LEGAL EMPOWERMENT OF THE POOR:LESSONS LEARNED FROM INDONESIA

YLBHIJULY 2007

July 2007 (English Version)ISBN 978-979-95329-5-4© Indonesian Legal Aid Foundation All rights reserved.

Prologue ERNA WITOELAREpilogue PATRA M ZENEditors PATRA M ZEN & RESTU MAHYUNITranslator MATT ZURTRASSEN, SRI NUR FATHYA & ARIDesign & Layout ADRIAN B. SENTOSAPhotographs WILLIAM REINHARDT & ALBERT SIANIPARProduction YLBHI with supported by UNDP & CLEP

This report is a publication from national consultation of Commission on Legal Empowerment of the Poor inJakarta on 24 – 25 November 2006. The views expressed in this report do not reflect those of organizationsinvolved, but rather those of the participants.

Indonesian Legal Aid FoundationJalan Diponegoro No. 74 Jakarta 10320 INDONESIAWebsite: www.ylbhi.or.id

United Nations Development ProgrammeMenara Thamrin Building, Kav. 3, Jalan M.H. Thamrin Jakarta 10250INDONESIAWebsite: www.undp.or.id

Commmission on Legal Empowerment of the Poor205 East 42nd Street, 18th Floor, New York, New York 10017 USAWebiste: www.undp.org/legalempowerment

Please address correspondence in relation to this report to:info@ylbhi.or.id or patra.m.zen@gmail.com

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AKNOWLEDGMENTS

This book is a result of National Consultation of Legal Empowerment of the Poor which heldsuccessfully in Jakarta on November 24-26, 2006. The event was conducted with the support of

Commission on Legal Empowerment of the Poor (Commission), United Nations DevelopmentProgramme (UNDP) and The Indonesian Legal Aid Foundation (YLBHI)

YLBHI had done series of activities since mid of 2006 prior to the National Consultation. Manyparties had given contributions to this event.

YLBHI had facilitated some preparation activities, such as visit and discussion with Naresh Singh(Commission Executive Director), Ashraf Ghani (Commission Member), Hernando de Soto (Co-ChairCommission), discussion at YLBHI office and UNDP office with civil society, entrepreneurs, andgovernment officials. YLBHI had also conducted Focus Group Discussion in Jakarta on November04, 2006 with various participants such as policy makers, civil society activists, academic scholars,donors, entrepreneurs and journalists.

We would like to thank to Erna Witoelar as commission member and UN Special Ambassador for theMillennium Development Goals in Asia and the Pacific, Adnan Buyung Nasution as Chairman ofYLBHI Board of Trustees; UNDP: Mas Achmad Santosa, Karlina Sutaprawira, Ewa Wojowska, NesyaHughes, Mohammad Doddy Kusadrianto, National Consultation Steering Committee and OrganizingCommittee, especially Matt Zurtrassen, Matt Stephens, Philippa Venning and Dodo Juliman.

We would also like to thank to writers, contributors and National Consultation panelists: Patra M.Zen (YLBHI), Hafid Abbas (Department of Law and Human Rights), Fauzi Bowo (Vice Governor ofJakarta), Mas Achmad Santosa (UNDP), Tandyono Bawor (LBH Semarang Director), GunawanSasmita (National Land Agency), Endriatmo Sutarto (Head of National Land School), Anak AgungGede Putrayasa (Jembrana Province (Bali), local government), Tianggur Sinaga (Department of ManPower and Transmigration), Suliyem (Women Grass Root Networks), Yuni Pristiwati (Association ofWomen Small Business), Yuana Setyowati (Ministry of Cooperation and Small Medium Enterprise),Andang Setyobudi (Bank of Indonesia) dan Andi Rudiyanto Asapa (regent of Sinjai, South Sulawesi).

This book would have not been published without supports from Patra M. Zen as Chairperson of theIndonesian Legal Aid Foundation and editor of this book, Sri Nur Fathya and Ricky Gunawan asprogramme assistants. At last we would like to thank Rita Novella, Labora Siahaan, I Gede Aryanaand Zulkarnaen Bara as management team and Board of Directors of the Indonesian Legal AidFoundation.

Jakarta, February 2007

Restu MahyuniProgramme Manager of National Consultation of Legal Empowerment of the Poor

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LIST OF WRITERS AND CONTRIBUTORS

A. Patra M. Zen, Chairperson of Indonesian Legal Aid Foundation (YLBHI)Daniel Hutagalung, researcher of Social and Economic Research Institute (Inrise)Ery Sandra Amelia, researcher of Onghokham InstituteEsrom Aritonang, researcher of Social Development Institute (SDI)Fajar Nursahid, researcher of Institute for Research, Education and Social and Economic

Enlightment (LP3ES)F. X. Supiarso, consultant on labor rights

Restu Mahyuni, Director International Relation of YLBHI

Ricky Gunawan, legal aid worker of YLBHI

Rheinatus Beresaby, academicians/lecture of Jayabaya University, Jakarta

Sri Nur Fathya, Staff Directorate International Relation of YLBHI

Sugianto, researcer of SDI

Tabrani Abby, Vice Chairperson of YLBHI

Yudi Bachri Octora, researcher of Onghokham Institute

Ferry Siahaan, Staf Directorate Research and Publication of YLBHI

This report also uses materials from National Consultation of Commission Legal Empowermentof the Poor in Jakarta on 24 - 25 November 2006.

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ABBREVIATIONS

ADR : Alternative Dispute Resolution

ASEAN : Association of South East Asian Nation

BHB : Mobil Legal Assistance Programme

BHS : Structural Legal Aid

BPN : National Land Agency

BPS : Central Bureau of Statistics

BRI : Bank Rakyat Indonesia (Bank of Indonesian

People)

BUMN : State-Owned Companies

CLEP : Commission on Legal Empowerment of the

Poor

Depnaker : Departemen Tenaga Kerja

DPR : House of Representatives

DPRD : House of Representatives at Provincial Level

HGB : Building Concession

HGU : Business Concession

HM : Property Right

HP : Utilization Right

ILO : International Labor Organization

Jamsostek : Social Insurance for LaborKPK : Commission against CorruptionKSM : People’s Self-Support Community

KTP : Identity Card

KUB : Joint Enterprise Communities

KUHAP : Law of Criminal Procedure

KUM-LTA : Proper Micro Enterprise Credit Scheme

without Additional Collateral

LBH : Legal Aid Institute

MA : Supreme Court

MDG’s : Millennium Development Goals

MOU : Memorandum of Understanding

MPR : National People Assembly

NGO : Non-Governmental Organization

PBH : Legal Aid Workers

PEKKA : Women Headed Households (Perempuan

Kepala Keluarga)

Perda : Regional Regulation

PERMA : Supreme Court Regulation

Permen : Ministry Regulation

PKBL : Environment and Partnership Program

PKL : Sidewalk Traders

SJSN : National Social Insurence System

SPI : Institutional Education Contribution

TAP : Decree

TNC : Trans-Nasional Corporation

UMKM : Micro, Small and Middle Enterprises (Usaha

Mikro, Kecil dan Menengah)

UUPA : Principal Agrarian Law

YLBHI : Indonesian Legal Aid Foundation

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LIST OF TABLE

CHAPTER IITable 1 Number and Percentage of Poor in Indonesia from 1996 - 2005 19Table 2 Poverty Line, Number and Percentage based on Area, February 2005 - 2006 20Table 3 Types of rights according Principal Agrarian Law 1960 23Table 4 Types of “Primary” Rights to Land and their Nature 24Table 5 Land Ownership Structure in Indonesia 28Table 6 Map of Agrarian Conflict in Different Sectors from 1985 - 2001 28

CHAPTER IIITable 1 Formal and Informal Employee 42Table 2 Number of Workers in Informal Activity Based on Educational Achievement in 2006 42Table 3 Informal Work Force Distribution based on Business Area 42Table 4 Employment Status 46Table 5 Informal Economy Employment based on Type of Business and Employment Status 47

CHAPTER IVTable 1 Account Holder and Saving Value in BRI DIY Province, 1997 - 2002 56Table 2 Number of Small, Medium and Large Scale Enterprises 57Table 3 Amount of Manpower absorbed by Small, Medium and Large Scale Enterprise 57Table 4 Models of NGO Initiatives in Micro/Small Business 69Table 5 Popular Economy Development Programs from Five Large Companies in Indonesia 74

LIST OF SCHEME

CHAPTER IWORKING GROUP 1: ACCESS TO JUSTICE AND RULE OF LAWYLBHI and Paralegal Training for Marginalized People 8

LIST OF TABLE AND SCHEME

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ContentsAKNOWLEDGMENTS i

LIST OF CONTRIBUTORS ii

ABBREVIATIONS iii

LIST OF TABLE AND SCHEME iv

CONTENTS v

PROLOGUE 1

CHAPTER IWORKING GROUP 1: ACCESS TO JUSTICE AND RULE OF LAW 3• ACCESS TO JUSTICE AND RULE OF LAW IN INDONESIA 3• ACCESS TO JUSTICE UNDER THE FORMAL LEGAL SYSTEM 4• SUCCESS STORIES: THE ROLES OF NGO 6• BEST PRACTICE: ROLES OF LOCAL GOVERNMENT 10• RECOVERING PUBLIC TRUST TO LEGAL SUPREMACY 11• RECOMMENDATIONS: AREAS THAT NEED SUPPORT TO INCREASE ACCESS TO

JUSTICE 15

CHAPTER IIWORKING GROUP 2: PROPERTY RIGHTS AND NATURAL RESOURCES 18• POVERTY RATE IN INDONESIA 19• THE PROPERTY RIGHTS SYSTEM IN INDONESIA 20• BEST PRACTICES 32• CONCLUSIONS 34• RECOMMENDATIONS 36

CHAPTER IIIWORKING GROUP 3: LABOR RIGHTS 38• EXPLORING THE CONCEPT OF INFORMAL ECONOMY 38• DESCRIPTION OF INDONESIAN INFORMAL ECONOMY 41• INFORMALIZATION 43• EMPLOYMENT MAPPING IN INFORMAL ECONOMY 46• GOVERNMENT POLICIES IN INFORMAL SECTOR 50• BEST PRACTICES 52• CONCLUSION AND RECOMMENDATIONS 53

CHAPTER IVWORKING GROUP 4: ENTREPRENEURSHIP: MICRO, SMALL ANDMEDIUM BUSINESS SECTORS 56• BARRIERS TO STRENGTHENING MICRO, SMALL, AND MEDIUM SCALE

ENTERPRISES (UMKM) 58• CHARACTERISTICS OF THE POPULAR ECONOMY 62

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• GOVERNMENT’S ROLES 63• EFFORTS TO IMPROVE ACCESS FOR SMALL ENTERPRISES 65• INSTITUTIONAL AND LEGAL REFORM 65• BEST PRACTICES – NON GOVERNMENTAL ORGANIZATIONS FOR

COMMUNITY DEVELOPMENT 67• SOCIAL RESPONSIBILITY AS AN OPPORTUNITY 72• CONCLUSION AND RECOMMENDATIONS 75

CHAPTER VTOOLKIT LEGAL EMPOWERMENT OF THE POOR 77• MODULE 1 ACCESS TO JUSTICE AND RULE OF LAW 77• MODULE 2 PROPERTY AND NATURAL RESOURCE RIGHTS 80• MODULE 3 LABOR RIGHTS 83• MODULE 4 ENTERPENEURSHIP: MICRO, SMALL, AND MEDIUM ENTERPRISES 86

EPILOGUE 90

REFERENCES 94

APPENDIXES 97

1

Legal empowerment of the poor is not new inIndonesia. For decades civil society

organizations have been advocating on legal rightsand improved access for the poor. Legal aid groupshave been giving free legal access to evicted smalltraders and dispossessed slum dwellers, andwomen’s right activists are fighting violenceagainst the mostly female migrant workers.Environment advocates have been defendingforest dwellers’ land rights while campaigning fornatural resources protection, and urban poordefenders are supporting the informal sector’srights to secure tenure.

However, these efforts often fail to meet theexpected results due to various obstacles: havingto fight much stronger economic or politicalinterests, facing lack of higher level commitmentsand short term bureaucrat’s attention only inbetween elections, etc. Also most of these effortsare small and local, with limited capacities forreplications and up scaling; while Indonesia is sucha huge country. With decentralization of powerand resources to more than 440 local authoritiesin cities and districts since the year 2000, they arealso overwhelmed in their outreach effortsthroughout the country.

This is the motivation for making stronger effortsto advocate for mainstreaming legalempowerment agenda in national and localgovernments’ policies, and to develop bettersynergies between governments, civil society andthe private sector on this endeavor. In addition,international support is also needed to stimulatethis legal empowerment mainstreaming effort,hence we in Indonesia welcome the formation of

PROLOGUE

the Commission on Legal Empowerment of thePoor.

The Commission on Legal Empowerment of thePoor (subsequently referred to as “theCommission”) has given us an opportunity tocompile views and facts on actual situation throughthe national consultation and its preparatory worksin Indonesia last year. We welcome theCommission’s aims to provide justice and economicopportunity, not only as a prerogative for a fewpeople, but rather as the right for all. For Indonesia,the establishment of the Commission highlights theassurance that our continuing efforts to empowerthe poor are not occurring as an isolatedphenomenon in Indonesia only, but are part of abroader collective effort throughout the globalcommunity.

Many initiatives have been undertaken by severalparties in order to end global poverty, spearheadedby the holistic efforts of aiming to achieve theMillennium Development Goals (MDGs) by 2015.This commitment of the international communityto reach their vision to attain sustainable social andeconomic development is approached by creatingand improving global collaborations andpartnerships to fulfill basic human rights.

The formation of this Commission is an approachto addressing poverty challenges using a particularentry point, which is legal empowerment. TheCommission’s belief that legal empowerment is akey prerequisite of ending poverty, highlights asimple basic idea: how can legal access andeconomic opportunity be acquired not only by afew people, but also by the poor. In the process of

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creating new paths for the legal empowerment ofthe poor, the Commission realized that the nextfocus is to compare lessons from experiences inthe past. Programs that have accomplishedempowerment are very valuable and should bestudied in order to acquire a concept that fits welland is successful for ending poverty.

