East Javan town bucks trend in poverty battle

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Rasmini has no doubt why she has been healthy for the past 12 months after years of sickness.

“It’s my new house,” the 55-year-old widow says, gesturing to the bricks and tiles round her in the town of Blitar in East Java. “It’s more comfortable than the previous [bamboo] one. The water doesn’t come in when it rains.”

Ms Rasmini is one of the thousands of poor residents of Blitar who have received new homes in the past few years through an innovative scheme developed by the town administration and Formak, a local non-governmental organisation. The government gives those in poverty about Rp2.5m ($270) – a quarter of the money needed to build a house – and the rest is raised through donations, in cash and in kind, from relatives, friends and neighbours.

Djarot Hidayat, Blitar’s pioneering mayor, says: “Having a decent house to live in gives people the stimulus they need to lead a much more productive life.”

The evidence to back him up is striking. Some people have pulled themselves out of poverty by starting new businesses. Ms Rasmini, who had to scrape together Rp2m, or 200 times her daily profit from her streetside foodstall, to pay medical bills in the two months before she got her new house, has not been to the doctor for a year.

Poverty in Blitar has fallen by an average of 1 per cent a year for the past five years.

Such a success story is, however, almost unique in Indonesia. The World Bank publishes on Thursday the most comprehensive study of poverty in Indonesia for a decade and it shows the national trend is in the opposite direction.

Not only did poverty increase in the 13 months to March 2006 from 16 per cent to 17.75 per cent but also government efforts to reduce the number in poverty or vulnerable to it are making little headway. Of Indonesia’s 220m people, 49 per cent live on less than $2 a day purchasing power parity.

World Bank statistics highlight the problems. About 65 per cent of farmers and 83 per cent of Indonesians are net rice consumers but rice prices soared 33 per cent in the year to March – more than three times other staples. Yet the government refuses to import rice to bring down prices.

Indonesia’s maternal mortality rate, 307 per 100,000 live births, is one of the worst in the region while the fact that about 52 per cent of poor households do not have access to sanitation or safe water is “quite frankly a disaster”, according to Jehan Arulpragasam, who led the team that wrote the report.

Five years ago the government implemented a policy of decentralisation but the vast majority of regional administrations do not have the knowledge or experience to implement development programmes, so are not spending their budgets. An earlier World Bank report estimated that Rp94,000bn ($10.25bn) of sub-national government funds had not been spent in the past few years and 30 per cent of this year’s development budgets would remain unused.

“It’s a very different operating environment now,” Mr Arulpragasam said. “To make programmes much better for the poor there are a whole lot of issues related to service delivery that need to be addressed. The government, particularly local government, is not on the right road for poverty reduction.”

In Kebumen, a district in the heart of Central Java, is typical. Poverty has risen from 32 per cent in 2004 to 38.5 per cent this year, according to the local government. Rustriningsih, the district chief, said she started a village development programme four years ago but cannot describe any concrete success.

The hamlet of Kali Pancar, 20km north of the town of Kebumen up a beautiful valley of cascading rice terraces, exemplifies the problems. The last 3km of the road is unpaved and impassable to cars in the rainy season, no one has running water in their homes, only half the houses have electricity and the nearest telephone is 2.5km away. Everyone in the village is poor, according to the hamlet chief, Mulyawidadi.

“I can’t remember the last time anyone from the local government came here to see what we need or want,” he says. “And we don’t know what to do or how to ask for things.”

A handful of central government officials do appreciate the problems. “The way we design programmes is not done in such a way to really reach the poor,” says Pungky Sumardi, director of poverty reduction at the national planning ministry. “We have to change the way we do business . . . we don’t need to be so theoretical and do so many studies. We need to get into the field and implement realistic bottom-up programmes.”

His target is to bring “meaningful change” in officials’ ways of thinking in five years. “But even that is going to be hard to reach as long as we don’t change our overall paradigm to be really pro-poor,” he admitted.

Additional reporting by Taufan Hidayat

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