Community Development Agreement Template for Indonesia

A Community Development Agreement creates a formal partnership between mining companies and local communities in Indonesia. These agreements spell out how mining operations will benefit nearby residents through social programs, infrastructure projects, and economic opportunities. Under the Mining Law No. 4/2009, companies must create these agreements before they can begin operations.

The agreement serves as a roadmap for community relations, detailing specific commitments like job training, healthcare support, or educational initiatives. It helps prevent conflicts by establishing clear expectations and creating a framework for ongoing dialogue between mining companies and local stakeholders. Regular monitoring ensures both sides follow through on their commitments.

Mining companies need a Community Development Agreement before starting operations in Indonesia. The law requires this agreement as part of the mining business license application process. It's essential to begin drafting these agreements early in project planning, ideally 6-12 months before intended operations.

The agreement becomes particularly important when entering areas with established communities, traditional land rights, or existing local businesses. Many companies initiate the process during their environmental impact assessment phase to align community development plans with environmental commitments. Having this agreement in place helps secure local support and prevents costly delays or conflicts during mining operations.

• Basic Community Development Agreements focus on essential social programs and infrastructure improvements
• Comprehensive agreements add detailed economic development plans, including local business partnerships and workforce training programs
• Resource-sharing agreements emphasize profit-sharing mechanisms and direct financial benefits to the community
• Environmental-social agreements combine community development with specific environmental protection commitments
• Traditional rights agreements focus on preserving cultural heritage and indigenous land use rights while supporting community growth

• Mining Companies: Required to initiate, fund, and implement the agreement's commitments as part of their mining license obligations
• Local Community Leaders: Represent community interests, negotiate terms, and help monitor implementation
• Village Officials: Provide formal government recognition and help coordinate between company and community
• Regional Mining Authority: Reviews and approves agreements, ensures compliance with mining regulations
• Indigenous Rights Representatives: Protect traditional land rights and cultural interests during negotiations
• Community Development Teams: Manage day-to-day implementation of social programs and projects

• Community Assessment: Map local demographics, existing infrastructure, and development needs through surveys and consultations
• Project Impact Study: Document how mining operations will affect local communities, environment, and economic activities
• Stakeholder Identification: List all affected villages, indigenous groups, and local authorities who need to be involved
• Development Planning: Create specific, measurable social program objectives with clear timelines and budgets
• Legal Requirements: Review Mining Law No. 4/2009 compliance requirements and local regulations
• Documentation Prep: Gather supporting evidence, including community consultation records and impact assessments

• Parties and Scope: Full legal names of mining company and community representatives, project location details
• Development Programs: Specific social, economic, and infrastructure commitments with measurable targets
• Implementation Timeline: Clear schedule of activities, milestones, and completion dates
• Financial Provisions: Budget allocations, funding mechanisms, and resource distribution plans
• Monitoring System: Regular evaluation procedures and reporting requirements
• Dispute Resolution: Agreed procedures for handling disagreements or implementation issues
• Term and Renewal: Agreement duration and conditions for extension or modification

A Community Development Agreement differs significantly from a Community Engagement Agreement in several key aspects, though they're often confused. While both involve community relations, their scope, legal requirements, and enforceability are quite different under Indonesian law.

• Legal Mandate: Community Development Agreements are mandatory under Mining Law No. 4/2009 for mining operations, while Community Engagement Agreements are voluntary arrangements used across various industries
• Scope and Duration: Development agreements require specific funding commitments and long-term programs, whereas engagement agreements typically focus on consultation processes and short-term activities
• Enforcement Power: Development agreements are tied to mining licenses and legally enforceable, while engagement agreements generally serve as goodwill frameworks
• Regulatory Oversight: Mining authorities must approve development agreements, but engagement agreements rarely need official approval