At the beginning I doubted the idea of theCommission and was wondering why there wasa need for such a Commission, as challenges tolegal empowerment of the poor lies at the countrylevel. Also, privatization, individual rights thatdestroy communal rights, neo-liberalism, etc. areusually terms that provoke allergy to those whoare battling poverty, especially among CivilSociety Organizations. My doubt of theCommission’s existence was resolved when it didstart to work, and more so during the processesin Indonesia, when it facilitates opportunities forall stakeholders to sit together and face thiscommon challenge together. Also, from myexperience in promoting the MDGs, I really feelthat legal access issues are big obstacles oftenfaced by the poor, and am hopeful that a globaladvocacy on it will catalyze the drive to tacklethe challenges.

The Commission divides legal empowerment ofthe poor efforts into four interrelated clusters: (1)Access to Justice and Rule of Law; (2) PropertyRights; (3) Labor Rights; and (4) Entrepreneurshipof Micro, Small, and Medium Enterprises; whichare also implemented in Indonesia. In order tograsp the accomplished empowerment initiatives,the Commission designed a space for consultationat the national level in Indonesia, where itcollaborated with the Indonesian Legal AidFoundation (YLBHI – Yayasan Lembaga BantuanHukum Indonesia) as the secretariat and UnitedNation Development Programme (UNDP) Jakartaas the financial and program support. They hadorganized a series of supporting activities inIndonesia during the last months of 2006.

Focus on the four issues mentioned above was alsoaffirmed by establishing four working groups,which each consists of baseline researches andmulti-stakeholder exchanges. These eventsinvolved various stakeholders, including policymakers from local to national level in focus groupdiscussions as well as several multi-stakeholdersconsultations. The working groups have generated

final reports in the form of information and policyguidelines.

The initiative in Indonesia did not seek to totallyreconstruct the present legal and economic systemin order to accommodate the legal empowermentof the poor. Conversely, the organizers wanted tolisten to the opinion from every element of thecommunity, non-governmental organizations, thegovernment in local and central level, as well asthe private sector, on accomplished experiencesrelated to legal empowerment of the poor.

The National Consultation, as mentioned above,has provided real benefit for Indonesia. Manypractitioners that are involved in legalempowerment of the poor efforts and many morevaluable practices have risen to the surface, but todate they have yet to bring any significantcontribution to actual improvements of the welfareof the poor. The national consultation in Indonesiawas organized in order to strengthen the roles thathave been performed by related stakeholders

Furthermore, through the National Consultationprocess, Indonesia had the chance to present itselfto the international world. Ideal experiences fromIndonesia will be more discussed in theinternational forum. Successful practitioners oflegal empowerment of the poor will be able toshare their stories to others from different country.Indonesia could even widen its network to supportthe legal empowerment program and continuepartnering with grass-root level organizations,non-governmental organizations, andgovernments.

The success of the National Consultation left a bighomework to do for all of us in Indonesia. Weshould implement the homework optimally, so thatthe discussions from the Consultation are given agreater value. This book, entitled “LegalEmpowerment of the Poor: Lessons Learned fromIndonesia” is a documentation of results from theNational Consultation and the processes inpreparing it. This book will hopefully be oneinnovative pillar of the legal empowermentmovement, particularly in Indonesia, and also as avaluable lessons for other countries in the world.

Erna WitoelarCommissioner, Legal Empowerment

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The Indonesian community has recentlyacknowledged the correlation between legal

empowerment, justice, and poverty alleviation.Since Indonesia’s 1997-1998 economic crisis, localawareness of the importance of justice and legalempowerment is getting stronger and there is agrowing appreciation for the significantrelationship between the legal sector and socialstability. A strong legal sector is especiallyimportant for economic growth and povertyalleviation.

This increase in awareness is in accord with thework of the Commission on Legal Empowermentof the Poor and its goal of alleviating povertythrough legal empowerment of the poor. This isreflected in the Commission’s slogan: “make legalprotection and economic opportunity not theprivilege of the few but the right of all”. TheCommission’s work falls within the overallMillennium Development Goals (MDGs),targeting global poverty reduction by the middleof 2015.

Political marginalization during the New Ordergenerated a gradation in Indonesian legalinstitutions which weakened these institutions anderoded the public’s trust in them. Formal legal

institutions still do not function properly. Accessto justice for the poor remains illusive; poor peoplerarely perceive the benefits of justice under theprevailing judicial system or under informalsystems (such as discussion, mediation, negotiation)which are available through various socialinstitutions.

The question of to what degree poor people couldpotentially have access to justice and the legalsystem is the main issue that this section willaddress.

This section introduces existing problems andhighlights various successful initiatives and bestpractices that have helped increase access to justiceand the legal system for the poor. Hopefully, thispaper will inspire further efforts which will helpincrease justice for the poor.

ACCESS TO JUSTICE AND RULE OF LAW ININDONESIA

In his book “Law of the Constitution (1895)”,Albert Venn Dicey said that a constitutional state

requires three principles: supremacy of law, equalitybefore the law and a constitution based on humanrights.1

CHAPTER IWORKING GROUP 1ACCESS TO JUSTICE AND RULEOF LAW

1 “The Rule of Law is a political principle the classic exposition of which is in Dicey Law of the Constitution (10th Edn,1959) p 187 et seq. Dicey identified three principles which together establish the rule of law: (1) the absolutesupremacy or predominance of regular law as opposed to the influence of arbitrary power; (2) equality before the lawor the equal subjection of all classes to the ordinary law of the land administered by the ordinary courts; and (3) thelaw of the constitution is a consequence of the rights of individuals as defined and enforced by the courts.” ,http://en.wikipedia.org/wiki/Rule_of_Law, accessed on 3 October 2006.

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Legal supremacy means the law is paramount inaddressing problems that occur in daily life. Anindicator of success in this area is the effectivenessof the law as a rule or regulation.Legal effectiveness is comprised of four factors:the legal substance, the legal establishment, thelaw enforcement apparatus, and the social culture.The major challenge for any state wishing to applya modern model is creating a social culture thatincludes roles for the public and provides for publicparticipation in government administration.Recently, the lack of public participation in thelaw enforcement process and the unavailabilityof media coverage, providing the public withaccess to information on justice mechanisms, havebecome a real barrier for the realization of therule of law.

It is impossible to become a state based on lawwhen the law is ineffective. These foureffectiveness factors must be nurtured togetherand simultaneously. Once one factor fails, thelaw’s effectiveness will become stagnant or mayeven regress.

In the concept of a state based on the rule of law(rechstaat), the state acknowledges and protectsindividual rights including: the right to life, theright to liberty, and the right to property. Thesethree rights are basic human rights and areconsidered to be so because they are inalienableand absolute.2

In terms of implementation of the law, a majorproblem is that the extent to which people haveaccess to justice continues to be heavily influencedby their economic and social status. In everyconflict resolution process, either intra- or extra-judicial, marginal people are always eitherforgotten about or discriminated against.

By expressed in the Constitution, Indonesia is astate based on the rule of law. Unfortunately, inpractice, conditions on the ground show that thelaw is ineffective. The weakness of Indonesian’s

legal system has been widely acknowledged and isreflected in the partiality of legal institutions,corruption in formal legal institutions, poor humanresources within the law enforcement apparatus,and a restrictive government budget for lawenforcement expenditures. Because of this, in mostcases, access to the legal process is beyond reach.The public, the poor and marginalized people inparticular, are frequently unable to access their rightto justice within the formal legal structure.

Access to justice is a human right. Every citizen,without exception, has equal right to justice. One’seconomic condition, physical and biologicalcondition, social status, educational background,ethnicity, or race should not impede equal treatmentbefore the law and equal access to justice.

ACCESS TO JUSTICE UNDER THE FORMALLEGAL SYSTEM

Efforts to address law reform and provide justicehave frequently met stumbling blocks. Justice

has become something unattainable for the poor.The formal system: police, prosecutors, and courtsare perceived as inaccessible by the poor.Consequently, poor people continually have to giveup their right to justice.

Technically, legal access within the formal legalsystem has been specifically assured since theenactment of the Law of Criminal Procedure (LawNo. 8/1981, hereinafter KUHAP). Access to justicecan be defined as the provision of legal assistanceto people who are unable to afford it economicallyeither through lawyers who have the obligation todefend the poor on a pro bono basis, or throughdecisions made by a Court Justice to providelawyer’s assistance pursuant to the prevailingconstitutional laws.

Indonesia’s criminal procedure is based on rules laidout in the KUHAP. These include an obligation

2 Frans Hendra Winarta, Hak Dibela Advokat,, http://www.suarakarya-online.com/news.html?id=154536, 7September 2006, accessed on 3 October 2006.

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by the state to fulfill the legal access principle,particularly for poor and marginalized people.However, there is a limitation to such access underthe KUHAP: Only those who could be sentencedto more than five years are guaranteed access toa legal representative.3 The state does not haveresponsibility to provide an advocate in othercases.

Under Law No. 18/2003 (hereinafter the AdvocateLaw), the state confirms a lawyer’s obligation toassist minorities, the poor, or any othermarginalized people in their search for justice.

3 UU No. 8/1981 regarding the Law of Criminal Procedure, Article 56 paragraph 1.4 UU No. 18/2003 on Advocate, Article 31.

Hence, an advocate appears to have aresponsibility to ensure that equality before thelaw is well maintained as A Guardian ofConstitution. This is guaranteed through accessto legal counsel. Everybody may seek assistanceof legal counsel either from a professional lawyeror a public defender. Thus, there is a sense ofequality where those who have the means can goto a professional lawyer for legal assistance andthe poor can go to a public defender.

Unfortunately, this remains an ideal. In practice,poor people are still deprived of legal access thatthey urgently need.Moreover, legal aid institutions such as YLBHI andthe provisional branches of LBH, legal aidinstitutions established by universities, Legal AidPost (Posbakum), and legal institutions establishedby community organizations have not beenaccommodated within the Advocate Law. Thestate should immediately provide clear regulationson the operation of legal aid institutions that helppoor and marginalized people deal with legalmatters.

Until today, the only provision on legal aidinstitutions has been the Circular of the SupremeCourt No. 34/2003, which has no regulatory status(regeling) and could not be referred to as a legalsource. In the Advocate Law it is specified that anindividual who is not an advocate but performingthe function of an advocate shall be criminallyconvicted. This article was declared unbinding bythe Constitutional Court.4

Basically, this provision of the Advocate Law aimsto protect professional advocates and the public.However, it affects Legal Aid Defenders (PBH) whohave been rendering prodeo (for God) and pro bonopublico (for public interest) legal aid services. Inpractice, poor and marginalized justice seekersdepend on legal aid institutions for help whendealing with legal matters.

In addition to access to legal counsel, poor peopleoften experience injustice because of aninstitutional reliance on formal dispute resolutionprocedures which are plagued by the use of aninaccessible language, discrimination, corruption,impunity of officials, and lengthy processes. Suchfactors affect the public’s trust in the formal justicesystem and their trust in the law enforcementapparatus including advocates.

The provisions under Law No. 18/2003 onadvocates for the poor:

Legal assistance is legal service that anadvocate provides pro bono to an incapableclient (Article 1 No. 9);In performing his duty an advocate shouldnot discriminate against potential clientsbased on gender, political interest, ethnicity,race, and cultural or social background(Article 18 paragraph 1);An advocate has an obligation to providepro bono legal assistance to incapablejustice seekers (Article 22 paragraph 1);Through the legal assistance he/sheprovides, an advocate is performing his/herprofessional duty to provide justice basedon the law in the interests of justice seekers,including empowerment efforts(Clarification of Paragraph 2).

6

SUCCESS STORIES: THE ROLES OF NGO

In addition to institutional and legal reformother problems facing grassroots organizations

include how to strengthen public participation andtransparency in the reform process. Today, thereare a lot of non-governmental organizations(NGOs) that are succeeding in increasingparticipation and awareness in the community,these organizations include:

1. YLBHI and Structural Legal Aid

YLBHI is an organization working in legaladvocacy, human rights and democracy. Sinceits establishment in 1970, YLBHI has aimedto play a significant role the enforcement ofthe law and human rights. YLBHI at thenational level represents 15 provincialbranches (LBH) and 7 LBH posts workingacross the country. Its work includesStructural Legal Aid (Bantuan HukumStuktural or BHS).

To realize the BHS concept, YLBHIimplemented criteria for identifying cases.These criteria included supporting those whohad limited capacity and/or could notunderstand the law. These criteria weregrounded in case experience to identify casesaffecting many people or addressing publicinterest issues. It deemed these structuralcases.

In 1988 YLBHI identified ten types ofstructural cases they would be involved in.They include those that involve violationsagainst:1. the Right to free association;2. the Right to be free from arbitrary and

cruel treatment;3. the Right to truthful information from

public institutions;4. the Right to equality for women;5. the Right to a proper wage;6. the Right to preserve resources;7. the Right to a healthy environment;8. the Right to truthful information

regarding the quality of goods andservices;

9. the Right to shelter;10. the Right to be free from fear.

On Legal Aid

LBH was generated from the awareness thatadvocacy for the poor is an important elementof the justice process. In the course of itsdevelopment, LBH became aware of an urgentneed for a systematic effort to improve theIndonesian legal system. They brought activists,legal aid workers, LBH lawyers/advocatestogether with the public to promote reform anddemocratization, without which the law wouldbe ineffective, and the fulfillment and protectionof human rights would be muddled. Thisunderstanding drove LBH to not onlyconcentrate on defending the poor but alsovictims of structural violence (violence by thestate), which became known as “StructuralLegal Aid” – with the vision of “promoting ademocratic state based on law and justice, andthe fulfillment of human rights for all”

For over 30 years, LBH has been defendingvictims of human rights violations. Itstraditional clients are laborers, farmers, fishingcommunities, urban communities, students andother social groups, particularly thoseconsidered as opposing the ruling government.Megawati Soekarnoputri, the occasional leaderof the Indonesian Democratic Party of Struggle(PDI-P) and the former President of theRepublic of Indonesia, was once an LBH clientwhen she was a target of the New Ordergovernment’s oppression during the rule offormer President Soeharto.

