The Impact of AEC Implementation towards the Dominant

International Professional Workers in Borneo Mining

Corporation
Chamber name : Economic and Trade Development

Ermi Yanti, Hilary S. Megasakti, Orysa Ayu, Rizqi Nurul A.

ermiyr@ymail.com, hilarysurya@gmail.com, oriza.ayu2013@gmail.com,
isqi_rna@yahoo.com
Undergraduate Students of Faculty Law,
Sebelas Maret University, Surakarta

This paper discussed the implementation of ASEAN Economic

Community (AEC), a treaty organized by all Southeast Asia countries that will be
employed in 2015. AEC aims to cultivate highly quality product, develop
international trade, and enhance global economic. Approaching the legalization of
AEC, Indonesia has not prepared all of the requirements needed, for instance,
competent and professional human resources, modern technology, and so on.
Considering those phenomena, mining is one of the negative impacts of
employing AEC in Indonesia that would exacerbate the Indonesia economic
condition. The lately mining license legalized by Indonesia government will
threaten the environment of sustainable development. The reason is the
governance systems of Southeast Asia extractive industries are not wellorganized. In 2013, Resource Governance Index stated that Indonesia was in 14 th
to 58th rankings which is depth studied regarding the governance systems of
natural resources. However, that wealth of natural resources could not be enjoyed
by the local community living in that area. They even experienced economic
1

injustice and social conflict between them and the Mining Corporation. This
caused by the lack of government and the disorganization of governance systems
of human resources which led the dominant international workers in Indonesia
Economic Industry particularly in the Mining Corporation. Through this research,
the researcher will discuss the impacts of the AEC implementation towards
Indonesian economic issues on the international professional workers who worked
in Mining Corporation in Borneo. In addition, this research was qualitative
research.
Keywords:

ASEAN Economic Community (AEC), Mining Corporation,

Professional Workers.

Introduction
The economic development today urges all regions worldwide to compete
with the economic changing. This led Southeast Asia built a comprehensive
integration system as the base of economic foundation. In other words, Southeast
Asia have to face an International Trade including protecting their existent
product, managing their natural resources, and cultivating the industrialism
cooperation with ASEAN Community. ASEAN Economic Community is one of
the pillars of ASEAN community dream which firstly appeared in the Bali
Concord II.
ASEAN Economic Community (AEC)
ASEAN hopes to establish a single market and production base in 2015. In
2015, the movement of goods, services, investment, and professional workers in
ASEAN will be fully opened and liberated. There is no freedom, exclusion and
barriers in this liberalization. For the ASEAN members who are not ready to
employ

this

new

program,

they may delay the opening sector. However, strategic goals and commitments are
me rid of all the restrictions and exceptions, as well as all members should have
the same commitment. A single market and production base are essential areas
that have seen by ASEAN members. Meanwhile, the market and the power source
is within the national boundaries and only involve the economic actors in the
national level. The meaning is a state member will treat the goods and services
originating from anywhere in ASEAN equal treatment as them product of their
national. This will give them a privileges and access to ASEAN investors as well
as their national investors, experienced workers will be free to do their work
anywhere in ASEAN. The integration investment includes four pillars namely
liberalization, facilitation, protection and promotion. The integration investment
set out in the ACIA including manufacture, agriculture, fisheries, forestry, mining
and quarrying, and other services related to these five sectors.
The available energy factor is one of distinctive in the ASEAN economic
community. This is an important factor for people life that each country must have
their energy supply. Some of the energy is derived from natural resources. Our
country, Indonesia, has great potential for natural resources. Since the lack of
government attention in this field, foreign investors are vying to offer an
economic cooperation in managing the natural resources in Indonesia, and in the
end most of the large companies engaged in the field management of natural
resources come from foreign company '.
The benefits that can be taken from the cooperation between the
integration public ASEAN economies will strengthen ASEAN's position in the
world economic area. This integration will improve the welfare of the entire
ASEAN community. Income capita Indonesia before joined with ASEAN
amounted to US $ 57 and increased by 63 times in 2012 amounted to US $ 3.557;
AEC will open up more job opportunities for experienced workers in Indonesia.
New employment in Indonesia increased to 5.409 in the period 2004 to 2012 from
1,347 in the 2001-2003 times. ASEAN-cooperation investment reached US $
26.27 billion in 2011 and amounted to US $ 5.8 billion or 22.23% into Indonesia.
3

