`PPMK' fund fails to improve small businesses

`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.