 

Enquiries and/or comments about the project may be directed to:

Contact Person: David S

Company Name:  PT. Suryacipta Swadaya

Address:    Management Office, Jl. Surya Lestari Kav. C-3, Ds. Kutamekar,

   Kec. Ciampel, Kab. Karawang – Jawa Barat

Email:    subang@suryacipta.com

Phone:    0267-440088