City soft loans leave residents in dark
Tony Hotland, The Jakarta Post, Jakarta
The Subdistrict Community Empowerment Program (PPMK), often touted as one of the Jakarta administration's key programs, remains a mystery to many city residents.
Wardi, 32, claimed to have never heard of the empowerment funds distributed in his subdistrict.
"I've never heard that there was any kind of fund like that. Is it some kind of loan, like the ones provided by banks? I would like to get my hands on some of those loans," said Wardi, who owns a small garage in Kayu Putih, Pulo Gadung subdistrict, East Jakarta.
Another resident, Hutapea, 44, expressed a similar view when asked about the program.
"It's probably for poor people or widows, I don't know. But I don't think I'd take a loan if I was offered it. I don't really need one right now," he said.
Hutapea runs a small shop in front of his house selling household goods.
The PPMK offers soft loans at an interest rate of one percent, and is run by the city administration. It began in 2001, and is intended to allow residents to start up or develop small-scale businesses.
This year, the city disbursed loans to all 267 subdistricts in Jakarta, with each subdistrict receiving Rp 500 million (US$58,823).
The distribution of the funds is supervised by the local council (dekel) in each subdistrict. The council disburses the money based on proposals from the community units within the subdistrict.
Tuti, 31, of Tanah Tinggi subdistrict in Central Jakarta, is luckier than Wardi as they have already received loans of Rp 500,000 each from their subdistricts.
"It's much better than getting a loan from a loan shark and having to pay 30 percent interest," said Tuti, who sells snacks in front of her house in a narrow alley in the neighborhood.
According to a member of Tanah Tinggi council, Iben Darto, 406 families out of 7,000 families in the subdistrict have availed of the loans.
Iben said that out of the total fund of Rp 500 million, 60 percent had been disbursed in loans while the rest had been used for social welfare purposes.
Each community unit has to return at least 70 percent of the total loans disbursed to its residents before it can seek another installment from the revolving fund.
Iben admitted that although the fund was specifically intended to benefit residents running small businesses, there was nothing the council could do if the recipients used the money for purposes other than were intended.
"That's way too private. The important thing is that they have a business. They can lie, of course, and later use the money to buy a TV set or pay for their children's education," said Iben.
The city administration has proposed that the value of the fund be increased to Rp 750 million per subdistrict next year, even though the 2003 funds have just been disbursed.
Last year, six corruption cases involving a total of some Rp 900 million surfaced in relation to the program in five subdistricts in Central Jakarta, namely Serdang, Karet Tengsin, Paseban, and Bungur; and one in Kelapa Dua subdistrict, West Jakarta.