The reform movement of 1998 broughtimportant changes to the state administrationsystem. However, it failed to bring fundamentalchanges in democracy or the legal system. Thestate’s criminal violations of the economic,social, cultural, civil and political rights of itscitizens remain high both in quantity andquality. For the majority of Indonesians justiceremains an ideal that is hard to access.

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The BHS criteria that YLBHI has beenapplying is based on the principle that legalaid should not merely provide assistance toattain legal remedies for the poor, it shouldalso work to make inequitable socialstructures more impartial.

Law from the perspective of structural povertyis not neutral but generated from social andpolitical processes transpiring within thesociety. An unequal society will never generatejustice for all. Therefore, the activities ofYLBHI and its 15 branches and 7 poststhroughout Indonesia also aim to free thosepeople who have been marginalized by theseemingly impartial structure by providinglegal and human rights education. Theobjective is to build their awareness of theirrights as citizens, help them organize in orderto increase their legal bargaining position, andattempt to lobbying and pressure decision-makers to listen to and care about the interestsof the poor.

LBH Surabaya helped salt farmers in villagesin Sumenep Regency reclaim their right tolands they worked during Dutch colonialism.Following Indonesia’s independence, the landwas nationalized and today it is owned by PTGudang Garam. LBH Surabaya filed a

complaint in court and attempted to lobbymembers of the Commission II of the Parliament(DPR RI), the Regional Government of EastJava, the regents of Sampang, Sumenep, andPamekasan, and the Ministry of State-OwnedCompanies (BUMN). Similar advocacy workregarding reclamations were attempted atmost LBH branches and were aimed atchanging economic structures that deprivemarginalized people of their right to managetheir own natural resources.

Legal empowerment for the poor has beeninitiated by YLBHI and 15 LBH branchesthrough direct involvement and live-inprograms where facilitators interact intensivelywith communities. Hence, legal empowermentis achieved not only using subject-objectmechanisms but also through legal aiddefenders who mingle with their constituents.

Legal enlightenment is part of YLBHI mainagenda on legal empowerment. In 2006,YLBHI introduced its mobile legal aid project(BHB) where Legal Aid Defenders (PBH) andtheir BHB deploy into the communities inJakarta, Bogor, Depok, Tangerang, and Bekasi.

2. YLBHI Paralegal Education in MarginalCommunities

YLBHI’s paralegal education in marginalizedcommunities including: laborers, farmers, theurban poor, and the environmental movement,usually begins with an organization processand teaching about case administration. LBHlegal aid defenders usually use a structural caseapproach with an on-site training method totake advantage of the existing communityresources (e.g.: women’s gatherings, villagemeetings).

Case administration is participatory wheredecisions should be made by consensusamongst community members. In this context,PBH LBH only helps facilitate problem solvingand acts as an equal partner to assist thecommunity. Thus, PBH LBH is subject tocorrection. There are situations when PBH

This is reflected in the LBH’s statisticsregarding the complaints that their clients andvictims make to any one of their 15 branchesevery day. LBH Jakarta office, for instance,receives at least 10 complainants per day,resulting in thousands of complaints to beaddressed by PBH and activists.

Because of limited resource, case selection ismade very carefully by referring to parametersincluding: the complainant’s financial situation,the perpetrator of the crime, and the potentialcontribution to democratic and legal reformefforts. During this assessment, LBHcategorizes cases into three main issues: crimesagainst an economic, social, or cultural right;crimes against a civil or political right; andcrimes against the rights of a woman or child.

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should not be involved in a conflict, orinterfere with community decision making.Once a local organization is established, LBHfacilitates the establishment of a PeopleOrganization (OR) for the same case at thelocal level, as reflected in the scheme below:

Further on, when an OR Federation at theprovincial level becomes independent, LBHsteps back and assumes the role of legalcounsel (advocate). In terms of organization,the administration of basic paralegal trainingand education is handed to the Federation. Atthis stage, LBH acts purely as a resource andassumes the role of administrator of advancededucation on public advocacy. This processwas chosen to prevent patronage in specificareas, and allows PBH to reach other areasand educate the community so that they canact independently to protect their rights.

Paralegal Stories

The Story of Waluyo, The Legal “Saman”

We were both touched and proud to watch our peerWaluyo appear in the Oasis Program on Metro TV.In the episode, highlighting “the rob in Semarang,”he appeared as a bird retailer and manager of PSIS(Semarang Soccer Association) supporters club.Although he suffered from a speech defect, it did notstop him from speaking out about the seawaterincursion into the mainland (locally known as ‘rob’)where he lives.

Nobody could have imaged that this man, who didnot graduate from elementary school, would undertakesuch a metamorphosis and become a paralegal for hiscommunity. It was the lay-off policy that affectedhim and his colleague, which compelled him tocollaborate with the FBSI (Independent Labor Union)and LBH Semarang. He was just one among a fewwho had the strong drive to learn. He tried tounderstand the books he was given but it took a gooddeal of time for him to understand what they said.He always had the courage to ask about, and writedown, the difficult and unfamiliar terminology thathe encountered in the seminars or training sessions.

His knowledge grew tremendously not only from laborscases, but also environmental and citizens’ rights cases.Today, if we watch Waluyo present his arguments ina forum, we can see how he has made thistransformation. These days, Waluyo earns his livingas a bird trader, but his awareness and experiencewith bipartite advocacy in labor cases have also madehim an advisor in the area where he lives. “Now Ihave become a saman” he said describing his activitiesin the community. His advice ranges from labor rightsto divorce matters. He often receives packs of sugaror chicken for his advice, just like a saman.

Scheme 1YLBHI and Paralegal Training for

Marginalized People

The Story of Mbak Rini: An Urban Poor Paralegal

Mbak Rini is the only woman leader of the sidewalk traders association (PKL) in Semarang city. She firstinteracted with LBH Semarang when the city government executed an order expelling the sidewalk traders inthe area where she ran her small business in front of Mesjid Baiturahman-Simpang Lima. This unfair practice,which was legalized by Regional Regulation No. 11/2000, compelled her and peers to establish a sidewalktrader association called Paguyuban PKL Depan Mesjid Baiturahman.Through collective advocacy and adept negotiation with the mosque, the area where she worked was excludedfrom the Regulation. Mbak Rini decided that justice must also be pursued when she discovered that paymentof the Institutional Education Contribution (SPI) was not compulsory for all students to be admitted to school,and that students of poor families could be exempted. But in practice the reality is always different. As aparent, Mbak Rini organized other parents and reported the case to the Semarang City Government. Theresult was that the school was sanctioned and the SPI requirement was dropped.

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3. Success Story of LBH Apik and KomnasPerempuan in Pro-Women Policy

LBH Apik, a legal reform organization hasbeen actively initiating pro-women legalreform. Their advocacy has been focused onthe establishment of legal regulations whichcreate gender parity and get rid of laws whichcan be used as a tool to discriminate againstor subordinate women. LBH Apik hassuccessfully increased the participation ofIndonesian women in pressuring thegovernment to enact pro-women or gender-based policies such as the Law on theEradication of Domestic Violence, and the Lawon Citizenry. Meanwhile, structurally LBHApik has been consistently urging the Ministryof Women Empowerment to establish and setup a women’s desk or integrated crisis center.

In terms of culture, LBH Apik has been activelyencouraging victims of domestic violence toattend legal education. This also extends tolegal training programs for law enforcementofficials, paralegals, and advocates whoprovide pro bono legal aid. In addition to LBHApik, Komnas Perempuan has also beencoordinating national, gender-basedlegislation and introducing gender-basedviolence as a political issue, such as the issueof the trafficking of women and children.

4. Best Practice of PEKKA

The PEKKA (Empowerment for Female FamilyHeads) Program was initiated by the NationalCommission Anti Violence against Women(known as Komnas Perempuan) and theNational Secretariat for Female Family HeadsEmpowerment Program of the Center forWomen Resources Development (PEKKA-PPSW). The program was initiated as aresponse to various issues that affect the mostmarginalized communities that have no accessto development programs.

PEKKA membership is made up of womenwho are divorced, widowed, have a husbandwho left the family, whose spouse’s status is

unclear, who head the family because of anunproductive husband (due to sickness ordisability), women who have not or will notget married, an eldest child who serves as themain bread winner for the family because ofhaving to take care of sick parent, or an orphan.Their ages range between 20-60 year old. Mostare illiterate or have never had an education,even in elementary school. They generallyhave 1-6 dependents work as farmhands orwithin the informal sector with average wageof Rp. 7000 per day, and many have traumafrom acts of domestic violence.

PEKKA’s empowerment strategy includesincreasing participation, promoting awarenessto strengthen bargaining power, and improvingwomen’s ability to control their lives. With thesupport of Komnas Perempuan and DerapWerap Sari, PEKKA has also developed anetwork with the police, the religious court, thedistrict court, the Religious Affairs Office(KUA), the Prosecutorial Body, the DistrictDeliberation (Muspika) and the MUI Cianjur.PEKKA has created an active Multi-Stakeholder Forum (MSF) with representativesfrom the aforementioned organizations, tosupport women’s groups through informalvisits. Through these visits MSF members canhear about cases, and women’s groups canbecome involved in activities that also includethe government. In this way PEKKA canincrease women’s access to justice and alsosupport government departments bydisseminating information on their activities.

The PEKKA program not only fulfills practicalgender needs, but also responds to the urgentneed to increase incomes and have access toavailable resources to fulfill a family’s basicneeds and improve their welfare. The PEKKAprogram also attempts to fulfill strategicgender needs, many of which require a longertime to accomplish. The initiative wassufficiently assertive because women havebegun to understand their human rights as theresult of increasing this critical awareness.

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BEST PRACTICE: ROLES OF LOCALGOVERNMENT

The government has made efforts to increaseaccess to justice but there is still a long way

to go. Below are some efforts made by localgovernments presented as best practices:

1. Best Practice: Regional Government ofJembrana

The Jembrana regency of Bali provinceprovides an example of the fulfillment ofeconomic, social, and cultural rights as wellas a model of a government that is willing andcommitted to practicing the principles ofeffective, good government.

In formulating their regional developmentstrategy, the Regional Government ofJembrana analyzed the factors impedingpoverty eradication and identified the weakbargaining position of the poor to be one ofthem. Based on this, the Jembranagovernment designed a program to moreeffectively address poverty.

The factors impeding poverty eradication5:1. Poverty eradication policies that tend to be

limited to marginal activities;2. The sustained application of the policy was

ineffective, or the policies disappear alongwith the completion of project activities;

3. Biased bureaucracy and the weak positionof the poor;

4. Centralized fund utilization;5. The determination of the program’s target

groups is significantly affected bygovernment’s vested interests;

6. Decision about business initiatives to beattempted by the target groups are limitedto familiar sectors regardless of the marketor business prospects;

7. Ineffective advocacy to the constituentcommunity.

One of the Jembrana government’s bestpractices in attempting to increase access tojustice and legal regulations was thesimplification of the bureaucratic process forID cards and one-roof permits. This policy wastranslated into a formal legal regulation asRegent’s Decree SK No. 391/2003 regardingPublic Service.

Furthermore, the government of Jembrana doesnot charge a fee for ID (KTP) and birthcertificate processes. This helps poor peopleaccess the formal legal system since a KTP anda birth certificate are important documents forevery citizen to have in order to get particularpermits or deal with formal institutions e.g. toget education, access to healthcare, and otherpublic services.

5 I Gede Winasa (Bupati Jembrana), “Peran dan Kebijakan Pemerintah Daerah dalam Pemenuhan Hak MasyarakatMiskin” (Regional Government Roles and Policies in the Fulfillment of the rights of the poor), A paper presentedon the National Consultation on Legal Empowerment for the Poor, Jakarta, 24-25 November 2006, page 3.

Jembrana’s three keys to success:

Pro-poor policies: prioritizing issues thatrelate significantly to basic needs such aseducation, health care and local economicdevelopment;

Serious efforts to ban corruption and rungovernment administration to its maximumefficiency: in order to fight corruption, theyconduct public tenders for the procurementof office and project facilities, followed bya price cross-checking using an independentteam. In order to improve efficiency,Jembrana re-organized its offices andtrimmed its staff;

Public participation: Jembrana workstogether with traditional institutions to runrevolving funds, and cooperates with theParents-Teachers Association (POMG)regarding the school renovation program.

In addition to pro-poor administrative service,the Jembrana government has also initiated

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programs to help prevent corrupt practices,collusion and nepotism (KKN) because suchpractices are disadvantageous and weaken thepoor. Another success of the Jembranagovernment has been preventing cost-inflationfor government projects. The regent ofJembrana, I Gde Winarsa himself establishedan independent team of Universitas Udayana.None of its members work within the localgovernment. The team, named Owner’sEstimate (OE), was established on the basisof a Regent decree (SK) with its main taskbeing the preparation of detailed estimationsof government projects by re-calculating theproject cost based on charts, and locallystandardized unit prices. The results of thisestimation are reported to the Regent. Becauseof the need for consistency, mark-upopportunities for government officials andbusiness actors can are reduced.

One challenge facing Jembrana is the fact thatthese successes were all achieved using aRegent’s decree. While this mechanismbenefits from being practical and decentralized,many argue that the sustainability of thepolicies will significantly depend on the nextelected Regent unless it is translated into aregional regulation (Perda), a process whichrequires approval of the provincial parliament.

2. Best Practice: DKI Jakarta

As the state capital, Jakarta is the center ofeconomic, social and cultural activities. Thismakes most people think of it as a promisingplace to improve their welfare. Thisperception makes Jakarta the city with thehighest population density in Indonesia – acondition that generates problems,particularly poverty.

In the effort to reduce poverty the citygovernment of DKI Jakarta has taken certainsteps to realize its vision of making Jakarta,

the Capital of the Republic of Indonesia, ahumane, efficient, and competitive city thatencourages participation, good morale, socialwelfare, and culture for all citizens in a safeand sustainable environment.6

Providing the poor with access to justice is animportant issue that the city government isaddressing. One of the concrete steps that thegovernment is taking is financially supporting legalaid institutions and NGOs that provide free legalassistance to the public. This financial support is aroutine contribution of the regional governmentthat has been allocated in the Regional Budget(APBD). In addition, the regional government ofDKI Jakarta has also allocated funds for therenovation of YLBHI building in Jakarta.

