Council summons local heads over microcredit scheme

Damar Harsanto, The Jakarta Post, Jakarta

The City Council plans to evaluate the Subdistrict Residents Empowerment Program (PPMK) in five municipalities and one regency, amid suspicions that the microcredit scheme has been marred by irregularities.

"We have summoned the heads of the community empowerment boards (BPM) responsible for the scheme to deliver their progress reports next week," said councillor Dani Anwar, who chairs Commission E for social welfare.

He said only 45 of 65 subdistricts in East Jakarta had submitted reports on the program's implementation in the 2002- 2004 period. Jakarta has a total of 267 subdistricts, all received PPMK funds.

"The hearing next week will help us decide whether to approve the proposed additional PPMK funds for next year," he said.

In the draft of the 2005 budget, the administration proposed a total of Rp 267 billion, a 53 percent increase from the current Rp 175 billion for the program, which is aimed at empowering small businesses at subdistrict level.

Dani said Commission E planned to conduct field checks in several subdistricts that had reportedly failed to implement the program properly.

The PPMK was first launched in 2001 in 25 subdistricts, each received funds of Rp 2 billion. The program was then expanded to all subdistricts in the city in an effort to empower local communities, particularly small businesses through revolving soft loans.

Irregularities in the program have been rife according to observers, who blame the administration's poor monitoring of local communities, which were unprepared to handle such large sums of money.

Last year, two members of the subdistrict council (Dekel) in Serdang, Kemayoran, who were in charge of channeling the fund, were sent to prison for misusing funds of Rp 700 million.

East Jakarta Community Empowerment Board acting head Endjang Abdullah, acknowledged the problems in the program.

"Many residents continue to misinterpret the program as a means to easy money, with no strings attached ... Most of the subdistricts are not channeling the funds in accordance with the priority scale, which is needs-based," Endjang said.

As of September this year, he said, the municipality had disbursed total funds of Rp 14.775 billion among 20,173 recipients.

"Unfortunately, some Rp 2.930 billion has turned out to be bad debts."

Proposed PPMK funds in 2005

Municipality/Regency Subdistricts Fund allocation

C. Jakarta 44 Rp 43.780 billion

N. Jakarta 31 Rp 33.980 billion

W. Jakarta 56 Rp 55.290 billion

S. Jakarta 65 Rp 63.030 billion

E. Jakarta 65 Rp 64.920 billion

Kepulauan Seribu 6 Rp 6 billion

Total Rp 267 billion

Source: draft of the 2005 city budget