Governor says flood victims not obliged to repay loans

Ahmad Junaidi, The Jakarta Post, Jakarta

The conditions for a Rp 66.8 billion (US$6.6 million) loan, allocated to flood victims in the capital, are unclear as City Governor Sutiyoso said on Tuesday that the residents were not obligated to return the loan.

"If they have a strong reason, then they do not have to return the loan," Sutiyoso said, after symbolically handing over a Rp 250 million loan to the Semanan subdistrict council in the Kalideres district of West Jakarta.

He said that if a fire destroyed the stall of a vendor who had received a loan, then he or she would have a strong reason for not returning the money and the city administration would write off the debt.

But he urged the council to carefully select the residents before disbursing the loan, saying that the sanction would be given to residents who could not return the loan without any reason.

All of the city's 267 subdistricts received Rp 250 million each for the Subdistrict Community Empowerment Program (PPMK).

The fund, which is aimed at helping boost the economy of residents affected by the floods, was to carry an interest rate of 1 percent per month, did not require any collateral and should be returned within 24 months.

Residents expressed skepticism that the loan would reach the right hands. They said they suspected it would be disbursed to certain residents, including relatives of the subdistrict's head or members of the subdistrict council.

"It's still unclear. Many residents have not been informed about it," Marju, a small-scale trader in Semanan, said as he watched the ceremony from outside the subdistrict building compound.

Marju, whose house was damaged by the floods, predicted that the fund's use would be unclear just as the Rp 50 million grant, which was handed over to the subdistrict.

Last month, the administration granted Rp 50 million each to 167 of the worst flood-hit subdistricts for emergency aid during the floods. But it was not clear how the money was spent.

Separately, the head of the City's People Empowerment Office, Rohana Manggala, revealed that some Rp 22 million of the Rp 66.8 billion would be allocated to several non-governmental organizations (NGOs), which assisted the subdistricts in planning the disbursement of the empowerment program loan.

"The NGOs will be paid according to the minimum wage (about Rp 500,000 a month)," Rohana said, without mentioning the names of the NGOs.

Many activists have criticized the program, which allegedly missed its target. Last year, the administration allocated Rp 50 billion for 25 poor subdistricts.

Much of the fund was used to finance the construction of the local infrastructure, such as roads and public buildings, while some of the fund was lent to relatives of the head of the subdistrict.