RECOVERING PUBLIC TRUST TO LEGALSUPREMACY

Why do other modern states have trust in thesupremacy of the law while public trust in

the supremacy of the law in Indonesia remains low?

The question above adopts the same concern thatHernando de Soto, writer of the best-seller “theMystery of Capital”, had in mind. De Soto aimedat answering why capitalism was triumphant inthe West but failed in the other rest of the world.This paper has no intention of promoting a Westernsystem of capitalism but rather is using de Soto’sconcept to address the issue of legal supremacy inIndonesia.

When carefully examined, modern states entrusttheir cases to the court. Why does this not happenin Indonesia?

The uniform of the police, and the robes ofprosecutors, judges and advocates are not onlyprofessional symbols. They function as visibleidentities or marks of a process that links all law

6 Fauzi Bowo (Vice Governor of DKI Jakarta), Roles and Policies of the Regional Government of DKI in fulfillingpoor people’s access to Justice, a paper presented in the National Consultation of the Commission on LegalEmpowerment for the Poor, Jakarta, 24-25 November 2006, page 2.

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enforcement sectors to one another. This processenables the achievement of justice both in practice(physical appearance of the law enforcementapparatus) and as a perception (as a professionto achieve justice for all). Therefore, the police,prosecutors, judiciary, and professional advocateinstitutions as well as legal aid institutions, notonly have to implement the law but also be seento implement it by protecting and defending justicefor the poor including through receivingcomplaints, and requests for protection and justice.

These institutions become places for people toexamine and test the assurances of justice that arespecified in the constitution and legal regulations.From this, democratic principles and principlesregarding legal supremacy are conveyed toindividuals to help increase their trust that theirsystem is controlled by legal supremacy.

In developing countries like Indonesia, the police,prosecutors, judges and advocates have not yetachieved the professionalism that their peers inother modern countries have. This contributes tolow public trust. This is inflated for poor peoplewho are particularly vulnerable before the lawenforcement apparatus.

Borrowing from and adjusting Hernando de Soto’sthought, there are at least four mysteries thatexplain this situation and condition.

First, answering the mystery of missinginformation.

The Constitutional Court and the Anti CorruptionCommission (KPK) are two institutions that havebeen working to increase the general public’saccess to justice. The websites of these twoinstitutions have become effective sources ofinformation for the public. However, poor people’saccess to this information needs to be addressedbecause they are unfamiliar with using theinternet.

Publications by non-governmental organizationsand state institutions aim to help peopleunderstand the law and how to use legal

mechanisms to defend their interests. There are alsopublications that help promote public participationin the drafting of legal regulation, such as:

Indonesian Legal Aid Guideline. YourGuidebook to Understanding and ResolvingLegal Problems (2006), Jakarta: YLBHI, PSHK,and AusAID;Anti Corruption Pocket Book “Memahamiuntuk Membasmi” (Understanding toBanishing). Jakarta: KPK;Tak Ada Hak Asasi yang Diberi (There is NoGiven Right) (2005). Jakarta: YLBHI – CIDA;Buku Pintar 60 Menit Memahami (Mengawasi)Penyusunan Peraturan Perundang-undangan(2005). (Smart Book 60 Minutes Understanding(Supervising) the Drafting of Legal Regulation)Jakarta: KKP and Yappika.

In addition, YLBHI BHB programs also aim toprovide direct legal information to the public, andpoor people in particular.

Second, answering the mystery of justice.

The Supreme Court is aware that addressing civildisputes at the district court level consumes time,money and resources. Therefore, Supreme CourtRegulation (PERMA) No. 2/2003 requiresmediation before the examination of a civil subjectmatter in the Court. A case administrationmechanism in the Court which uses mediation asan alternative means of dispute resolution couldencourage the reduction of case files at the SupremeCourt level.

Indonesia has a National Arbitration Agency(BANI) based on Law No 30/1999 and a ConsumerDispute Resolution Body based on Law No 8/1999that serve as permanent institutions to help resolvedisputes extra-judicially.

In addition to these resolution mechanisms,traditional or adat law is also used to address legalproblems. A good example is the resolution of theinter-village war in West Sumatra that satisfied bothparties because the results fulfilled localconceptions of justice.

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To resolve the mystery of justice which closelylinks the many efforts to support access to justicefor the poor, there is a need to develop a disputeresolution mechanism that is both accessible tothe poor and operationally feasible. Everyone hasan equal right to resolve individual problems extrajudicially, to identify the most suitable disputeresolution mechanism based on individualcapacity, and to have the benefit of a fair hearingby an independent judicial institution.7

Legal assistance is a form of public service thatevery individual is entitled to in addition to theireconomic, social and cultural rights.8 In Indonesia,the rights of citizens are specified in the amended1945 Constitution, which provides a clear basisfor the state’s responsibility to administer lawenforcement equally and without discriminationfor all people, as articulated in Article 28.9

The state, should facilitate the benefits providedby Legal Aid Defenders (PBH), known as publicdefenders. But the lack of legal regulation relatedto PBH makes it difficult for public defenders toassist their clients, who are generally poor people.This deprives the poor of equal access to a properdispute resolution system because they are unableto afford other legal counsel. They must rely onpublic defenders alone.

Until recently, public defenders in Indonesia haveoperated outside the system, have had no clearauthority, and have had no financial support fromthe government. If the state is obliged to provideadvocates for those incapable of providing themfor themselves, as stipulated in the KUHAP, thestate should be financially supporting PBH

operations to help maximize their ability toadvocate for the poor.

The lack of government support impedes thedevelopment of Indonesian public defendersprogram and weakens their bargaining position vis-à-vis other groups within the law enforcementapparatus including advocates, prosecutors, policeand judges. The absence of legal regulationregarding PBH makes judges resistant to theirpresence as legal counsel in court, adverselyaffecting the position of poor people seeking justice.

Therefore, to promote legal access for the poor thegovernment should immediately providejurisdiction for PBH. This would allow PBH orother public advocates to advocate moreeffectively as intended under the prevailing legalregulations in Indonesia. This would help completethe Law on Legal Assistance.

A Law on Legal Aid will help poor people accessjustice and reach dispute resolution mechanismbased on their specific condition. This will movethe system closer to equal justice for all, pursuantto the prevailing laws and regulations.

A comparison should also be made between thelegal aid model in Indonesia and legal aid modelsin the Philippines, Bangladesh, Nepal, Ecuador,South Africa, Thailand, Taiwan, and Australia withthe goal of improving the application of free legalaid to the poor and achieving equal access to justicein Indonesia.

In addition to legal aid for the poor, YLBHI hasalso developed Structural Legal Aid (BHS) with

7 ICCPR paragraph 1: “All persons shall be equal before the courts and tribunals. In the determination of anycriminal charge against him, or of his rights and obligations in suits at law, everyone shall be entitled to fair andpublic hearing by a competent, independent and impartial tribunal established by law…”

8 For a comparison, see Article 39A of the India Constitution, which specifies: “It is duty of state to see that thelegal system promotes justice on the basis of equal opportunity for all its citizens. It must therefore arrange toprovide free legal aid to those who cannot access to justice due to economic and other disabilities.“ See also,Criminal Code of Procedure paragraph 304: “If the accused does not have sufficient means to engage a lawyer,the court must provide one for the defense of the accused at the expense of the state.“

9 For a comparison see The Universal Declaration of Human Rights Article 25: “the rights of every one to standardof living adequate for well-being of himself and his family, including food, clothing, housing, medical care andnecessary social service.“

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its 15 branches nationwide. BHS is a differentform of legal aid that concentrates on structuralcases which affect larger social segments. IfYLBHI and LBH branches provide advocacy onthese structural cases the impact would not onlyaffect their clients but also the broader generalpublic.

YLBHI also runs a program called BHB or MobileLegal Aid, in which proactive measures are takenthrough visits to poor, marginalized, and crowdedcommunities. In this program, local people areintroduced briefly to their basic rights. Targetareas were decided based on internet research,direct surveys and discussions with local leaderson the type of legal issues that local people oftenencounter.

By undertaking this program, YLBHI has shownconcern for the poor. It is ensuring that access tojustice is not merely an empty slogan. Throughthis program people learn about their rights andbecome more responsive to government policiesand their ability to impact them. Poor people whomay have been initially receptive of legalregulations and government policies become moreconcerned about these policies, particularly withnon-popular policies.

The plan is for the 15 LBH branches to graduallyconduct this innovative BHB program to allregions nation wide in order to widely disseminatepositive values of support for poor andmarginalized peoples. Knowledge about the basicrights of citizens should not be a monopoly ofurban dwellers in Jakarta. Marginalized and poorpeople in every corner of the archipelago shouldunderstand their rights as well.

Third, answering the mystery of politicalawareness and public participation.

The importance of political awareness is reflectedin the regional government (Pemda) and Regional

Parliament (DPRD) of Yogyakarta’s promotion ofpublic participation and their passage of RegionalRegulation No. 26/2002 on the Re-organization ofSidewalk Traders, which accommodates certainpeople’s right to earning a living.

Another issue of concern for the members of poorand marginalized communities is ID cards (KTP)and birth certificates which certify their rights. Anexample of best practice was the RegionalGovernment of Bogor’s passage in 2006 of a policyproviding free KTP processing for first timeapplicants and renewals for poor families thatapply within 14 days of expiry.10 The Jembranagovernment has a similar policy, and even launcheda promotional program with a Suzuki Smashmotorbike as a monthly prize.

In the case of birth certificates, the city governmentof Solo has provided four thousand birth certificateforms for free to members of the public between1–18 years old, who do not already have birthcertificates. This program has been held incooperation with hospitals, maternity clinics, andthe PKK in each Kelurahan (village administration).

In addition, a number of initiatives have beenpursued to promote public participation in theproduction of legal regulations. These include theestablishment of civil coalitions like thoseestablished for the drafting process of the Law onthe Eradication of Domestic Violence, and the Lawon Citizenry. Komnas Perempuan, LBH Apik, andYLBHI were all involved in these processes as well.Moreover, the Coalition on Participatory Policy(KKP) has been actively involved in the drafting ofLaw No 10/2004, a law that secures publicparticipation in the drafting of legal regulations.

Fourth, learning from the history of developedcountry histories and answering the mystery oflegal reform failure.

We continue to long for an accelerated processproviding justice for all, including the poor.

10 See the provision on the Amendment of Regional Regulation of Bogor City No. 12/2006 regarding Retributionof KTP Printing Cost. http://www.kotabogor.go.id/berita.php?isi=626&page=31. accessed on 1 February 2007.

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However, in order to arrive at that stage, we needstrong, determined and committed leaders!

The following table describes the areas that requiresupport to increase access to justice.

RECOMMENDATIONS: AREAS THAT NEED SUPPORT TO INCREASE ACCESS TO JUSTICE

AREA DESCRIPTION KEY ACTORS

LEGALPROTECTION

Legal protection could be attemptedthrough:

Ratification and implementation ofrelated conventionsConstitutional reformDevelopment of responsivelegislation (from legislation up tothe Operational Regulation level)Traditional law

ParliamentMinistry of Foreign AffairsMinistry of Law and HumanRightsKomnas HAMNational Legal CommissionMinisterial legal bureausLegal bureau/section of theregional government andregional legislation body of theDPRDCourt JusticeTraditional courtPublic leaders (Traditionalleader, religious figures)Civil Organizations

LEGALAWARENESS

Public knowledge of discourses andprocedures to address violated rightsusing both formal and traditionalmeans.

Ministry of Law and HumanRightsMinistry of EducationNational Commission on HumanRightsLegal aid institutionsState Auxiliary Organ as acharacter of transitional state (AntiCorruption Commission andElection Commission)Regional government and localparliament (DPRD)Non-governmental organizations

LEGAL AID ANDCONSULTATION

Legal aid is not the sole responsibilityof private legal aid institutions. It isalso the professional responsibility ofadvocates as an embodiment of the probono publico principle, and theresponsibility of public figures andactivists that are consideredparalegals. Significant support fromthe state is needed to increase theeffectiveness of these actors.

Ministry of Law and HumanRightsProfessional Association ofAdvocatesCourtsProsecutorial OfficePoliceSocial systemRegional Government and DPRDNon-government organizationsUniversitiesLocal communities

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ADJUDICATION The adjudication process includesinvestigations, convictions, anddecision-making all with the intent tobuild a process that helps a communityaddress rights that have been violated.

CourtsProsecutorial OfficeNational Commission on HumanRightsADR mechanism (Court BasedMediation and Administrativetype ADR, and Traditional typeADR)

LAWENFORCEMENT(Criminal Justice

System)

The criminal justice system is the keyto encourage public accountability ofkey state actors, prevent impunity, andprevent the materialization ofinjustice.

PoliceProsecutorial OfficeSocial systemAdministrative law enforcementapparatusTraditional values structuresystem

CIVIL SOCIETYSUPERVISION

Supervision by civil society aims todevelop effective pressure on stateadministrators to make sure they areaccountable.

NGOsMediaDonor institutions (nontraditional)

PARLIAMENTARYSUPERVISION

Parliament’s role is to establishlegislation that is capable ofresponding to the interests of poor andmarginalized people.

DPR/DPDProvincial DPRDCity and regency DPRD

In the above table we can see that in order to promote legal access there is a need for a concrete legalreform program in Indonesia which is described in the following table:

IDEAL CONDITION TODAY’S

Constitutional reform Reform of the legal education system Legislation reform (priority scale,

concord, responsiveness, compliance to human rights principles, sustainable development, good governance, gender)

Institutional re-organization of the Legal Apparatus (police, prosecutorial office, court)

Comprehensive resolution of serious human rights violations and cases of corruption as a commitment to the recovery of public trust

Building legal awareness and a legal culture within the society

Legislation refo Law enforceme Prosecuting

perceived to be

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relieve it of its duties and functions. TheCommission’s weakness adversely affects publictrust in judicial institutions. Prolonged conflictbetween the Supreme Court and the JudicialCommission is only hurting the image of these twoinstitutions.

The establishment of external supervisorymechanisms is a positive thing as long as they canfunction well. However, overlap betweeninstitutions is unavoidable. These institutions arefrequently incapable in functioning, uncertain aboutthe scope of their duties, and easily discouragedwhen dealing with more powerful authority. Theimplication is their achievements do not satisfy thepublic’s expectation for reform.11 We need toinitiate institutional restructuring in order toredefine their authority and respective duties.

