Helping the poor

President Soeharto's appeal to the better-off to help those still below the poverty line shows he has a strong vision of how to sustain Indonesia's high economic growth in the long term. The development process can be sustained only with stability, which in turn can be maintained if all share in the growth.

In fact, shared growth has been one of the main factors allowing the economy to grow steadily at the very respectable rate of more than 7 percent a year over the past three decades. Besides creating a larger base of middle and high income people, development has also reduced the poor from 60 percent of the total population in 1966 to only 14 percent today.

However, 14 percent is still a lot of people, especially since Indonesia has a total population of almost 200 million. The government therefore wants to further reduce absolute poverty to only 6 percent (12 million) by 1998.

Yet growth is no longer enough in itself. A government study has concluded that poverty is becoming increasingly localized by household size, education, gender, and age. A poverty alleviation program was launched in April, 1994, specifically targeted at the least developed villages. But the government, constrained by limited budgets, feels it cannot do the job alone. Hence, the President last year came up with another initiative -- those with an after-tax income of more than Rp 100 million (US$42,500) per year were asked to donate 2 percent of their income to the "Self- Reliant Prosperity Fund".

It is thus understandable that Soeharto was disappointed to find out one year afterwards that about 50 percent of the eligible donors have still not contributed. True, as he recounted at the meeting with the country's richest men over the weekend, it was not merely their hard work that allowed them to amass their wealth. They would not have been able to do any business at all had it not been for national stability. The rich should indeed realize that the masses who remain outside the economic mainstream, those who have nothing to lose, could become a threat to stability.

Yet there are several other factors which could make the program more attractive to donors. The President promised that the manner in which the funds will be used will be transparent and the funds donated by the rich would be audited by Hans Tuanakotta & Mustafa Public Accountants. Accountability is indeed essential, especially for a charitable organization which can thrive only with favorable public opinion. After all, the donors already share their wealth with the public through their taxes.

Support will be forthcoming if the programs financed by the donations are designed to create productive assets for the poor and not simply distributed. It is encouraging to learn that the funds will be used to finance interest-free loans linked to compulsory saving.

However, there is scant information on technical details, how the program will be executed, which agency is responsible for supervision and which will advise the poor on how to use their loans. The program should attempt to address the root of their problems. Hence we feel the program requires the involvement of local grassroots institutions such as non-governmental organizations.