Everyone wants slice of emerging Morowali

A worker inspects a pile of hot-rolled coil (HRC) steel produced in the Morowali industrial park, on Oct. 18, 2017.
A worker inspects a pile of hot-rolled coil (HRC) steel produced in the Morowali industrial park, on Oct. 18, 2017. Viriya Singgih.

The number of residents of Bahodopi district in Morowali has spiked two-fold after Chinese venture PT Indonesia Morowali Industrial Park (IMIP) employed 15,000 Indonesian workers in less than five years for its nickel processing industry.

The district has now become the economic backbone of Central Sulawesi and attracts people from nearby provinces to sip the industrial honey pot in a largely backwater region.

Asbut, 45, a resident of Morowali regency in Central Sulawesi, used to know every person living in his village, Keurea. But lately, it seems like everyone is a stranger.

“New people are coming here every day to work for the company [IMIP], mostly from southern Sulawesi, including the Torajan or Bugis ethnic groups [from South Sulawesi],” Asbut, the head of hamlet V in Keurea, told The Jakarta Post last month.

The number of families in Keurea has skyrocketed to 1,600 from only around 300 in 2013.

Keurea and 11 other villages in the Bahodopi district in Morowali are at the epicenter of the development by IMIP, a joint venture between China-based Shanghai Decent Investment Group and local mining firm Bintangdelapan Group, which is linked to several retired military generals.

China has thus far spent more than US$5 billion to develop the Morowali industrial complex and its supporting infrastructure since the third quarter of 2013. When the entire project is completed in 2019, the complex will employ around 22,000 to 25,000 workers.

As the region is suffering from an economic slowdown due to a decline in commodity prices, people from outside Morowali come in droves to find steady employment. And they are willing to do just about anything to get a job.

A 31-year-old excavator operator interviewed by the Post admitted that he got the job at the industrial estate in early 2015 after paying Rp 3.5 million ($258.28) to certain individuals, while adding that the figure had doubled to around Rp 7 million at present.

Because IMIP has been prioritizing Morowali natives in its recruitment, people from outside the regency have jostled to be registered as local residents. This has quickly been seen as a political opportunity by some.

“My relative, who owns a rented house here, once told me that one of the tenants had been offered a new ID. In return, he was asked to vote for a certain candidate in the upcoming Morowali regional election [in 2018],” Asbut said.

For blue collar workers in the region, Morowali is the place to be as its economy skyrocketed by 67.82 percent in 2015 before stabilizing at 13.18 percent in 2016, far higher than national growth of 5.02 percent in 2016.

Bahodopi has been particularly impacted by the rapid development, especially Fatufia and Labota villages where IMIP is developing its new industrial complex.

Jl. Trans Sulawesi, the main road in Fatufia, was once dark woodland and largely avoided by travelers after 6 p.m. But now, small restaurants, rented houses, machine shops, fuel retailers and banners of regent hopefuls from a number of political parties litter the road.

Even though IMIP’s presence has turned Bahodopi into an industrial area, people still have a long list of complaints about the company’s overall operations.

People have questioned IMIP’s corporate social responsibility (CSR) programs, including one related to electricity procurement.

Last year, IMIP signed a power purchase agreement with state electricity firm PLN that paved the way for the latter to buy excess electricity of 5 megawatts (MW) from IMIP’s power plants at the Morowali industrial complex.

IMIP currently operates three coal-fired power plants with a total capacity of 1,130 MW and an annual coal demand of 6 million tons. It is also in the process of developing another coal-fired facility worth $650 million with a capacity of 700 MW.

As a result, PLN has distributed electricity to 12 villages in Bahodopi since May using transmission lines built by IMIP.

“Initially, IMIP promised to provide subsidies so that we could just pay half the electricity rates. In fact, we were forced to pay full price. Dozens of people staged a rally in October, and the company agreed to honor its promise,” Asbut said.

During the rally, people also protested about the delay in the disbursement of the company’s annual CSR funds worth Rp 5 billion for 2016.

IMIP senior vice president for external relations Slamet Viktor Panggabean, however, said IMIP could not disburse the funds because it had yet to receive the 2015 accountability report from residents.

He added that the Bahodopi district administration had formed a dedicated team to manage the company’s CSR funds, whether to repair public roads or construct public facilities such as a mosque.

“Nonetheless, we haven’t received any reports about the proposed developments or even seen the physical construction of such facilities,” Slamet said, indicating that there might have been some embezzlement of the CSR funds.

On the other hand, it is hard for regional administrations to directly benefit from IMIP’s operations because the company pays export duties, mining royalties, foreign workers’ levies and even reclamation-guarantee funds directly to the central government.

IMIP also pays water taxes to the Central Sulawesi provincial administration, not to the Morowali administration.

Read also Morowali: A tale of China’s grip on rich region.

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Note
1. This story is the fifth in a series of reports on Chinese investment that has transformed the remote Morowali regency in Central Sulawesi into an integrated industrial estate, published in The Jakarta Post newspaper between Nov. 14 and 16, 2017.

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