With such changes each existing institution couldfunction to its full potential. There are a lot ofinstitutions that already posed a burden on the statebudget. As of 30 May 2005, Indonesia had 40institutions, commissions and bodies withsupervisory functions They are either part of thejudiciary system, or presidential administrativeauthority. Unavoidably, each commission mustwork hard to win public trust!

11 National Legal Commission of The Republic of Indonesia, “Membangun Paradigma Hukum Dari Akar Rumput”(Building Legal Paradigm from the Grass Root), Newsletter Vol. 4 No. 5, January - February 2005, page. 10.

In relation to the issue of legal reform presentedin the above table, and with the intent ofimproving trust and access to justice amongmarginalized and poor people, some reformmeasures have improved the quality of judicialinstitutions in Indonesia. Democratic systems thatprovide justice for the public with regulations andlaws can only remain effective if the rule of lawprinciple is well maintained.

The principle must be esteemed in both theory andpractice. Without due respect to this principle legalaccess for the poor will remain only an ideal.Without laws, there will be no democraticinstitutions, justice or democracy. Therefore, bothdemocracy and the rule of law must be upheldsimultaneously.

One of the initiatives which has attempted toincrease the integrity and quality of legalinstitutions has been improving the supervisionmechanism. When internal supervisionmechanism no longer have a significant impact,external mechanisms should be in place.Established external supervision mechanisms aretherefore necessary to address weaknesses ininternal mechanism.

However, external supervisory mechanism canonly be effective if highly qualified candidates arerecruited and accepted by the public. A closedand exclusive recruitment system is therefore notideal. Furthermore, the government should beconsistent in its support for the institution and itsoperational functions, including financial support.Good examples of external supervisorymechanisms are: the Judicial Commission, whichacts as an external supervisory mechanism forjudicial officers; the Prosecutorial Commission,which supervises the prosecutorial office; and thePolice Commission. Of these three examples, onlyone has been continuously resisted by theinstitution it supervises—the Judicial Commission.

Until recently, the Judicial Commission has beenupset by the Constitutional Court’s efforts to

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As one of the most populous countries in theworld, poverty is a significant social issue for

Indonesia. The national economic crisis in 1997caused the poverty level within Indonesia toincrease significantly. This crisis also triggeredvarious social-political problems whichcomplicated and prolonged these initialconsequences. As a result, in Indonesia today,democracy, poverty and injustice have become thecentral themes within the development discourse.

Although government reform has already takenplace in Indonesia, it has had no significant impacton the poor population, which has been growingconsistently. This is primarily because many inthe population have had insufficient access to theresources they need to live. This implies that inIndonesia, poverty is a structural problem withroots in policies regarding development. Thesepolicies are based on a development paradigm thatprioritizes economic growth rather than evendistribution of resources.

This economic growth paradigm has beenimplemented in Indonesia through policies thathave given precedence to foreign investment orhave increased the provision of loans as a primesource of financing, as opposed to policies whichhave cultivated national investment capability.This has systematically deprived the general publicof access to local resources. The transfer of themanagement of natural resources from society’shands to investors has been recently legalized bythe State and has been included in regulations andlegal instruments under the guise of protectionist

CHAPTER IIWORKING GROUP 2PROPERTY RIGHTS ANDNATURAL RESOURCES

strategies. People’s right to own land, forestryresources, water resources, air or marine territoryis only allowed so long as it is not against theinterest of the State. The acknowledgment of thepublic’s right to own property has been reduced inthe last five years, as the government hasaccelerated the move toward privatization byselling several state-owned companies andlegalizing the sale of administration rights tonatural resources to various national andmultinational corporations.

State regulation with the goal of even distributionof economic advantages and access to naturalresources does not correspond with the currentdevelopment paradigm. The taxes and levies paidby private sector companies for the ability toexploit natural resources have little positive impacton economic equality and public welfare, whichare the goals specified in Article 33 of the 1945Constitution. In fact, they increase the poverty ofmost Indonesians.

It is becoming more difficult to improve quality oflife and reduce the poverty level in Indonesiabecause of an underlying economic structure thatis closely connected to the prevailing politicalsystem and legal bureaucracy, both of which arefocused on the interests of the free market. Laws,including those on property rights, generallycontribute to the establishment of legal protectionsthat prioritizes the interests of investors. Lawsregarding property rights for natural resource areissued based on the government’s interests, intereststhat have been manipulated by the demands and

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requests of capital owners, investing countries andthe International Monetary Fund. Laws thatprioritize the interests of private sector and foreigncapital occurs because of the impact of the freemarket and economic liberalization demands.Undeniably, the presence of those laws areinseparable from international donor interventionand interest.

However, the biggest loss to the local populationis not that they are deprived of legal ownershipand legal protection, but that they are beinguprooted from their social connection to the land.In theories regarding economic liberalization andfree market economies, property has an economicvalue in the form of a commodity only. For people,however, property has both an economic andsocial value. For farmers, land contains a socialmeaning as an identity and a personal value thatis perceived by rural communities. For traditionalcommunities the forest is a base that bindstogether their whole social structure andlivelihood; the sea is the same forfishing communities.. Eachcommunity has a binding social-economic value shaped by anindividual and communal bond withproperty. This value-bond sustainstheir life, and becomes a socialsecurity network that secures themfrom the poverty trap.

This paper is written within thecontext of a liberalist legal tendencywhich uproots people from theirsocial-economic connection with theirproperty, causing structural poverty.This paper will review theimplementation of and dilemmasregarding property rights and thelegal framework of property rights inIndonesia today. It will explain theconditions and problems surroundingproperty rights in Indonesia today and in the past.This paper will conclude with a summary of thesefinding and recommendations for future action.

12 National Legal Commission of The Republic of Indonesia, “Membangun Paradigma Hukum Dari Akar Rumput”(Building Legal Paradigm from the Grass Root), Newsletter Vol. 4 No. 5, January - February 2005.

POVERTY RATE IN INDONESIA

The number and percentage of the populationliving in poverty from 1996-2005 fluctuated from

year to year, despite an overall decline from 2000-2005 (Table 1). From 1996-1999, the overall numberof poor people increased by 13.96 million, from 34.01million in 1996 to 47.97 million in 1999, largely dueto the economic crisis. The rate of poverty increasedfrom 17.47% to 23.43% in the same period. From1999 to 2002, the number of poor people decreasedby 9.57 million, from 47.97 million in 1999 to 38.4million in 2002. Relatively, the percentage of povertyalso decreased from 23.43% in 1999 to 18.2% in2002. Between 2002 and 2005, the number of pooralso decreased by 3.3 million, from 38.4 million in2002 to 35.1 million in 2005. The rate of povertyalso decreased from 18.2% in 2002 to 15.97% in 2005.

Table 1. Number and Percentage of Poor inIndonesia from 1996-200512

Number of Poor Population (million)

Percentage of Poor Population

YEAR Urban

Rural

Urban

+ Rural

Urban

Rural

Urban +

Rural

1996 9.42 24.59 34.01 13.39 19.78 17.47 1998 17.60 31.90 49.50 21.92 25.72 24.23 1999 15.64 32.33 47.97 19.41 26.03 23.43 2000 12.30 26.40 38.70 14.60 22.38 19.14 2001 8.60 29.30 37.90 9.76 24.84 18.41 2002 13.30 25.10 38.40 14.46 21.10 18.20 2003 12.20 25.10 37.30 13.57 20.23 17.42 2004 11.40 24.80 36.10 12.13 20.11 16.66 2005 12.40 22.70 35.10 11.37 19.51 15.97

Resource: Processed based on the NationalEconomic-Social Survey (Susenas)

20

Table 2. Poverty Line, Number and PercentageBased on Area,

February 2005 – March 200613

13 Ibid.

Poverty Line (Rp./Capita/Month)

Area/Year Food Non

Food Total

Number of

poor population (million)

Percentage of

poor population

Urban February 2005

103,992 46,807 150,799 12.40 11.37

March 2006

126,527 48,797 175,324 14.29 13.36

Rural February 2005

84,014 33,245 117,259 22.70 19.51

March 2006

103,180 28,076 131,256 24.76 21.90

Urban+Rural February 2005

91,072 38,036 129,108 35.10 15.97

March 2006

114,619 38,228 152,847 39.05 17.75

Resource: Processed based on Susenas Panel dataFebruary 2005 and March 2006

Indonesia’s poverty rate increased to 17.75% (39.05million) in March 2006. That was an increase of3.95 million from February 2005, when there were35.10 million poor recorded at a rate of 15.97%.The poverty rate increase in rural areas was slightlyhigher than that in urban areas. During the periodof February 2005 – March 2006, the number of poorincreased by 2.06 million in rural areas, and 1.89million in urban area (Table 2). The poverty rate inurban and rural areas changed only slightly. InFebruary 2005, most poor people lived in rural areas(64.67%). In March 2006, this percentage decreasedslightly to 63.41%.

The various changes of regime in Indonesia havebeen unable to deal with the foundational causesof poverty. One of these foundational causes isthe deprivation of property rights. Despitechanges in governmental control in Indonesia,

from President Soekarno’s OldOrder, to President Soeharto’smilitarily controlled New Order(1967-1997) to the Reform Era(1998-now) under President B.J.Habibie, Abdurrahman Wahid,Megawati Soekarno Putri, andcurrently President SoesiloBambang Yudhoyono povertyremains a central problemconsistently suppressed by thepolitical elite. The result is thatpoverty reduction continues to beaddressed with the same oldconventional strategies including:subsidization, supplying smallgrants, and a variety of charitymodels.

The real challenge is addressingstructural poverty: where theState’s economic-political systemcontributes to increases in povertylevels by taking people’s propertyrights and handing them over tointernational investors. To protect

investment interests, laws and regulations aregenerated to secure investments and investors.Thus, the anatomy of many poverty-relatedproblems is really between the people and the State,and the latter is to blame. Within this context theissue of poverty plays a central role inunderstanding the logic of the property rightssystem in Indonesia.

THE PROPERTY RIGHTS SYSTEM ININDONESIA

Initially the concept of property was understoodonly in terms of natural resources such as land,

forests, water, minerals and air. The use of the term“property” has developed to include not onlyphysical objects, but also health, education,employment, gender equality, etc. Property rightshave become on form of legitimizing the State over

21

individual rights as well as communal rights toproperty.

The history of property rights in Indonesia is closelytied to agrarian concerns. For most Indonesianpeople land is not only vital to economic growth,but also to political, social, cultural and religiousmatters. From this perspective it is easier tounderstand why people are willing to put their livesat risk over agrarian conflicts. This context makesland disputes a major issue that the State and theprivate sector have to address when dealing withthe Indonesian people.

Historically, in Indonesia, property rights on landare classified into three legal systems:

1. Property rights based on a customary legalsystem. According to Van Vollenhoven theright to land based on kinship, ethnicity andvillage throughout the archipelago includesboth individual and communal (group) rights,which is legally referred to as Hak Ulayat(beschikkingrecht). Individual and communalrights are classified as (1) primary individualutilization rights; (2) village communal rights;and (3) sovereignty rights.

2. Property rights based on Western/Europeanlaws. In Western/Europe legal systems,property rights are the most important materialrights. As an absolute right, property rightshave the widest scope, covering the rights ofthe individual, but they are restricted by legalprovisions. This is exemplified in the AgrarianLaw of 1870. The Agrarian Law set up a legalsystem that was used during Dutch colonialismin Indonesia. The law stipulated that that theState had an ownership interest in all lands(staat domein) that were obtained from theimposition of domein verklaring. During thatperiod, people were classified into three

classes: (1) Europeans; (2) Foreigners from theEast; and (3) Indigenous. Europeans andForeigners from the East were entitled toeigendom (property rights) on land, whileindigenous peoples were only given agrarischeigendom (primary customary usage rights).

3. Property rights stipulated in the PrincipalAgrarian Law (UUPA) 1960. These areproperty rights that integrate property rightsunder the customary system and property rightsunder Western law.14

A Pro-People Legal System on Property: The OldOrder

During Soekarno’s reign, after Indonesia’sindependence in 1945, an anti-imperialism and anti-colonialism ethos controlled the State and nationlife. A primary focus of this new ethos was toprotect Indonesian natural resources and localproperty from capitalist exploitation so thatIndonesian economic development could be fullycultivated and controlled from within. Theestablishment of anti-imperialism politics resistedcapital investment offers from imperialist countriessuch as England and the US. In the context of theCold War, this anti-imperialism political stanceseemed to indicate that Indonesia was favoring theSoviet Union over the US.

With the goal of protecting Indonesian naturalresources for the sole benefit of the Indonesianpeople (as stipulated under Article 33 of the 1945Constitution), a political consensus had beenachieved among the three main political powers:the Nationalist, Communist and Islamic groups.The ideologies of each key group required pro-poorlegislation. This was a result of their awarenessthat the poverty of the majority of Indonesianpeople had its roots in an access to naturalresources. On the other hand, the vast diversity ofcustomary laws required a national law that would

14For further explanation, see Boedi Harsono, Hukum Agraria Indonesia, Sejarah Pembentukan UU Pokok Agraria,Isi dan Pelaksanaannya, First Edition, Jambatan, Jakarta, 2005 (revised edition). See also Iman Soetiknjo, PolitikAgraria Nasional: Hubungan Manusia dengan Tanah yang Berdasarkan Pancasila, Gadjah Mada UniversityPress, Yogyakarta, 1983; and A.P. Parlindungan, ‘Keterpaduan dan Sinkronisasi Hukum Agraria dalam MenunjangPembangunan Indonesia’, in A. P. Parlindungan, Bunga Rampai Hukum Agraria serta Land reform, MandarMaju, Bandung, 1989.

22

serve as a unifying umbrella. This visiongenerated Law No 5/1960 on the PrincipalAgrarian Law (UUPA). Thus the UUPA wascreated with the intent of promoting the well beingof all Indonesians.

Production of pro-poor or neo-populist laws endedthe dualism of agrarian law in Indonesia, whichwas reliant on Western agrarian laws based onthe Civil Code of Procedure and Law on TribalLand that was itself based on native (customary)legal principles.

