Cash aid won't help the poor: Critics

Abdul Khalik ,  The Jakarta Post ,  Jakarta   |  Fri, 05/16/2008 12:39 PM  |  Headlines

Direct cash assistance will not mitigate fuel price increase impacts on the poor. Itstrengthen their purchasing power or increase their income, experts and activists said.

They criticized the policy as a panic move by government contrasted to alternatively offering sustainable empowerment of the poor via job creation and business opportunities.

"Cash aid is a bandage to bind up the wounds of society without curing any ills. The government must create income sources instead of giving charity," Emmy Hafild, coordinator of Transparency International, told The Jakarta Post.

The government plans to raise fuel prices to cap fuel subsidies and protect the state budget in the face of soaring global crude oil prices.

President Susilo Bambang Yudhoyono on Wednesday issued a presidential instruction for the disbursement of Rp 14.1 trillion (US$1.55 billion) in direct cash assistance to help 19.1 million lower income households comprising 76.4 million people cope with the fuel price increases. The government is using 2005 data to identify recipients.

Under the scheme, each family will receive Rp 100,000 per month until December in compensation for the maximum 30 percent increase in fuel prices.

Parallel to cash aid, the government has launched a Rp 13.2 trillion credit program in 4,000 districts across the country, and has extended Rp 5.3 trillion in credits to approximately 400,000 micro and small businesses.

The government hopes to cut the poverty rate from 14 percent in 2008 to 12.5 percent in 2009 via these programs.

Emmy, however, said the fuel price increase will ultimately raise poverty rates no matter what the government does.

Former coordinating minister for the economy Kwik Kian Gie doubted the program would work, given the difficulties in determining who is eligible.

"I predict that the process of identifying recipients will be chaotic. I failed to make a similar program work," he was quoted by Antara, when he referred to a past social safety net program under president Megawati Soekarnoputri.

Siti Zuhro, senior researcher at the Indonesian Institute of Sciences, slammed the government for not taking the poverty crisis seriously but focusing only on partial and short-term solutions.

"The policy seems to only aim at calming political and social unrest ahead of 2009. We will see long queues of people fighting for the cash," she told the Post.

Indra J. Piliang of the Centre for Strategic and International Studies warned of a wave of chaos he dubbedsocial tsunami" because the cash aid was insufficient to cope with high prices.

"Imagine if many families have to withdraw kids from school because of financial difficulties. There will be many children having to work to earn money to help their parents," he said.

Citing a lack of coordination among government offices, both Siti and Indra doubted the direct cash aid would reach the needy.

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