Meeting on poverty

President Soeharto has further improved top-level coordination and supervision of the national drive against poverty through a special cabinet meeting. The first of what will be a quarterly cabinet meeting was held on Tuesday for four-and-a-half hours. The session was chaired by the President, who was accompanied by Vice President Try Sutrisno, seven ministers and the governor of the central bank.

With so many poverty alleviation programs currently underway, sponsored by the government and private organizations, better coordination and more effective supervision are warranted.

Interministerial coordination is necessary for the effective execution of poverty alleviation programs, due to the different characteristics of the targeted people. Programs often involve cross-sectoral activities which, in the absence of good coordination, could be hindered by bureaucratic competition and jealousy.

Poverty has decreased from 13.7 percent of the total population in 1993 to 11.3 percent in 1996 (still more than 22 million people), but it has increasingly become localized with different characteristics specific to geographical location, household size, education, gender and age. These different characteristics call for poverty alleviation projects, which are designed specifically for the diverse target groups.

One may indirectly connect the launching of the cabinet session to the recent wave of riots in several districts. Many social scientists have partly blamed the riots on the widening gap between the rich and poor, and the increasing concentration of wealth in the hands of several business groups.

But as we argued earlier, better coordination and supervision are necessary now, not only to improve the effectiveness of various poverty reduction programs, but also to prevent overlapping and inefficiency. Moreover, as Coordinating Minister for Production and Distribution Hartarto explained after the cabinet session, the meeting's agenda, besides including anti- poverty programs, also covered matters related the development of cooperatives and small and medium-sized businesses.

The meeting, for example, discussed efforts to ensure that credit for small and medium-sized businesses reaches its targets. This apparently followed up the recent ruling by the central bank which requires both domestic and foreign banks to allocate a specified portion of credit to small businesses. The ministers also exchanged views on how to facilitate more partnerships between cooperatives and small and medium-sized firms, on one hand, and big businesses on the other.

The ministers were instructed by the President to design programs which would enhance partnerships between big retail chains and local cooperatives and small firms and to close towns in regencies to new big retail chains. The role of venture capital companies in the provinces to enhance the growth of small start-up businesses was also emphasized.

The special cabinet meeting was also quite important in that it once again demonstrated the government's strong commitment to enhancing equity development. It also served to strengthen the message that poverty reduction and broader-based economic growth are keys to the sustainability of overall development. The development process can only be sustained by national stability, which in turn can only be maintained if all people share in the growth and if the economy is strengthened by a broadened range of business.