The Jakarta Post, Fri, 12/26/2008 11:20 AM
JAKARTA: With high nonperforming loans in the Subdistrict Empowerment Program (PPMK) fund distribution, the city administration will soon set up a micro-finance institution to manage the funds properly.
The city administration currently allocates PPMK funds to the People Empowerment Board (BPM), which hands the money out to communities through the subdistrict community council.
BPM head Budi Harjo said the audit results on PPMK funds during 2002-2007 showed it was in the red by up to Rp 116.50 billion (US$9.70 million).
"There are many reasons, such as bankruptcy or the PPMK recipient died and the heir can't afford to pay. In the latter case, we would exempt them from the obligation as long as the neighborhood unit head issues a notification letter," he said.
"Those who flee obligation, we will prosecute."
Mara Oloan Siregar, assistant to city secretary for economic affairs, said that next year credit would be managed by micro-finance institutions or cooperatives.
The program was started in 2001, with Rp 50 billion for 25 subdistricts. It grew gradually to cover all 267 subdistricts. As of this year, the disbursed funds total Rp 1.175 trillion.
The funds have been used for social, physical and economic development programs conducted by the communities. For economic programs, the money goes into revolving funds to improve the communities' small and medium businesses. -- JP
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