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Bulletin of Indonesian Economic Studies
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
BOOK REVIEWS
To cite this article: (2003) BOOK REVIEWS, Bulletin of Indonesian Economic Studies, 39:2, 221-226, DOI: 10.1080/00074910302014
To link to this article: http://dx.doi.org/10.1080/00074910302014
Published online: 17 Jun 2010.
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ISSN 0007-4918 print/ISSN 1472-7234 online/03/020221-6 © 2003 Indonesia Project ANU
BOOK REVIEWS
Nilanjana Mukherjee, Joan Hardjono and Elizabeth Carriere (2002), People, Poverty and Livelihoods: Links for Sustain-able Poverty Reduction in Indonesia,The World Bank and Department for Inter-national Development, Jakarta.
When the World Bank was undertaking the study for the report Poverty Reduc-tion in Indonesia: Constructing a New Strat-egy, 2000, it agreed that funding should be made available for a parallel study to be conducted at a level much closer to the rural poor and within a ‘sustainable livelihoods’ framework.
The task was given to Mukherjee, a senior community development special-ist from the World Bank, Hardjono, an Australian-born geographer who has lived and taught in Indonesia for many years and has researched transmigra-tion, poverty and land tenure, and Car-riere, who is a Social Development Advisor for DFID (Department for Inter-national Development), the British gov-ernment’s overseas aid agency.
Together with 11 Indonesian field re-searchers, they carried out intensive studies at four sites in Indonesia: a farm-ing community in West Java with a high degree of landlessness; an urban com-munity in Surubaya (East Java) where people support themselves by informal urban activities and there is much com-petition for local resources; a fishing community on Lombok where catches are falling and there are inadequate al-ternative employment opportunities; and a Dayak community of shifting cul-tivators in West Kalimantan.
The findings are reported in this monograph, which describes the meth-odological issues, the study areas, the vulnerability contexts of the communi-ties included in the study, the assets available to people, the processes and structures that could be used to trans-form the situations of the poor in these areas, the livelihood strategies that peo-ple use, and possible interventions. A final chapter sets out what was learned about the impacts on the poor of present policy, and what future policy makers need to know about the situations of the poor in Indonesia in order to change their circumstances.
The study does not attempt to mea-sure poverty quantitatively, and it does not assume that increased income is the primary or only solution. Rather, the authors investigate the human, physi-cal, natural, financial and social capital upon which poor people depend. They then look at how vulnerable these assets are to loss or deterioration, and at the structures and processes that determine the viability and sustainability of the ways poor people use these assets to survive—their ‘livelihood strategy’.
The authors chose to use a participa-tory research method, in which commu-nity members were involved in the analysis of their assets, strategies, trends and institutions, and in examining the interventions that help or hinder them in their search for more secure and sus-tainable livelihoods. For those who are sceptical about the usefulness of partic-ipatory methods, as I tend to be, this monograph will be a pleasant surprise. It demonstrates how effective this
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approach can be when it is implement-ed by researchers who are experiencimplement-ed at working in rural communities, who have outstanding language skills and cultural sensitivities, and who are assist-ed by experiencassist-ed and well trainassist-ed field workers.
The authors argue that participatory research results in ‘an understanding of poverty that is people centered, respon-sive, participatory, multi-level, dynam-ic and balanced’. It highlights, they say, ‘the economic, social and environmen-tal dimensions of sustainability’. In the case of this study, at least, I agree with them. Participatory research evolved out of the ‘rapid rural appraisal’ approach-es, criticised and espoused by Robert Chambers. Chambers (1992) argued for the formal recognition of the ‘quick-and-dirty’ research methods that highly ex-perienced researchers use when they have limited time in which to work, but the participatory method that evolved came to be seen in some quarters as the only way to do social research. It was also frequently used in a template fash-ion by inexperienced fieldworkers, and the results were often less than impres-sive. That is not the case in this mono-graph. The depth and complexity of the material presented is impressive. An ap-pendix discusses the participatory meth-od and the way it was applied in this study.