The aims of the enactment of the UUPA were: (1)to lay the foundation for a national agrarian lawthat would increase welfare, happiness, and justicefor the State and the general public, particularlythe farming community, by helping to achieve aneconomically self-sufficient society; (2) to providea unified and simplified agrarian law; and (3) toprovide legal certainty regarding the right to landfor all people.

The concept of “land” contains two interrelatedelements: natural wealth and social livelihood.Natural wealth includes the earth, water andnatural resources underneath the earth, alsoreferred to as land objects. Social livelihood meanssocial structures on the earth, also referred to asland subject. The earth has a central position inthe concept of land because it accommodates allnatural wealth underneath it and all sociallivelihood on it.15

The goal of the UUPA was to make fundamentalchanges to land ownership in order to provide amore just system and better satisfy the interestsof the people. This objective was supported bythree key concepts in the UUPA:

1. The law that applies to earth, water and airspace is customary law (hukum adat);

2. The State’s authority as the supreme ruler ofthe nation is demonstrated by its Right toControl (HMN) earth, water and air space forthe benefit of the people, as declared in Article33 paragraph 3 of the 1945 Constitution;

3. The execution of a land reform program.

Returning the underpinning of laws concerning landto native Indonesian legal customs has beenspecified in Article 5 of the UUPA:

The agrarian law that applies to earth, waterand air space is customary law, as long as itdoes not conflict with the interest of the Stateand Nation. These interests are based onconceptions of national unity, Indonesiansocialism, and the provisions under this Lawas well as other constitutional regulations,all of which comply with religious law.

The UUPA put several restrictions on the executionof customary law. First, under the State Right toControl (Hak Menguasai Negara, HMN) there isa simplification of pluralism and the diversity ofprimary laws nationwide. There has been noattempt to explore the customary laws that theUUPA asserts as the foundation of the nationalagrarian law. Second, the UUPA declares that theexecution of the local customary law may notcontradict higher laws and regulations. Customarylaw in any given area is no longer independent anddominant. When provisions of higher laws andregulations contradict customary laws, the higherlaws and regulations shall prevail.

According to agrarian expert Boedi Harsono, theauthority of the HMN “is for the public, completelydifferent from the property law between state andland based on domein-verklaring.”16 State controltranspires because the Republic of Indonesia, as apolitical entity that unites the nation, receives amandate in the agrarian sector to execute “nationrights”.17

15 MT. Felix Sitorus, “Kerangka dan Metode Kajian Agraria“, in Jurnal Analisis Sosial, Vol. 9, No. 1, April 2004,p. 113.

16 Op.Cit., Boedi Harsono, Hukum Agraria Indonesia, 1995, p. 211.17 A “nation right” is stipulated under Article 1 of the UUPA 1960. The ‘Elucidation of UUPA 1960’ (General

Explanation II) specifies that the legal relation that results from the “nation right” shall be permanent as long asthe united Indonesian people exist as a nation, and the natural resources, claimed under the right, exist.

23

The result is that the State does not possess allland and natural resources in Indonesia; the Stateonly controls these resources to ensure that theyare utilized for the benefit and welfare of the entirenation. This also means that there is no land ornatural resource that is unowned or unattendedin Indonesia. Based on the Constitution, the owneris clear: the people of Indonesia.

According to the HMN conception,authority over land and other naturalresources is classified into two types.First, there are the parties to whomparticular property rights have beengiven, i.e. proprietary rights, concessionrights, utilization rights, etc. Second,there is the State, which has authorityover land and other natural resourcesthat have not been rendered to thepeople or other legitimate, feasible legalentities. Based on the perspective of thislaw of authorization by the State, theconcept of “State’s land” has arisen.

Rights to land under this system are,according to the UUPA, classified intotwo categories. First, all rights that areobtained directly from the State, arecalled primary rights. Second, all rights thatoriginate from an owner of proprietary rights onthe land, based on mutual agreement, are calledsecondary rights. The two categories of rights toagrarian resources share something in common:both specify that the right’s owner is entitled touse the agrarian resources under his authority for

18 Onghokham Institute, “Property Rights dan Perubahan Pola Penguasaan Tanah di Indonesia dalam TinjauanSejarah” (unpublished paper).

19 Under the UUPA, there is no mention of the Right to Process, which is basically a means of conversion whichexisted before the stipulation of the UUPA. It resulted from a State mandate to provide land to governmentinstitutions, or state-owned corporations. In practice, this stipulation was not only utilized by the related governmentinstitution. The conversion result for lands with the right to control that existed before the stipulation of the UUPAbecame the Right to Use. Thus, the Right to Process was a conversion-based Right to Use. For further explanationon this, see the Regulation of the Agrarian Minister No. 9/1965 re. The Execution of Conversion of AuthorityRight upon State’s Land and the Regulations on Further Policies. The existence of this administrative right underIndonesian agrarian law has been confirmed by the enactment of Law No. 16/1985 regarding apartment blocks.Hence, in this context the Administrative Right is also included as part of “the main” right to land.

Type Forms 1. Primary rights to land (primary titles)

Proprietary rights Building concessions Utilization rights Administrative rights19 Other concessions Rights to clear land and to

collect forest resources 2. Secondary rights to land (secondary titles)

• Lease rights • Rights to profit dividends • Rights to rent • Mortgage rights

3. Rights to water and aerospace

• Water concessions • Fishing and maintenance rights • Aerospace concessions

4. Rights to Land Assurance

• Insurance rights

Source: UU No. 5/1960

his personal interests or for gaining advantage fromothers by means of an agreement under which oneparty renders secondary right to the other. Article16 of the UUPA specifies these types of rights toland: the primary right and the secondary right.

Table 3. Types of rights according to UUPA196018

24

Among the rights specified in the UUPA, onlyproprietary rights are absolute. The other rightsare not absolute; they are rights that are subjectto provisions of entitlement over a given periodof time, and are observed merely uponauthorization. Proprietary rights are the rightsthat refer to the ownership of land and are passedfrom one generation to another (without the needfor authorization). Other than proprietary rights,formally there is a confirmation on allotment whena land right is issued. Restrictions on utilizationof land under proprietary rights are limited tospace arrangements.

Proprietary rights can be given to anyone, manor woman, as long as the individual is anIndonesian national. Proprietary rights can alsobe given to particular legal entities provided thatthey satisfy predetermined conditions.20 Businessconcessions and building concessions can berendered to Indonesian citizens andlegal entities that have an Indonesiandomicile, and are established incompliance with Indonesian law.Utilization rights may be rendered todepartments, non-departmentgovernment institutions, regionalgovernments, religious or socialinstitutions, foreigners who haveIndonesian domicile, and foreign legalentities that have: (i) a representativeoffice in Indonesia, (ii) a foreigncountry representative, and (iii) envoysto international bodies.21

20 E.g., State banks, cooperatives, religious institutions, and social agencies. See GovernmentRegulation No.38/1963 re. the Appointment of legal institutions that possess Right to Property onLand.

21 Regarding the procedure for endowment of HGU, HGB and Utilization Rights, see GovernmentRegulation No. 40/1996 regarding Business Concessions, Building Concessions, and Concessions ofLand Utilization.

22 A.P. Parlindungan, ‘Hak Pengelolaan Tanah Pelabuhan menurut Sistem UUPA’, in Bunga RampaiHukum Agraria serta Land reform, Section III, A. P. Parlindungan, Mandar Maju, Bandung,1994,p. 344. Also see footnote No. 99 upfront.

23 Op.cit.

Administrative rights can only be issued forgovernment bodies and legal entities. Accordingto A.P Parlindungan, “the essence of theAdministrative Right is the transfer of the (limited)authority over land from the central government,that is known as the HMN, to the autonomousregions, government institutions, departments andcentral and regional government corporations”.22

Business concessions are issued for authorizing theutilization of land for activities related tocommercial enterprises in the areas of agriculture,fishery/fish farming, and animal husbandry.Meanwhile, building concessions (HGU),utilization rights, and administration rights aregiven for various purposes including: necessaryhousing construction, military facilities, tourisminfrastructure, public facilities, etc.

NO. TYPE OF RIGHT

NATURE

1. Proprietary Right (HM)

- Absolute - Hereditary/can be inherited - Can be used as collateral - Transferable - Can be subject to an

insurance right 2. Building

Concession (HGB)

- Based on a term (30 years, extendable to the next 20 years)

- Transferable - Can be used as collateral - May be subject to an

insurance right

Table 4. Types of “Primary” Rights to Land andtheir Nature 23

25

3. Business Concession (HGU)

- Based on a term (25 years, extendable to the next 25 years)

- Transferable - M inimum width 5 hectares - Can be used as an object to

loan - Can be subject to an

insurance right 4. Utilization

Right (HP) - Based on a term (25 years,

extendable to the next 25 years)

- Transferable - M ay be used as collateral - Can be subject to an

insurance right under given notes24

Source: provisions on the rights to land under LawNo 5/1960

24 See Article 4 Paragraphs 2 and 3 of Law No. 4/1996.25 For further explanation on the objects of Insurance Rights see Article 4 of Law No. 4/1996 regarding Insurance

Right on Land and Objects related to Land.26 UUPA 1960 strictly specifies that the government is the central government. The Elucidation of UUPA 1960

specifies that: ‘agrarian matter, pursuant to its nature, principally falls under central government responsibility(elucidation of Article 2).

Lands with all the primary rights mentioned above(HM, HGU, HGB, and HP) can be transferred toanother party, used as bank collateral, and inprinciple may be subject to insurance rights.25

The End of Pro-People: The Rise of the NewOrder Regime

Before the ideal conditions that the UUPA intendedwere achieved, particularly national restructuringthrough agrarian reform, there was a coup d’etatby Soeharto in 1965 that put an end to Soekarno’sleadership. The first strategy of the New Ordergovernment was banishing the IndonesianCommunist Party (PKI), and restricting andcontrolling the freedoms of assembly andassociation, which together resulted in the mergingof all political entities into three political partiesand the establishment of farmers and workersassociations that were fully controlled by thegovernment. In contrast to the spirit of his anti-imperialism predecessor, Soeharto opened up

ample opportunities for foreigninvestors to exploit Indonesian naturalresources. The entry of capital was aturning point away from a “pro-poorlaw” toward a “pro-investment andforeign capital law”.

The legal change was made not bynullifying UUPA, but rather bydeveloping an interpretation of theHMN which recognized the ‘State asthe sole owner of land’. Hence,individual ownership became relative,and when the government needed landor wished to hand it over to particularparty, the legal principle that applied

was an individual’s involuntary submission and apayment of compensation by the government, afterwhich the legal process would be perceived ascompleted. The compensation, however, wasusually much smaller than the land’s commercialvalue. Any protest would be met by the argumentthat sacrifice was required for Indonesiandevelopment. If protests continued, the governmentwould charge the individuals involved with being‘anti-development’ or ‘anti-government’, and itwould often result in intimidation or possibleimprisonment.

Under the New Order regime, in some cases thecentral government could transfer HMN to theregional government administrators. However, themain authority to execute the agrarian law basedon HMN concept was the central government.26

As time passed, in practice the HMN becamesimilar to the domein verklaring principle undercolonial agrarian law. Ironically the HMN hadintended to eradicate the domein verklaringprinciple that declared that all lands belonged tothe state (landsdomein), and that no other partycould assert his/her proprietary right (eigendom

26

rights).27 The practice of this principle enforcedthe State’s ownership of land and was thuscontradictory to the original intent of the HMNconcept.28

Pro-Investors Proprietary Right System: NewOrder Era

By manipulating the HMN principle, proprietarysystem under the New Order were fundamentallyaltered. Although the New Order did not nullifyUUPA, through its law as a tool of socialengineering paradigm, the New Order, in effect,produced a new law while it appeared to beexecuting the UUPA. By manipulating the HMNspecified under the UUPA, the New Ordergovernment enacted Law No 5/1967 regardingPrincipal Provisions on Forestry (further amendedinto Law No 41/1999 regarding Forestry), LawNo 11/1967 regarding Principal Provisions onMining, and Law No 1/1974 regarding PrincipalProvisions on Water (further amended into LawUU No. 7/2004 regarding Water Resources).

Furthermore, agrarian policy was arrangedstructurally according to the jurisdiction ofvarious state institutions: forestry policy wascontrolled by the Ministry of Forestry, miningsector policy was controlled by the Ministry ofMining, land policy by the National Land Agency(BPN), etc. These institutions also had theauthority to issue proprietary rights for managingnatural resources to individuals or businessinstitutions. The way these departmentsadministered these powers resulted in conflictsover natural resources and lands throughoutIndonesia.

This strategy cut off access to the UUPA, as a legalumbrella to all proprietary rights, particularly inreference to emerging conflicts. At first glance, itseemed that the conflicts were sectoral. But bothurban and rural agrarian conflicts (forced evictions,taking-over of farmers’ lands, etc.) were rooted inthe same legal issues, namely, removingopportunities to return to using the UUPA as anauthority through a judicial system that fullyadjudicated claims over agrarian resources basedon an understanding of Indonesia as a state of law,instead of authoritarian state. In practice, the NewOrder government was the latter.

The authoritarian nature of the New Ordergovernment was corroborated by a conflictresolution system that prioritized repression. Theuse of violence was justified as a means of securingthe development process. However, the New Ordergovernment faced a new challenge: Socialmovements based on human rights, were becomingan important tool for disclosing people-versus-State conflicts when laws failed to protect thepeople. Advocacy that combined human rights andlegal litigation issues in union- or organization-based social movements was an effective strategythat riddled the New Order government,particularly because of international attention tohuman rights violations in cases involvingauthorization rights of agrarian resources.

