PDM-PKE program

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Mention should also be made of one particularly important social safety

net program that, at least in part, can be included in the labor-intensive

employment creation category although for reasons of its timing cannot

be considered from a quantitative analytical perspective. This was the

awkwardly named Empowering the Regions to Overcome the Impact of

the Economic Crisis Program (Pemberdayaan Daerah dalam Mengatasi

Dampak Krisis Ekonomi or PDM-DKE).25 With a total budget of Rp

1.7 trillion, the program consisted of block grants delivered through a

decentralized disbursement process, under the supervision of districtlevel

committees and village implementation teams. The block grants

were intended for local infrastructure improvements that would generate

temporary employment opportunities using labor-intensive methods,

and for the creation of revolving funds to provide credit to the poor and

unemployed to support income-generating small-scale business activities.

The size of the funds made available to villages varied from Rp 10 million

to as much as Rp 1 billion, depending on size and the estimated numbers

of the poor and unemployed.

This program was conceived by BAPPENAS to be one of the centerpieces

of the government’s social rescue package. It seems to have been designed by

that agency’s planners to create the impression that this arm of the central

government bureaucracy was really in charge of the coordination of the

entire Social Safety Net program. However, the PDM-DKE program soon

attracted considerable negative attention as one of the worst of the safety

nets and was quickly mired in controversy with allegations of corruption

and ‘money politics’. Much of the fi nal stages of the implementation of

the program, in particular the disbursement of signifi cant amounts of cash

at the district level to thousands of specially created community groups

in rural and urban villages throughout the entire country, occurred in the

lead up to the 1999 national elections. Consequently, in the heated political

atmosphere of the country’s fi rst democratic election campaign since the

mid-1950s, charges of blatant pork barreling were leveled at the government

and those offi cials who were directly in charge of the program.

The plans for the PDM-DKE program had been announced in November

1998, and the program’s planners had stressed that this package was intended

to be delivered as rapidly as possible, ostensibly to provide support to the

poor and disadvantaged throughout the country who were still suffering

from the economic impact of the crisis. However, the actual disbursement

of funds did not begin to take place until March of the following year. As a

result, although the various essential administrative preparations had started

shortly after the program was announced, the actual physical work on any

of the labor-intensive public infrastructure projects funded by this program

had not yet started when the February SUSENAS was conducted by BPS.

Unfortunately, this means that participation in padat karya activities under

PDM-DKE was not captured by the question asked of respondents in the

SUSENAS Special Module on the Social Safety Net program.

This point has never been made explicit in any of those published

quantitative analyses of the targeting of social safety net activities based on

the data derived from the Special Module, even though frequent reference is

made to the PDM-DKE program in these studies. The only specifi c analysis

of this program was a rapid appraisal conducted by a team from SMERU

in late 1998, the period when the administrative preparations and structures

were being put in place at the local level.26 This qualitative fi eld survey study

examined the operations of the PDM-DKE in 13 villages located within

six districts across four different provinces.

In addition to reporting on the many problems that were already evident

because of the excessive haste with which such a complex and diffi cult

program was being put into effect, the SMERU study revealed some of

the serious targeting anomalies that were already becoming apparent.

Although the intended benefi ciaries of the PDM-DKE program were the

rural and urban poor and unemployed, it was apparent that in the villages

in the rapid appraisal, credit was being directed instead to those who were

better off and who were considered more likely to repay their loans. As

for the employment-generating infrastructure component, there was little

evidence that the poor were being consulted over the selection of projects,

and as a result, many infrastructure projects were being selected that did

not provide benefi ts to the poorest section of the community. There were

strong indications that excessive amounts were being diverted into materials

and equipment instead of being made available for labor. These preliminary

fi ndings appear to have been confi rmed by the many problems observed

as the program funds were released in the months that followed. Serious

shortcomings in the PDM-DKE program were a strong element in the

World Bank’s decision to cancel the second tranche of the Social Safety

Net Adjustment Loan.