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n an article entitled '€œGovernment needs to pay more attention to informal sector'€, (The Jakarta Post, Jan. 17) World Bank senior economists Truman Packard and Vivi Alatas appear to know surprisingly little about the realities of the informal sector or about common sense in supporting business development.

To explain to Packard, the informal sector is the survival, subsistence part of society, where protection of citizens is impossible and where the only alternatives for economic prostitution are undertaking '€œmicro-businesses'€ or begging.

The reason for calling it '€œinformal'€ is because citizens, their lives and their possessions are unregistered, unknown, impossible to regulate, impossible to protect.

Promoting it as the '€œsavior for the nation in 1998'€ could be regarded as a severe insult to Indonesia.

As co-author of the World Development Report and a strong supporter of civil rights, he surely knows better.

On '€œaccess to financing to business'€, any economist can easily see from verifiable data from all over the world that the biggest sources of funding of small businesses are retained earnings, family and friends capital; logical as there exist no verifiable data for financiers to make a prudent decision on investing the funds that have been deposited by clients that entrust their income, their savings to them.

What both experts also don'€™t seem to know about Indonesia'€™s finance sector is that it already has one of the world'€™s largest financial institutions working with movable collateral in a flexible manner, namely state-owned pawnbrokers Pegadaian. It has a history of 115 years and operates thousands of branches in all provinces and districts. They are indeed ubiquitous, omnipresent.

Finally, I can lend these World Bank experts the recent publication (September 2013) of USAID, '€œGood practices in Agricultural Finance in Indonesia'€.

Building on global and Indonesian experience, it clearly states that especially in informal agriculture, it is best to work with (capped) subsidies instead of with loans.

Maybe both economists could have a look at Thai state-owned lender BAAC (explained in Appendix A-5 of USAID'€™s publication) to see how it plays a key role in its society'€™s current division.

Its poor farmers depend on politicized charity and soft loans and a '€œcharitable'€ billionaire elitist family stays in power because of the votes of those rural poor whose survival depends on their handouts.

Why are these renowned World Bank representatives providing advice that undermines the development of the economy and the financial sector of Indonesia, and will most certainly provide its government and weakest citizens with unmanageable debt?

Peter van Dijk
Jakarta