This implementation is professional workers in the field. Energy is an

essential requirement that need the mobility of life in the world. One of the energy
sources needed today is coal. Coal mining, is one of the potential natural resource
in Indonesia. The large income also derived from the management of coal. In fact
fired brick management in Indonesia is not entirely held by Indonesia, because of
lack of this due to lack of human resources. Indonesia has abundant natural
resources, including estate products such as coffee, tea, palm oil, etc., and mining
products such as oil and coal.1
The AEC is established as a single market and production base in ASEAN.
It appeared to be more dynamic and competitive with new mechanisms. Some
cooperation areas are also incorporated such as human resources development and
capacity building, recognition of professional qualifications. The different levels
of development within ASEAN require some flexibility as ASEAN towards a
more integrated and independent future.
Borneo and Mining Coal
Borneo is located in South East Asia, have coordinates 01 0 N 1140 E, all
around Borneo 743.333km , Borneo have five provinces , theyre West Borne,
Central Borneo, South Borneo, East Borneo, North Borneo. Demographic in
Borneo 19.804.064 many ethnic groups, such as Malays, Chinese, Banjar,
Buginese, Javanese, Dayak, but the origin people in Borneo is Dayak Tribes.
Mining coal is still the single most important fuel for the electricity sector
worldwide, accounting for a steady 40% of the global fuel mix for power
generation over the past three decades, and is very likely to retain its lead for at
least another decade or two. To product Mining Coal Indonesia cooperate with
another country to get good benefit, and many corporation have been invest to
management mining coal, The largest of the emerging independents is PT Bumi
Resources, and, in most respects, they are no longer emerging, it is already a
1 Economic data for investors in Indonesia

leader. A hotels and tourism company until the late 1990s, PT. Bumi Resources
has come from nowhere to become one of the regions leading coal producers and
exporters, very much in the same league as the mining majors in terms of size of
production in the Asia-Pacific region.
This has been achieved in two dramatic steps: the first, in October 2001,
was the acquisition of Arutmin from BHP Billiton, and the second, in October
2003, was the acquisition of Kaltim Prima Coal (KPC) from Rio Tinto and BP.
Now in control of two of Asias prized coal assets, Bumi achieved production of
nearly 40 Mt in 2004 and has plans to increase to 70 Mt/y by 2007, mainly
through expansion of KPC. Indonesias coal production increased by 12% in
2004, to 128.5 Mt. Of the countrys 28 coal producers, PT Bumi Resources, PT
Adaro, PT Kideco, PT Berau Coal, and state-owned PT Bukit Asam account for
74% of total production. Almost 70% of the countrys production is exported.At
an operational level, Bumi still benefits from the world-class training received by
many of its managers and staff from BHP Billiton and Rio Tinto. Bumis
marketing is handled through arrangements with Mitsubishi Corp, Glencoe
International AG and BHP Billiton. And, of course, Bumi is currently churning
out unprecedented cash flows. In the fact there are many dangers that come along
with coal mining, not only for environment but also for the workers. Coal mining
and the coal industry have caused damage to our environment. Overall,
Indonesias mineral producers were able to weather higher energy costs in 2004
thanks to higher prices realized for their products. However, non-producers have
had to recast their exploration and development budgets to reflect higher energy
costs.
Unfortunately, over the past five years, the solid regulatory foundation for
mining in Indonesia has been weakened by some new, serious threats, which have
forced annual investment in the sector to all-time lows. From 1994 through 1999,
new investment averaged US$1.4 billion annually. For the period 2000 through
2004, new investment has averaged less than US$0.5 billion annually, with most
of this investment coming from companies that have had stakes in the country
5