Human rights advocacy proved effective inconfronting the New Order government’sstigmatization efforts and mental terror tactics usedagainst the people’s struggle. The New Ordergovernment’ phobia of Communism and Marxism-Leninism was obvious at the beginning of its rule,when it ban the Indonesian Communist Party (PKI).Resistance against or criticisms of development

27 The Domein Verklaring principle is under Article 1 of Agrarisch Besluit28 As stipulated in UUPA 1960, HMN was not meant to preserve the domein-verklaring principle. The practice,

however, was almost like the domein-verklaring principle. When the people have no adequate controls overstate administrators, who have been authorized to control land and other natural resources, the State’s lands willbe utilized not for the people’s welfare, but for the benefit of a selected minority. In many cases, the concept ofthe State’s land and/or forest negated the physical authorization or authority of an individual or group that werehistorically verified as the eligible rights holder rather than other groups that recently held the right of bestowalgiven to them by the government based on its HMN authority. For more on the HMN concept, see, ÒHakMenguasai dari NegaraÓ, KPA Position Paper, KPA, Bandung, 1989.

27

policies or practices were easily associated with“Communism” or the “PKI”. Once such anassociation was attached to someone, subversivetechniques and imprisonment would be imposed.Stigmatization as a member of the PKI scaredeverybody. Every effort to resist forced evictionsor land acquisitions would be labeled by thegovernment as “anti-development” acts andassociated with the PKI.

For a while, such stigmatization was effective inpreventing conflicts from emerging. However,these conflicts became latent hazards that couldsurface at any time. People still resisted the releaseof their proprietary right to the land or othernatural resources since such practice was againstthe law. The results of research done by theAgrarian Reform Consortium (KPA) describemany of the conflicts. According to KPA between1970 and 2000, there were 1,753 agrarian conflictsand disputes over a total of 10,892,203 hectaresof land, and involving 833 private companies, 219state-owned companies, 719 governmentagencies, 59 military personnel, and affecting1,189,482 families. Among these conflicts, theresolution of 508 involved military action.29

The significant increase in agrarian disputesreflected the government’s partiality towardprivate sector interests. It gave the private sectoraccess to millions of hectares of land, forsakingmillions of common people who were soon to beor were already living in poverty. The followingdescribes millions of hectares of lands under theprivate sector’s authority:

1. In 1995, there were around 585 forestconcessions over a total area of 63 millionhectares across the archipelago, equal to one-third of the total amount of land in Indonesia.The Indonesian Ministry of Forestry declaredthat in July 2000 there were 652 forest

concessions that were acknowledged coveringa total of 69 million hectares of land (FWI &GFW, 2001:31).

2. As of 1999 there were 561 mining companiesthat were in control of 5.25 million hectares ofmining concessions. In agriculture andplantations as of 2000 there were 2,178 large-scale plantation companies that managed atotal of 3.52 million hectares of land.30 Minerelated conflicts between TNC and traditionalcommunities were addressed repressively (usinga military approach) in order to prevent thedisruption of the mining processes.

3. Major companies were also given authorityover land for the development of new cities,real estate projects, industrial estates andtourist attractions. As of 1998, the NationalLand Agency (BPN) had issued location permitsfor a total of 74,735 hectares of land for realestate and new city projects in the JABOTABEK(Jakarta, Bogor, Tangerang, Bekasi) area.They had also issued permits for 17,470 hectaresfor the construction of 46 major industrialestates. In 1995, in JABOTABEK area therewere 32 golf courses using a total of 11,200hectares of land.31

4. There was a large scale conversion ofagricultural land into non-agricultural uses.Land conversion increased from 88,500hectares per year during 1981-1999 to 141,286hectare during 1999-2002 (Kompas, 25November 2006).

The above facts support the assertion that duringthe New Order regime, there was a significantimbalance between the amount of land used forcommercial purposes and the amount used foragricultural purposes. Based on the AgricultureCensus (SP) of 1993, more than 11 millionagricultural households or 40% of the totalpopulation of the agriculture community had noland ownership. Some 27% owned less than 0.5

29 Dianto Bachriadi, “Land Disputes in New Order’s Indonesia: The Need for Comprehensive Restitution and RedistributionActions”, in Land Tenure Law and Livelihood in Indonesia. KPA, Bandung, 2001.

30 Dianto Bachriadi and Gunawan Wiradi, “The Land Problem in Indonesia: the Need for Reform in Land Tenure Law andLivelihood in Indonesia“, KPA, 2001.

31 Ibid.

28

hectares of land, 14% owned less than 1 hectareof land, and only 16% owned more than 1 hectareof land. The result was that 40% of farmers hadno land ownership or limited ability to access landwhile, a mere 16% of the agricultural populationowned around 70% of the available land. See thetable below:

Table 5. Land Ownership Structure inIndonesia

Rural Household

(RT)

Proportion of Owned Land (access)

Width (HA) Total Household

(%) Land (%)

Farmers without land

(farmer < 0.1 ha)

11.084.605 43 0

• 0.1 – 0.49 7.645.428 27 13 • 0.5 – 0.99 4.130.221 14 18 • > 1 ha 4.421.764 16 69

Source: Agriculture Census 1993

If the rural and agricultural community’s landownership was dwindling in 1993, in the sameperiod major plantation estates were expanding.Up until 1993, major plantation estates owned3.80 million hectares of land, which were managedby 1206 joint ventures (388 State-ownedcompanies or BUMN, 709 private companies, 48foreign companies, 21 joint ventures, and 40regional government-owned companies).Unfortunately, not all these lands were cultivated.Most of them were abandoned. In the period of1997-1998, plantation estates made up most ofthe agricultural estates, including 252 abandonedestates.32

The move from State- to investor-owned landsresulted in conflicts over lands which affectedmany cultivated lands. According to the dataissued by the Directorate General Plantation

Products, as of August 2003 therewere 573 plantation-based conflicts.Most of them occurred during theNew Order’s reign, and were spreadthrough 20 provinces – with themajority in North Sumatra (298 casesor 52% of the total). Around 544cases or 95% were disputesregarding land. This shows that theconflicts between communities andplantations had their basis in the rightto land rather than basic criminalconduct (the rationale frequently

proclaimed by the government.33 Below is a mapof agrarian conflict:

Table 6. Map of Agrarian Conflict in DifferentSectors from 1985-200134

32 Syaiful Bahari, “Konflik Agraria di Wilayah Perkebunan: Rantai Sejarah yang Tak Berujung“, Jurnal Analisis Sosial,Vol. 9, No. 1, April 2004, pp. 43-44

33 Ibid. p. 38.34 Ibid..

NO. SECTOR Total 1. Public facility 259 2. Plantation 254 3. New city / housing estate 200 4. Industry 90 5. Dam/water work 75 6. Tourism 70 7. Forestry 70 8. Military facilities 37 9. Mining 36 10. Government facility 36 11. Fish breeding 25

29

Women’s Vulnerability to Capital Expansion

During the 30 years of the New Order regime,when violence was used as the main conflictresolution tool, the term “forced eviction” becamea common term to describe government actionsto acquire lands occupied by the poor. Suchactions were evictions aimed at clearing the landfor industrial construction, middle-class housingestates, or modern malls and plazas. In the nameof development, the government expelled thepeople from their land providing only minimumcompensation in an amount decided solely by thegovernment. Each claim or attempt at resistanceby the people was met with either repression,through the deployment of coercive state tools,or with indirect means of intimidation.

The immediate impact of a forced eviction wasthe suffering and misery of women and childrenwho lost their homes or shacks. The loss of a homerepresents a specific tragedy for women, becausein a patriarchal social structure the home is theirterritory. The psychological pressure is manifestedin the actual loss of a place for cooking, washing,bathing, sleeping, etc. These are pressures thatmen find difficult to understand.

Women are also more vulnerable as objects ofintimidation, harassment, and sexual violence,tactics that are often used as the symboliclanguage to psychologically damage resistancemovements by men. On one hand, these conflictscould be understood as a tension between the Stateand the people; on the other hand, these conflictscould also be understood as struggle between menfrom the State and men from the community, usingwomen’s bodies as the tools of conflict. In such asituation, the women suffer first and foremost.

Women’s souls and bodies are the most vulnerableobjects in every capital expansion that collideswith communal interests. In struggles where menin the dominated community come forward;women could, at any time, become targets ofintimidation, abuses, or sexual violence. Theseare manifestation of governmental efforts tofrustrate opposition movements.

In prolonged conflict situations, where stateapparatuses were involved in violence, or in evictionpractices where military personnel or other securityunits were deployed together with heavy-dutyequipment, the state demonstrated its violentcharacter in front of the people. In some cases,women took off their clothes in protest. By allowingparts of their bodies to be seen publicly, thesewomen responded by humiliating the State and itsofficers who bluntly displayed violent tendencies.

In some of these forced eviction cases, womencourageously took off their clothes in an attemptto prevent State forces, with their heavy-dutyequipment, from destroying their property. In aconflict with Toba Pulp company in North Sumatra,local women used this strategy to humiliate thedeployed security units. Such tactics had apsychological effect on State forces, and also hadthe additional benefit of generating a lot of presswhich, in turn, generated public discussion.

Pro-privatization Laws Regarding ProprietaryRights: The Reform Era

The 1997 economic crisis and democratic tidalwave forced former President Soeharto to stepdown. It was the end of the New Order regimeand Soeharto’s 30 years in power. The transitionfrom Soeharto to B.J Habibie marked the beginningof the Reform Era. The next general electionnominated Abdurrahman Wahid (Gus Dur)President and Megawati Soekarnoputri VicePresident. However, the MPR required Gus Durto step down and picked Megawati for hisreplacement. Megawati’s government issued TAPMPR No. IX/MPR/2001 regarding AgrarianReform and Natural Resource Management.

This decree (TAP) was a result of hard work by anumber of NGOs and grassroots organizations thaturged the MPR to issue this decree regarding theexecution of agrarian reform. This marked thepolitical return of the UUPA discourse and spirit.

Based on TAP MPR No. IX/MPR/2001, thePresident of the Republic of Indonesia is mandatedto:

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1. Execute agrarian reform;2. Solve agrarian conflicts and conflicts over

natural resources across the archipelago;3. Take the necessary steps required to revitalized

the ecosystem which was damaged as a resultof excessive exploitation;

4. Review all government regulation andpolicies, and revoke, amend and/or replace allgovernment regulation that contradicts theprinciples of TAP MPR No. IX/MPR/2001; and

5. Take the necessary steps to fund an agrarianreform program.

The Parliament (DPR) is also given a mandate toreview the prevailing laws, revoke, amend and/or replace the laws and operational provisions thatcontradict TAP MPR No. IX/MPR/2001.

Source: Gunawan Wiradi, Reforma Agrariauntuk Pemula, Jakarta: Bina Desa Secretariat,2005, p. 5

UNDERSTANDING AGRARIAN REFORM

“Agrarian reform” refers to a far-reachingand comprehensive rearrangement of theownership structure, authorization, andutilization of agrarian resources (mainly land),in the interests of poor people (farmers, farmworkers, farm hands, etc.).

The “Restructuring” process itself was laterknown as “land reform”. “Far-reaching andcomprehensive” refers to two things. First,that the target is not only agricultural land,but also forestry land, plantations, miningareas, water, marine areas, etc. In short, allagrarian resources. Second, the land reformprogram has to be followed by othersupporting programs such as educationregarding production technologies, creditinitiative programs, marketing, etc. In brief,agrarian reform is land reform plus othersupporting programs. Yet, the core is landreform.

From its enactment in 2001 until now, the Presidentand the Parliament (DPR RI) have still not carriedout the mandates specified in TAP MPR No. IX/MPR/2001. In the presidential progress reportpresented in the MPR Annual Sessions of 2002 and2003, implementation of the decree was notreported at all. Further in TAP MPR No. VI/MPR/2002, regarding Recommendations on the Reporton the Execution of MPR decision of 2002 by thePresident, DPA, DPR, BPK and MA in the AnnualSession of 2002, MPR recommended that thePresident prepare a draft of the constitutionalregulations that provide for the redistribution andutilization of natural resources, including earth,water, aerospace, and the natural resourcescontained underneath. The MPR also asked thePresident to solve existing conflicts over naturalresource utilization and agrarian matters as wellas anticipate future conflicts in order to achievejustice and the legal certainty specified in TAP IX/MPR/2001 (point 4 regarding environmentalrecommendations).

Similar recommendations were also issued in theMPR 2003 Annual Session that aimed to strengthenthe existence of TAP IX through TAP MPR No. I/MPR/2003 regarding the Results of MaterialReview and Legal Status of the MPR/MPRSDecree. Under TAP MPR No. V/MPR/2003regarding Suggestion to State Institutions, thePresident and the DPR, there was another requestto resolve agrarian conflicts and disputes. It alsoincludes a request for the DPR to discuss the Lawon Agrarian Reform and Natural ResourcesManagement which would serve as the principallaw, and simplify the land certification process forpoor people, particularly farmers.

In response to the above mentioned MPR decrees,on 31 May 2003 President MegawatiSoekarnoputri issued Presidential Decree (Keppres)No. 34/ 2003 regarding A National Policy on Land,which ordered the head of the National LandAgency (BPN) to refine the UUPA 1960, preparethe relevant data and information to executeagrarian reform, and hand over of part of centralgovernment administrator’s authority over land tothe local (provincial/district/city) governments.

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In view of the land policy decentralizationspecified in Keppres No. 34/2003, PresidentMegawati issued Government Regulation (PP)No. 16/2004 regarding Land Use. TheGovernment Regulation provided that District/City Landscape Plans be observed in preservationareas and breeding areas. Land uses that do notcomply with the Area Landscaping Plan cannotbe expanded or developed (Article 7 paragraph4). This land use policy enables the transformationof land marked for housing or conservation intotrade/industrial areas under the interests of localelites.

By the end of President Megawati’s rule, thenatural resource and agrarian reform policiesmandated under TAP MPR No. IX/MPR/2003 hadnot even approached their requisite social justicegoals. Many sectoral laws remained despite thefact that they conflicted with the principles of TAPMPR No. IX/MPR/2001. These include Law No.41/1999 regarding Forestry, Law No. 11/1967regarding Mining, and Law No. 24/1992regarding Area Landscaping. Some revisedpolicies even strengthened the domination of free-market influence, such as the legalization of waterprivatization under Law No. 7/2004 regardingWater Resource (replacing Law No. 11/1974 onWater).

There has been no change in natural resource andagrarian policies under President Susilo BambangYudhoyono. Presidential Regulation (Perpres) No.65/2006 prioritizes the proprietary rights on landfor businesses and investors. The regulationstrengthens the domination of capital interestsover proprietary rights through the passage ofpolicies and constitutional regulations by thecentral government.

