Helping the poor

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.