The section on the context of vulner-ability begins with people giving their own definitions of what it is to be poor. This is followed by an examination of longer-term trends (is the resource base deteriorating?); the impact of short-term shocks (the Indonesian economic crisis of 1997, for example); and seasonal fluc-tuations that increase vulnerability at certain times of the year (dry seasons that affect drinking water, or rough weather that makes fishing impossible).
In all three rural sites, the natural re-source base is deteriorating as a result of increasing population, inappropriate government policy and poor extension advice. Physical infrastructure im-proved during the New Order, but is now falling into disrepair and the origi-nal construction was commonly of poor quality. Poor quality education and health services mean low levels of hu-man capital. Social capital is threatened by competition for resources, exploita-tion, dislocaexploita-tion, violence and despair.
The chapter on transforming struc-tures and processes highlights the enor-mous uncertainty generated by the sudden decentralisation of government services in Indonesia. In the four site studies, the poor are now, more than ever, excluded from decision making, information and consultation. Their rel-ative powerlessness has increased as dominant local groups take advantage of new structures and processes.
The section on strategies and out-comes finds that poor people are more concerned about survival in the short term than about long-term sustainable outcomes. Importantly, the authors ar-gue that problems with natural resource exploitation cannot be solved at the lo-cal level but require changes in national policy and law enforcement, as well as ‘more accountable, collaborative forms of government’.
The final chapter examines present poverty alleviation programs in Indo-nesia. It finds that poor people favour programs that ‘get to the roots of pover-ty, transforming power structures and relations that keep them poor’. Im-proved health, education and training are favoured over short-term handouts. Reform of local and middle-level gov-ernment will be required before the poor can be the recipients of poverty allevia-tion programs created for their benefit.
The specific interventions that the poor people in these studies said would be of most benefit to them are microcredit schemes; better family planning facili-ties; education and training, especially for job skills; changes in agricultural policies; and secure access to the land and the natural resources on which they depend.
This is an important piece of work, well written, well presented and well illustrated.
Bryant Allen
ANU
Reference
Chambers, R. (1992), ‘Rural Appraisal: Rapid, Relaxed and Participatory’, IDS Discussion Paper311, Institute of Devel-opment Studies, University of Sussex.
Marguerite S. Robinson (2002), The Microfinance Revolution. Volume 2: Les-sons from Indonesia,The World Bank and the Open Society Institute, Washington DC, pp. li + 463.
This is the second part of a three-volume work. It merits a separate review in BIES
by reason of its focus on Indonesia and the depth and authority of Robinson’s examination of the Indonesian contribu-tion to microfinance. This has been to show the potential for formal financial institutions to conduct microfinance operations sustainably. For Robinson, the ‘microfinance revolution’ consists in ‘the large-scale provision of small loans and deposit services to low-income peo-ple by secure, conveniently located, competing commercial financial institu-tions’, thus putting in place ‘the process-es needed to democratize capital’.
Robinson claims that Indonesian ex-perience has four principal lessons for
this ‘revolution’. These are, first, that ‘microfinance institutions can be fully sustainable with large, nation-wide out-reach over long periods’. As evidence of longevity, she examines the operations of Bank Dagang Bali, established in 1970. This she describes as ‘the world’s oldest licensed, full-service commercial bank providing continuous, profitable microfinance services on a substantial scale’. As evidence of national outreach, Robinson presents a detailed discussion of the evolution of the ‘Unit’ (formerly ‘Unit Desa’) system of Bank Rakyat Indonesia (BRI). This commences with an account of the bank’s involvement in the Bimas rice intensification program in the period 1970–83 which is likely to be of considerable interest to students of Indonesian agriculture.
The failure of BRI’s Bimas lending program stimulated a drastic change in the bank’s institutional culture. This co-incided with changes in the broader fi-nancial sector, commencing with the freeing of commercial bank interest rates in 1983. The culture change involved shifting from reliance on ‘supply-leading’ subsidised credit, with a concomitant neglect of savings mobili-sation, to a commercialised model of fi-nancial service provision, designing and refining the Kupedes (village credit) loan product and tapping into the un-exploited well of savings in rural areas. By offering convenient savings products bearing positive real rates of interest, the BRI Unit system was able to self-finance a rapidly growing loan portfolio by 1989, and thereafter to become a sub-stantial net contributor of liquidity (and profit) to the bank’s operations.
