PMI launches cooperatives in flood areas

Hasyim Widhiarto, The Jakarta Post, Jakarta | Sat, 10/17/2009 1:10 PM

The Indonesian Red Cross (PMI) Jakarta chapter, working in cooperation with the Netherlands Red Cross, on Wednesday launched the first of the city's community-based savings and loan cooperatives focused on working with residents in a flood-prone areas.

Sukarlan, the PMI Jakarta official heading the cooperative project, said the idea for the cooperatives came up when his organization realized that almost all disaster victims in Indonesia had a tendency to rely heavily on government financial assistance after disasters. "It is definitely a misconception if people think the government can cover all losses caused by disasters," he said.

"So, if people realize they live in a disaster-prone area, the only way they can insure themselves is to move to a safer place or save enough money before another disaster happens."

Run and managed by the local community, the new cooperative, named "Siaga Bersama" (ready together), was opened to serve residents of West Jakarta's flood-prone Rawa Buaya and Kedaung Kaliangke subdistricts.

Next week, a similar cooperative will be launched in Cawang, East Jakarta.

Prior to establishing the cooperatives, Jakarta PMI and the Netherlands Red Cross have (for two years) been running regular micro-finance training programs for residents, Sukarlan said.

"We first taught people in communities how to manage a small lending and savings groups. Once they are ready we help them establish a cooperative," he said, adding that he was expecting each cooperative to attract 2,000 members by next year.

Flooding has become an annual occurrence in Jakarta, with 40 percent of the city currently at or below sea level, and an outdated and poorly maintained drainage system.

The Jakarta administration has identified more than 70 flood-prone areas in the city.

Aside from floods, many areas in Jakarta are also vulnerable to fires. Data from the city's Fire Fighting and Disaster Mitigation Agency shows that Jakarta has 53 fire-prone areas - mainly in slum areas throughout the city's five municipalities.

With both floods and fires being everyday occurrences, any attempts to improve city residents' capacity to recover independently from such disasters have become increasingly important, critics say.

H. Chandra, the managing director of PT Reka Desa, the consultancy company hired to provide micro-finance training and to establish the cooperative system, was positive that the cooperatives would work.

"The most important thing is to encourage residents to utilize cooperatives as places to save money, not for borrowing," he said.

A cooperative is a joint-owned and member-controlled organization formed by a group of people to serve their economic interests.

According to data from the Jakarta Trade, Cooperatives and Small-and-Medium Enterprises Agency (KUMKP), there were more than 7,000 cooperatives registered in the city, but only 4,000 of them were active.

During the first six months of this year, the city's cooperatives booked a combined turnover of Rp 4.4 trillion (US$470.8 million).