Funds for poor villages used mostly for savings and loans

JAKARTA (JP): The majority of the funds under the presidential aid program for poor villages, known by its Indonesian acronym IDT, has been used as seed capital for savings and loans schemes, according to a senior official of the Ministry of Home Affairs.

H.H. Siagian, the Director General of Rural Development, told a hearing with the House of Representatives yesterday that the borrowers of the funds pay fees or interest for the privilege of using the money.

"These savings and loans mechanisms, adjusted in accordance with how ready people will be using the funds, are the basis of the success of the IDT program," Siagian told a hearing with the House's Commission II.

The IDT program was launched in April as part of the official campaign to lift the condition of nearly 26 million people in Indonesia who live below the poverty line.

Under the program, the government sent packets of Rp 20 million ($9,500) to nearly 20,000 villages across the country where the poorest people live.

The money is given directly to poor people who must decide how they intend to spend the money productively -- a move intended to invigorate their own initiative. The government's role is restricted to that of supervision.

Generally one recipient village can consist of up to three groups, each one consisting of between 20 and 30 members.

Siagian said in the majority of cases, the borrowers are asked to repay the money in 12 installments. The first 10 are used to repay the loan, one installment is considered the fee and the last is "voluntary savings."

This method has been developed and adopted in many village cooperatives and village banks throughout Indonesia, he said.

The Ministry of Cooperatives, the Ministry of Finance and Bank Indonesia (the central bank), are currently drafting the guidelines on how the funds should be administered and supervised, he said.

Last month, Minister of Home Affairs Moch. Yogie S.M., scolded some village officials for taking a cut on the Rp 20 million packets. He insisted that the money reach the recipients intact, and not a cent less than was originally sent.

Confusion

Confusion reined because, in the absence of clear instructions, some local administrators had thought that the funds for the supervision of the program were to be taken from the packets.

Siagian said the program will continue through the 1995/96 fiscal year which starts on April 1. However, the actual form it will take has not yet been decided and are pending the results of the review of the first six months.

In the six months since the program was launched, some 47 percent of the overall funds allocated were distributed.

All of the funds allocated for Jakarta and Yogyakarta have been distributed. In West Java, some 99 percent have been distributed with the exception of the Baduy region in the westernmost part of the province. Distribution in this area has been delayed because of "socio-cultural" aspects, Siagian said without elaborating.

He said the government has had problems in distributing the packets in many eastern provinces -- most notably in Maluku, which consists of islands which are inaccessible or not served by a commercial bank. To overcome this problem, the government is considering enlisting the service of post offices in distributing the funds. (emb)