Robinson’s second lesson from Indo-nesian microfinance is that so long as basic principles are applied, commercial microfinance can be conducted using a variety of institutional models. Thus
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Bank Dagang Bali is a commercial bank (Bank Umum) under the 1992 banking legislation, whose core business is in microfinance, while the BRI Units formed a specialised ‘microbanking’ division of a wider Bank Umum. Rob-inson examines various small financial institutions known generically as Bank Perkreditan Rakyat (People’s Credit Banks, BPR). These are, firstly, the li-censed ‘rural banks’, regulated by Bank Indonesia and subject to the Banking Act. Secondly there are the Badan Kredit Desa (Village Credit Agencies, BKD) and Lembaga Dana dan Keuangan Pedesaan(Village Funding and Finance Institutions, LDKP). She provides case histories and operational analyses for these locally based institutions, as well as an historical account of their origins (which in the case of the BKDs date back to the 1890s).
The third lesson is that ‘microfinance can be profitable and stable even dur-ing severe [economic] crisis’. Robinson recounts the remarkable performance of certain formal microfinance institutions in the wake of the financial crisisfrom mid 1997. She maintains that the village Units of BRI, a state bank, the privately owned Bank Dagang Bali and the vil-lage-owned BKDs all remained stable and profitable while the broader Indo-nesian financial system was collapsing around them. This was in part because their clients, operating in the domestic sector, were less exposed to the crisis. Also, the institutions held substantial savings or retained earnings and they (particularly the Units) actually gained deposits, switched from institutions the public deemed less safe. Thus they re-mained liquid and were able to contin-ue lending. Borrowers in turn valcontin-ued continuing access to credit and gave pri-ority to repayment. In the BRI Units, for
example, ‘portfolio status’ (overdue principal instalments as a proportion of total portfolio outstanding) rose during the crisis, but only to 5.7% in 1998, com-pared with 3.7% in 1996, and by 2000 it had fallen back to 2.5%. The Kupedes loan window was at no time closed.
The fourth lesson is that ‘millions of low- and lower-middle income savers and borrowers can improve their enter-prises, increase their incomes, and gain self-confidence’ through access to micro-finance. For this conclusion, Robinson, as a social anthropologist, draws upon her own long experience in Indonesia.
In addition, the book contains a great deal of historical and cultural material, drawn from secondary sources and like-ly to be familiar to Indonesianists. How-ever, Robinson has a much wider readership in view. These are students of microfinance, whom she regards as insufficiently informed about the char-acter and achievements of Indonesian microfinance, and excessively influ-enced by models, such as the Grameen Bank of Bangladesh, that derive essen-tially from an NGO focus rather than a commercial one. This bias is real, and the book will go a long way to correct-ing it.
John D. Conroy
The Foundation for Development Cooperation, Brisbane
Jose L. Tongzon (2002), The Economies of Southeast Asia, Second Edition: Before and After the Crisis, Edward Elgar, Chelten-ham, pp. xiv + 308. Paper: £19.95.
There are surprisingly few surveys of the economies of Southeast Asia in print, possibly because the task of analysing
10 such different economies within the 300-page limit that most contemporary publishers impose on authors is decep-tively difficult. Should the author select a few themes and develop them in depth, or try to cover a broad range of topics with the inevitable risk of treat-ing many of them too superficially? The dramatic events of the past six years have not made the task any easier; a ver-itable library of monographs and arti-cles has appeared on the crisis that unfolded after the decision to float the baht in July 1997, and the flood shows little sign of abating. In addition, any modern author has to try to take account of material, much of it unedited and cer-tainly unrefereed, which comes out via the internet. How is one author to boil down this mass of material into a single volume that can be a useful guide to stu-dents, as well as to business people, diplomats and others wanting an au-thoritative guide to a diverse region con-taining over half a billion people?
