`PPMK' fund fails to improve small businesses
M. Taufiqurrahman, The Jakarta Post, Jakarta
The distribution of the Subdistrict Community Empowerment Fund (PPMK) has failed to improve the recipients' businesses, because it is not supported by an entrepreneurship training program.
Enjup, a resident of Pekojan subdistrict in Tambora, West Jakarta, said that her five-and-dime stall now generated less income, although she had received a PPMK loan of Rp 750,000 (US$83) to augment her assets.
Considering that there was not much she could do with the loan, she said, "If I didn't receive money from my husband's pension fund, I would have problems paying my installments."
Her stall, located down an alleyway in the neighborhood of Pekojan, did not stock a variety of goods for sale.
The PPMK program was launched in 2001 for 25 subdistricts in the city and in 2002, each of the 267 subdistricts in the city received Rp 250 million in a revolving fund. This year, the city administration is expected to increase the aid to Rp 500 million per subdistrict.
A number of concerned urban activists voiced their opposition regarding the fund's distribution, due to the alleged corruption involving subdistrict officials and subdistrict council (Dekel) members.
Chairwoman of the City Community Empowerment Board (BPM), Rohana Manggala, however, said last week there were only five cases of suspected graft, being investigated by police.
The first four cases involved four members of four subdistrict councils who allegedly misused a total of Rp 195 million last year. They occurred in Kelapa Dua subdistrict, West Jakarta, and in three subdistricts in Central Jakarta: Karet Tengsin, Paseban, and Bungur. In 2001, one graft case was detected. It involved Rp 719 million, occurring in Serdang subdistrict, also in Central Jakarta.
The empowerment board had also found Rp 4 billion of bad debts from a total of Rp 60 billion of PPMK funds disbursed last year.
Nadi, a member of Dekel in Pekojan, admitted that there were many cases in which the PPMK alone could not do much to help develop small-scale businesses.
He told the Post that the disbursement of the loan was based solely on the size of the business.
In 2002, Pekojan subdistrict received a PPMK worth Rp 250 million, of which Rp 196 million was later disbursed as loans to 239 small-scale businesses.
"If a street vendor runs a business with a total sales of only Rp 1 million per month and a profit of Rp 300,000, there is no way for us to lend him credit worth more than the total sales, because he will face difficulties in paying the installments," he said.
He was quick to add that there were also cases in which the fund had been used to buy household appliances, such as a television set.
"Learning from our past experiences, we will develop a training program for small-scale businessmen to improve their entrepreneurship skills," he said.
Separately, Agus Sucipto, an administrative staffer for the financial management unit of the subdistrict council, said that the PPMK had been disbursed to those who badly needed loans.
"We even have a long waiting list," he said, adding that not all small-scale businessmen in Pekojan would receive a loan, as funds were limited.
He said that his unit had made a profit from the 1 percent interest paid by debtors, along with the monthly installment.
"Thus far, we have collected Rp 16 million in profit since the first disbursement in July 2002," Agus said.
The profit, he said, would be used later as a revolving fund for other needy small-scale businessmen.
"In the long run, the PPMK fund and its returns will be used as a trust fund for this subdistrict," he said, although he was aware that the city administration might stop distributing the fund in the next few years.