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After the Asian economic crisis hit Indonesia in 1 99711 998, an increasing number of government projects and programmes in micro finance were created, which aimed at helping the poor both in rural and urban areas to cope with poverty problems. For the purpose of this study, I would like to elaborate specifically on the government projects and programmes in the agriculture sector, along with the general government projects and programmes for poverty alleviation.
Government's projects and programme for poverty alleviation
In addition to the various types of microfinance institutions as mentioned above, there are several large micro finance programmes funded by the government and donor agenCIes. Major government agencies include: the Ministry of Agriculture, National Planning Agency Board (Bappenas), and National Family Planning Coordination Agency Board (BKKBN). Despite the increasing effort to achieve the commercialisation of micro finance programmes in Indonesia, these government institutions still continue to subsidise the credit programme to the poor.
This condition has been the subject of criticism by many authors. The first criticism relates to the coordination of the programmes among the agencies. Each agency has a particular philosophy and procedure based on its policy priority, and in many cases there are contradictions in promoting formal micro finance policy from the central government (ADB 2003, cited in Charitonenko & Afwan, 2003 : xv). Another criticism relates to the subsidised and directed microcredit programme. A recent survey found that there are 70 programmes and projects for poverty alleviation available in various ministries and other government institutions, each of which has a microcredit component, with high government subsidy (Charitonenko & Afwan, 2003 : 37) . For example, the Family Welfare Income Generating Project (Usaha Peningkatan Pendapatan Keluarga Sejahtera) under the BKKBN charged very low annual interest rate (only 6%), while the Village Economic Savings and Credit project or UEDSP
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promoted by Ministry of Home Affairs had allocated substantial subsidies to local government (Sukarno, 2000: 1 4) .
Another example i s the Inpres Desa Tertinggal (lDT) programme o r presidential instruction relating to least developed villages. IDT is the largest government programme for poverty alleviation, which has developed about 20,000 self-help groups in target villages (Conroy, 2000: 1 07). This poverty alleviation programme, which is coordinated by the National Planning Agency (BAPPENAS), is an inter-departmental programme aimed at reducing regional income inequality. The programme consists of providing capital grants for each least developed village for income-generating activities of the poor, along with a package of infrastructure development, training programmes, and so on (Perdana & Maxwell, 2004: 1 5). A block grant of Rp 20 million was given to each participating village, and this fund is used as the basis for small-scale revolving credit for groups of people in the village (Perdana & Maxwell, 2004: 1 5- 1 8).
Although the IDT cannot be classified as a microfinance programme, because of its capital grants to the poor, this programme has developed an image among the poor who receive grants that the government is very generous, and any government' s programme is considered cheap, and the repayment of any credit advanced under a formal programme is sometimes unnecessary. This impression is widespread among the rural community and is affecting credit programmes designed by the government such as the KUT and credit for food security (KKP).
The main problem in channelling the IDT fund was in selecting the participating villages. This problem is very common in Indonesia, considering the fact that the number of villages categorised as under-developed is high, and to select them as the recipients of the IDT funds needs specific standards or criteria. Similarly, it was also difficult to identify the population who are the poor, not poor or semi-poor, and sometimes the poor are not residing in the respective village at the time of identification, and they are therefore missed from the identification (MOA, 2002; Perdana & Maxwell, 2004). Considering the ineffectiveness of this programme, and coinciding with the fall of the Soeharto regime, the IDT programme did not receive further funding after 1 997. The increasing number of credit projects and programmes
1 00 provided by the government agencies could hamper the process of commercialisation of micro finance in Indonesia.
The background as to why the government is still continuing to implement subsidised credit programmes is in order to help the poor who suffered greatly from the last Asian economic crisis, while the government no longer gives liquidity credit from the central bank (Bank Indonesia) (MOA, 2002). In the agricultural sector, the reason for extending the subsidised credit programme is to strengthen the food security of the poor, especially after the crisis. It is also to support the small farmers with capital for their farming activities, considering that credit for the agricultural sector has been limited after the elimination of liquidity credit from the central bank (Hermanto, 1 992: 65).
Government's credit programmes and projects in the agricultural sector
The government's credit programme and projects in the agricultural sector are usually named as 'Kredit Program ', which are characterised by high subsidy level, and the procedure of delivery is usually through state banks or cooperatives direct to the farmers' groups. The previous BIMAS and KUT credit programmes are examples of this kind of government credit programme. The 'Kredit Non-Program ', on the other hand, is a credit programme for the agricultural sector, which comes from private banks or non-bank institutions (World-Bank, 2005a: 2).
In recent years the government, through the Ministry of Agriculture, has designed many credit programmes which are aimed at helping farmers to fulfil their capital needs for their farming activities. However, most of these credit programmes are not successfully implemented due to many shortcomings, such as slow distribution of credit funds, low repayment, and problems in design and management, while the government has to continue to replenish their capital in order to enable them to survive. In fact, these programmes absorb a large part of the government budget, of which about Rp 3 trillion is used for subsidising interest rates and topping up revolving funds (MOA, 2002:3). The KKP (Kredit Ketahanan Pangan or credit for food security) credit programme was launched in 2000, to replace the KUT credit programme, which was terminated in the 1 998/1 999 planting season. The objective of the KK.P is to strengthen the national food
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security, and also to increase fanners' income through provision of investment credit with affordable interest rates of 6- 1 0% (SMERU, 2002: iii-iv). However, this programme was constrained by the slow distribution of credit funds. Until March 200 1 ,
the distribution of credit in South Sulawesi reached only 2 . 1 7% of the total funds available, while in East Java was only 0.5% of the total funds (World-Bank, 2005a: 2).
Other programmes are Bantuan Langsung Masyarakat (BLM) and Pemberdayaan Masyarakat Agribisnis Melalui Penguatan Modal Usaha Kelompok (PMA-PMUK). The BLM is a revolving credit mechanism, which absorbs 40% of the Ministry of Agriculture' s public funds, while the PMA-PMUK spent Rp 1 .8 trillion of the government budget. This is the highest among the government's recent targeted credit programme (Soentoro et al., 1 992: 5 1 ). Because the BLM suffered from poor implementation, the government replaced it by the PMA-PMUK in 2003, which has been more a change in name rather than substance. Looking at the previous credit programmes of KUT and KKP, the pattern is similar, and the problems of poor design and implementation are reiterated.