since before the last round of CoWs was signed in 1997. With a few exceptions,
Canadian and Australian junior exploration companies have all but disappeared
from Indonesia, and are not expected to return until the reformed regulatory
regime is finalized.
Coal is a source of natural energy that used all over the world. Nearly 40%
of world demanding for energy supply obtained from coal almost 3 decades. One
of the largest origin countrys coal importer is Indonesia, specifically Borneo.
Several major coal companies in Borneo are PT.Kideco from UK, BHP Billiton,
Utah Indonesia, Kaltim Prima Coal, PT. Multi Harapan. BHP Billiton has seven
coal mines which covers approximately 350 thousands square hectares in East
Borneo and West Borneo from a total of 7 million hectares of existing mines. The
company received investment from major bank in the UK as a standard
Chartered,such as Chartered, HBSC, Barclays, and RBS, their hiver include in
regulated by law (Invest Capital UU No 25 year 2007) . Fast investment that
doing by major bank with mining coal corporation impact that mining coal can be
grow so fast . Mining coal in Indonesia have output 127 MT in 2004 and 150 MT
in 2005, Indonesia can be export more than 95 MT coal. This numeric can be
make Indonesia being second large export after Australia.
Mines coal accounted for about 3% of state revenue for Indonesia
Economy, so the revenue management of coal can be effect state revenues amount
contain in the following table according national income countries to national
static agency in 2005 and 2013.
2005
12
483
884,19
11
876
400,53
11
010
476,78
7 878
428,11

2006

2007

2008

2009

2010

2011

2012*

14 816
401,25

17 290
031,38

21 364
534,10

23 880
878,38

27 028
695,01

30 658
976,15

33 531
354,56

14 185
141,48

16 578
960,45

20 605
286,94

23 045
037,30

26 269
975,42

29 762
690,91

32 540
449,99

13 008
853,48

15 223
494,38

19 087
875,69

20 935
863,42

23 974
407,31

27 487
046,94

30 674
674,07

8 195
865,08

8 596
355,03

8 990
403,36

9 281
300,80

9 703
464,88

10 184
548,83

10 671
024,82

2013**
36 508
486,32
35 378
758,40
32 463
736,28
11 134
017,58

7 395
225,30
6 845
163,54

7 690
669,37
7 034
952,80

8 068
740,33
7 392
111,69

8 573
380,12
7 927
938,47

8 813
501,04
7 994
083,16

9 313
592,04
8 488
596,72

9 785
943,80
9 027
335,72

10 260
896,29
9 665
117,07

Companies from aboard have certainly had some workers from their own
country, most of the foreign workers usually have expert in their coal, especially
when it comes to coal mining companies large scale. Although mines dominated
by workers from Indonesia , but some mining expert from aboard because there
are certified professionals. To get good benefit , labour on mining coal must have
a good skill to management good product and get special product from coal, from
good skill can combine with :
Management skills:
Management teams that really understand value and value maximization, with
skills in identifying and securing value-creating growth opportunities (eg
high-quality, low cost-quartile mines) through acquisitions, mergers and
organic expansion, will generally be those that become leaders over the long
term.
Understanding of Asian coal markets:
Having insight into the way in which the Asian coal markets are likely to
evolve over the longer term, including the impact of environmental pressures
and penalties, will give a company a strong advantage.
Emphasis on good corporate governance and social responsibility:
Companies that give due attention to good corporate governance, employee
motivation, stakeholder relations and socio-environmental issues will
generally be more successful at creating constructive and innovative corporate
cultures while reducing the likelihood of stakeholder conflicts and liabilities
over the long run.
7

10 687
682,53
9 798
899,43

 Access to financial markets:

Apart from existing financial resources and future resources generated from
internal cash flow, the ability to access external funding on favorable terms is
also important. A stock-market listing on an international mining-friendly
exchange plus good investor relations skills may be the key for some
independents to fund growth over the next ten years through equity placings,
and merger and acquisition paid for in shares.