This is the second edition of a book that originally appeared before the cri-sis erupted, and the author has chosen not to greatly change the earlier chap-ters, which deal mainly with ASEAN economic cooperation and external re-lations prior to 1997. Instead he has add-ed a new chapter on the 1997 crisis and its aftermath, and five chapters on fu-ture prospects both for the individual economies and for ASEAN economic cooperation. The result is rather a cu-rate’s egg: useful in parts, especially for those new to the region and its problems, but too often both superficial and out-dated. The author appears to have made little effort to update any of the material in the first nine chapters of the book; few of the tables contain any statistics be-yond 1996. Complex issues are dealt with in a few pages; the discussion of
poverty and income distribution (issues which warrant a monograph to them-selves) merits seven pages in chapter 2. Most of the data are lifted rather uncrit-ically from World Bank, Asian Devel-opment Bank and other publications, and the author provides little in the way of nuanced commentary even on those publications (such as the 1993 East Asian Miracle report of the World Bank) which have stirred up considerable contro-versy.
Some of his statements are, to say the least, questionable: is it really the case that state enterprises in Singapore are ‘not given any special privileges or sub-sidies, and must be competitive with the private sector’? In the chapter on the 1997 Asian crisis, we are informed that unemployment in Indonesia registered 20% in 1998, compared with 4.9% in 1996. We are then told that by 2000, 40 million Indonesians would be un-employed. No sources are quoted for these figures, which are almost certain-ly wrong; nor is there any discussion of the problems of measuring unemploy-ment in the Indonesian economy, either before or after the crisis. The author also states that per capita GDP in Indonesia declined from $1,110 to $515 between 1997 and 1998. While these dollar fig-ures may be correct, they are highly mis-leading; the decline in GDP in terms of real rupiah was much lower. Unfortu-nately chapter 10 is peppered with these sorts of inaccuracies, and would leave the uninitiated reader with a distorted picture of both the causes and con sequences of the growth slump of 1997–98 in the ASEAN region.
The final section is the most useful; three chapters review the prospects for ASEAN economic cooperation in the light of enlargement, the problems fac-ing the ‘transitional’ economies, the
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domestic economic environment and the problems facing local businesses, and the impact on ASEAN of China’s acces-sion to the WTO. These chapters contain good reviews of the literature and are quite up to date. The chapter on China and the WTO is especially useful, as this is a topic that is now attracting much concern in the ASEAN countries, and indeed in other parts of Asia. But over-all the book is too superficial, and in places too inaccurate, to be recommend-ed as essential reading on the ASEAN economies.
Anne Booth
SOAS, University of London
BRIEFLY NOTED
Sidney Jones (2000), Making Money off Migrants: The Indonesian Exodus to Ma-laysia, Centre for Asia Pacific Social Transformation Studies (CAPSTRANS), University of Wollongong, and Asia 2000, Hong Kong, pp. x + 157.
This small, well researched book deals with the dark side of labour migration from Indonesia to Malaysia, focusing on the mid 1990s when Sidney Jones took a period of leave to research the subject at the Australian National University.
Jones looks at both the sending and the receiving sides, in Indonesia and Malay-sia respectively, noting that the illegal operations and corruption of officials in the former are as exploitative of mi-grants as the behaviour of contractors in the latter, if not more so. In addition to providing a very useful brief history of migration to Malaysia from the early 1980s until after the crisis in 1999, the book deals with recruiting in Indonesia, wages and conditions of work in both Peninsular Malaysia and East Malaysia, and arrests, detention and deportation of migrant workers. Jones gives special attention in one chapter to domestic and female workers, and in another to the notorious case of the trial of NGO activ-ist Irene Fernandez in Malaysia from 1996 through 1999. From the book one gains a good understanding of how seeming crises in Malaysia over the is-sue of migration, such as the one that led to repatriation and hardship for many migrants in 2002, can pass so quickly, as they have often done. On one hand, there are the vested interests that so many recruiters, employers and offi-cials have in the continuation of illegal and sordid processes. On the other, in-dividual migrants have a strong incen-tive to try their luck in Malaysia, given the often misrepresented but seemingly very high wages, compared with those at home.