Quality and extent of existing undeveloped coal resources:

Those independent companies that already have extensive undeveloped coal
resources will typically be in a better position to generate value-growth
through organic development and expansion than those that rely mainly on
acquisition. This could be particularly relevant at the present time, as
Greenfield and Brownfield costs per tone of coal produced are well below
those that can be achieved in the market.
Intentions and strategy of core shareholders:
If core shareholders are not committed to a company over the long term, then,
by definition, the company is likely to be acquired or integrated in a merger,
and so will not be around as a leader in ten or fifteen years time.
Professional Workers
Indonesia as a developing nation per se can not be separated from a variety
of different problems. Especially in the current economic problems often
become a hot issue. Associated with it, the establishment of large corporations
in this country is one of the factors supporting very instrumental in the
economic development process which being undertaken , particularly in the
form of mining labor is the most dominant party in a company. Need for

professional experts as well as the need for technologies that can support a
company with production process , making private companies , both foreign
and domestic private private use of foreign workers as workers though still
maintaining the use of local labor .
The influx of foreign investment into Indonesia is one of the triggers the
influx of foreign workers to Indonesia , not least in mining . Although allowed
by law , but the influx of foreign workers having a devastating impact on the
social circumstances surrounding the mining area of Indonesia. Because it is
not immediately evident in the Indonesian mining sector will be under foreign
control . Is an irony considering that should be the ruler and in control is the
Indonesian itself , judging from the number of mining companies in
Indonesia , is far more of Mining .Therefore , restrictions on the use of foreign
workers considered necessary with a view to limiting the things that are
necessary and thus providing employment opportunities for the citizens of the
State of Indonesia, One is when the least negative impact of Indonesian
workers who served in foreign owned mining companies that exist in the
country . As a result, the renegotiation of the way place with no agreement
between the two sides . This is as a result of mining enterprises managed by
foreigners . In contrast, if the Indonesia managing , negotiating predicted that
there will not be as complicated . Therofer ,from the aspect of employment
law , the use of foreign labor issue has been regulated in Law No. 13 of 2003
on employment and the Minister of Manpower and Transmigration No.
Per.02 / MEN / III / 2009 concerning procedures for the use of foreign labor .
In UU No. 13 of 2003
Acknowledgement
Indonesia is a rich country but our workers is predicted to lose because our
workers havent had certification of competency while in other country the
workers already got the trust from the company declared by the certification.
From implementation of AEC, Indonesia has to compete in economic changing.

With AEC, ASEAN hopes to establish a single market and production base by
2015. Before 2015, the movement of goods, services, investment, and skill labor
in ASEAN will be fully opened and liberated; capital flows will be less restricted.
Actually Indonesia Already starts the movement to certificate and has
institution but Indonesia do not optimize that function of the institution.
Moreover, many citizens do not know that there is institution called BNSP, Badan
Nasional Sertifikasi Profesi (National Agency on Professional Certification).
The government has to socialize to the civilian about the procedure and
how to get the certification and the importance of having it. Indonesia needs to fix
the professionalism and the empowerment so that Indonesia able to give the best
output especially in Borneo mining coal corporation. The result is if the
government socializes the civilian, our worker will be more trust and so, more
corporations will use them.
Indonesia needs legal standing to create good cooperation between the
government in BNSP that directly connect with the region in professional skill.

10

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Tenaga Kerja Asing.

Peraturan Pemerintan ESDM no 31 tahun 2013

Undang-Undang Nomor 13 Tahun 2003 tentang Ketenagakerjaan.

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Mining journal. Last Update: 17 November 2014. Indonesia: legal reform needed
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