Pro-poor laws and the UUPA spirit only lastedthrough the beginning of the Reform Era.Reclamation cases, by farmers and other poorcommunities, were impeded and unable to achievelegal resolution. This delay in agrarian reformreflects strong resistance by investment interests.During the New Order government foreign controlor privatization of natural resources was a guidingprinciple, yet there were still considerable anti-privatization efforts. However, during the ReformEra the government itself fully authorized theprivatization of natural resources. Law No. 7/2004regarding Water Resource legalized theprivatization of water resources by a number ofTNCs operating in Indonesia. Likewise,Presidential Regulation No. 59/2006 also gaveinvestors and the business community access tostrategic lands to expand their business.

The Reform Era has been referred to as theprivatization era of Indonesian natural resources.The impact has been that the people have beendeprived of their proprietary rights over and accessto natural resources. Laws have created a strictboundary that hurt the poor through eachprivatization of a natural resource. For example,water privatization has eliminated the Poor’s right

THE LAND RECLAIMING MOVEMENT

Under the New Order government, landacquisition cases were impeded by repression.The Reform Era reintroduced freedom ofassociation and assembly, stimulating manypeople’s courage to reclaim their lands. Initially,the government claimed that these landreclaiming actions were criminal. The media

referred to them the same way in their reports.However, with the help of information advocacy,the term “land reclaiming” has become moreacceptable.

According to Secretariat Bina Desa’s record,from 2000-2003, the total amount of landreclaimed by people in Sumatra, Java andSulawesi, as plantation estates numbered 57,000hectares. The total amount of land reclaimednationwide was estimated as 300,000 hectares(Krishnayanti, 2005:11). The Central JavaAgricultural Organization (ORTAJA) and LegalAid Institution (LBH) Semarang havedocumented 35 reclamation cases since 1998. Asof 2006, only one of these cases had been settledthrough the state legal system, and another casewas in the process of finalizing utilization rights.The other 33 cases on forestry and plantationshave not yet been resolved (Purbaya, 2006:3).

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to access water, and now part of their income mustbe spent to buy water. There is no legal protectionof their right to access water, nor is there anyguarantee that they will be able to purchase it ata reasonable price. Privatization has made wateravailable in the market, meaning: when there ismoney, there is water!

BEST PRACTICES

It is still too early to highlight best practices orsuccess stories for legal empowerment

regarding proprietary right for the poor. It is moreproper to note that the State has the obligation todemonstrate that its own laws have been enforcedto protect the rights of the poor. The best practicesbelow are stories of people who struggled for theirrights. The emphasis is not on success but on theefforts taken to give people access to justice:

Not all best practices stories are included below.The stories below were summarized from theCLEP National Consultation in Jakarta:

1. Best Practice “Advocacy Brings forth AgrarianReform”: TAP MPR No. IX/2001 regardingAgrarian Reform and Natural ResourcesManagement was a result of advocacy andlobbying members of the MPR by a coalitionof NGOs and people’s unions (farmers, fishingcommunities, and the urban poor). Thiscollective effort was finally fruitful and thedecree was enacted. Thus the agrarian reformdiscourse was brought back into the nationaldiscourse without fear of subversive sanctions.This decree brought considerable attentionback to the UUPA, as the national umbrella ofagrarian matters in Indonesia.

2. The “Team 13” Story: With LBH Lampung’ssupport, a coalition was established by legalaid activists, lawyer’s associations, campuscommunities, and government staff. This“Team 13” became the mediator in landconflicts between the government and thefarming community.

3. The Story of “Home for the Poor”: TheMinistry of Housing and Transmigration

constructed 6,000 free houses in remote villagesin Papua. Urban Poor provided technicalassistance, financial support, and access tocredit for poor communities in Jakarta,Bandung, Semarang, Solo, Surabaya, Malang,Lombok, Makasar, Kendari, and Ambon.

4. The Story of “Women’s Access andOwnership”: A number of customary chiefs inWest Sumatra traditional communities agreedto recommend pro-women policies,particularly to address discrimination inhereditary matters (tribal and family) andshared wealth in marriage. This was supportedby the implementation of Law No. 7/1984which is the translation of CEDAW’srecommendations regarding laws on marriage.

5. The Story of “Tribal Community PerekatOmbara”: The Tribal Community AlliancePerekat Ombara in Lombok established atraditional court comprised of governmentrepresentatives, customary leaders, andreligious leaders in 32 villages. The courtapplies customary law norms and procedures.The alliance also established a special board tohear inter-village conflicts and supervise theperformance of the customary court. The aimof the project was to ensure the maintenanceof customary laws on ownership.

6. The Story of “Kulawi Tribal Community”:This community lives in an area that wastransformed into the National Park Lore Lindu(TNLL), Central Sulawesi. Their access to landbecame limited, while at the same time a privatecompany was given authority over an area of200,000 hectares outside the TNLL. People’scoffee plantations in the TNLL area could notbe expanded. Discoveries of their customaryknowledge on the right to forest provided somewisdom as their traditional system hadhistorically divided the forest into 5 zones:a. Wana ngkiki: beyond human-touch zone;b. Wana: primary forest that can only be

utilized for hunting – not for agriculture;c. Pangale: an area that had been changed into

plantation in the past but has transformedback into forest due to abandonment fortens of years;

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d. Pahawa pongko; a forest area that hadbeen changed into plantation butabandoned for 25 years;

e. Oma: forest that was formed from theabandoned plantation and may bereopened for a new plantation.

This local wisdom became a basis to negotiatewith the Center of National Parks. Finally theyreceived recognition of their legal rightsthrough the issuance of a decree (SK) by theHead of the TNLL Center No. 651/VI.BTNLL1/2000 dated 18 June 2000. The letterexplicitly: “Acknowledge[s] the customaryterritory of Ngata Toro of + 18,360 hectaresto reside inside the TNLL which will bemanaged based on the category of Toro tribalterritory, due to equality with the zone systemof the National Park in the said area”.35

7. The Story of “60 Years in a Struggle forLand”: The Kembang Tani organization inKebumen Village, Kecamatan Tulis, BatangDistrict of Central Java, finally got their landback following a State legal order rendered inOctober 2002. The land had previously beenacquired by PT. Ambarawamaju. After a seriesof negotiation between Kembang Tani, thelocal government and BPN, the BPN issued adecree, (SK) No. 55/32/33/2002. This decreedistributed the land among the followingparties: the local government of Batang (15hectares), public facility (5.5 hectares), the oldrights holder (5 hectares), and farmers (26.5hectares). The 26.5 hectares of land wasdistributed to 800 members of Kembang Tani,with each getting 300 square meters, on thecondition that the land would not be sold to athird party for the next 10 years. Thecertification cost was subsidized so that each

member only had to pay Rp. 100,000. By theend of October 2002, when the certificates werehanded over to the eligible individuals, the landwas transformed into a parish.36

8. The Story of “The Baiturahman SidewalkTraders (PKL)”: The Baiturahman SidewalkTraders (PKL) are small-time traders that runtheir businesses at Simpang Lima – the centralpoint of Semarang City, Central Java. Effortsto eradicate traffic and the slums in the areamade these small-time traders one of severalundesired communities. The caretaker ofMosque Baiturrahman Semarang objected tothe presence of these petty traders around thefront yard of the mosque because he thought itmade it seems like a slum and blocked themosque’s front view. The mosque caretakercomplained to the Semarang city government.In response, the city government deployedSatpol PP (Civil Security Unit) to enforceRegional Regulation No. 11/2000 and Decree(SK) of Semarang Mayor No. 511.3/16. Thesidewalk traders’ community resisted theirorders. After a series of negotiations thesidewalk traders’ community won a legaldecree witnessed by the City Market Agency.PKL practices have been legally formalizedthrough a decree that legalizes their tradeactivities starting at 4pm. The governmentadministrator of Kelurahan Pekunden has evenlet them start their business at 1pm.37

35 Laksmi A. Savitri and Endriatmo Soetarto, “Pengelolaan Sumber-Sumber Agraria sebagai Cara PenghidupanLahir-Batin Masyarakat Adat (A Case Study on the Kulawi Tribal Community in Lore Lindu National Park,Central Sulawesi)”, A paper presented during the National Consultation of the Commission on Legal Empowermentfor the Poor, Jakarta, 24-25 November 2006.

36 Tandiono Bawor Purbaya, S.H., “Bukan Keberhasilan!!! Catatan-Catatam Atas Kemenangan RakyatMendapatkan Hak Atas Kepemilikan di Jawa Tengah“, A paper presented on the National Consultation of theCommission on Legal Empowerment for the Poor, Jakarta, 24-25 November 2006.

37 Ibid.

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CONCLUSIONS

1. Legal System of Proprietary Law:Historically, there have been three importantphases of Indonesian proprietary law:

Pro-people Proprietary Legal System: OldOrder Era (1945-1966);Pro-investor Proprietary Legal System:New Order Era (1967-1997);Pro-privatization Proprietary LegalSystem: Reform Era (1998-present).

2. Ideological differentiation on ProprietaryRights

The Pro-people Legal System (Old Order)was strictly aimed at executing the UUPA1960, particularly through agrarian andland reform. The Old Order stronglyrejected foreign capital investment andforeign debts to help development in orderto protect poor people’s proprietary rightsand access to natural resources. Landreform was also an effort to recapitalizeand legalize the public’s control overnatural resources so that agrarianconflicts would be systematically solvedand at the same time a new nationalagrarian structure would be generated.The Pro-investor Legal System (NewOrder) was the opposite of the Old Orderideology. The New Order, ruled bySoeharto, opened Indonesia to foreigncapital investment and made foreign debtsthe prime source of development funding.Development practices bluntly claimedpoor people’s proprietary rights and accessto natural resources. The most crucialmanipulation was interpreting the HMNto support absolute State control andownership over land and naturalresources. Violence was used as theprimary tool to impede those whodemanded their proprietary rights.Although they acknowledged the UUPA,the New Order never planned to executeit and rejected the execution of land and

agrarian reforms. Based on their newinterpretation of the HMN, the New Orderissued sectoral laws38 which contained aspirit that directly contradicted that of theUUPA.The Pro-privatization Legal System(Reform Era) was a clash between theideologies of the two previous regimes. Onone hand, the reform regime accommodatedthe UUPA by issuing TAP MPR No. IXregarding Agrarian Reform (althoughdismissing it in practice). On the otherhand, the regimes in this era continued theNew Order’s practice of accommodatingforeign investors and debts, particularly byallowing the privatization of naturalresources (e.g. the privatization of waterresource through Law No. 7/2004).Privatization that was legalized by theState, in fact, did thrust Indonesia, andespecially its natural resources, into tradeliberalization and the free market system.

3. Foreign Capital Interest: The main cause ofthe change from a pro-people to a pro-privatization principle was the legalization offoreign capital investment through theenactment of various regulations and laws.Concessions given to investors withoutconsultation with the affected community madesuch foreign investments prone to result inconflict.

4. The Main Implication of the Struggle againstAgrarian Reform: In order to open and expandcapital investment, the HMN concept under theUUPA was manipulated. Essentially, the UUPArequired the execution of agrarian reform.However, by issuing sectoral laws,comprehensive agrarian restructuring no longerseemed to be important. Governmentprioritization of the use of foreign investmentfor development either led to resistance orunlimited postponement of agrarian reform asa consequence. If agrarian reform is put into

38 Law. No. 5/1967 regarding Principal Provisions on Forestry (further revised into law No. 41/1999 re. forestry),Law no. 11/1967 regarding Principal Provisions on Mining, Law No. 1/1974 regarding Principal Provisions onWater (further revised during the Reform Era into Law No. 7/2004 regarding Water Resource).

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practice it might harm the private sector interms of the business community’s ability toexploit natural resources. Refusal to instituteagrarian reform is generally based on short-term economic interests alone and neglectslonger-term economic interests and concernsabout social justice.

5. Proprietary Right Authorization Model; LegalEngineering and Violent Intervention: Securinginvestment as the prime source of funding fordevelopment was attempted in two ways. Thegovernment created laws supporting suchfunding and the judicial system made decisionsin favor of investors’ interests rather thepublic’s interests. The process creating theselaws was not transparent. Conflicts ofinterests between the investment communityand the general public were not settled usingwin-win solution deliberation, but ratherviolence and security intervention. This onlytemporarily suppressed conflicts fromsurfacing, conflicts which proved areunavoidable as they escalated andaccumulated under the surface.

6. Capacity of Ownership-Based MassOrganization: The public’s struggle against theacquisition of their authorization rightsrequired them to deal with coercivegovernment apparatuses. Their strugglebecame less effective when organizations,based on proprietary interests (farmers,fishermen, and labors), other than thoseadmitted by the government, were banned.Prohibiting such proprietary-basedorganization was common practice under theNew Order government. Freedom toorganization was re-introduced during theReform Era. However, such organizations stillhave to deal with poor capacity which hasresulted from 30-years of congestion. Theirmain weakness is their leadership traditionwhich lacks of legal knowledge, writtencommunication skills and any permanentmanifestation of female involvement.

7. Poverty and Conflict Escalation: Theacquisition of people’s proprietary rights

mainly occurred according to their socialstratification: farmers, fishermen, traditionalcommunities, the urban poor, and women.These groups all depend on environmentalresources for their livelihood. Thus, when theseresources were taken away, they fell intopoverty, and became the poorest of the poor.The struggle to retain their land and resourcesrepresents their resistance to the poverty trap.Conflict resolution is the permanent way toincrease their dignity and pride by alleviatingtheir poverty. Unfortunately, this perspectivewas not sufficiently practiced by either thegovernment or private sector in these situations.

8. Human Rights Violation: Both the governmentand private sector might be charged withviolating people’s proprietary rights, violatinghuman rights, violating local customary laws,and abusing women. One of the contributingfactors to the fall of the New Order regime wasthe international community’s growingawareness of their human rights violations. Itis undeniable that the government committeda high rate of human right violations in orderto defend the interests of national privatecompanies and TNCs.

9. Conflict Resolution: In addition to notprioritizing win-win deliberations, conflictresolution has not widely been employed associal justice strategy to deal with people’sproprietary rights. The results of negotiationsthat have occurred could be codified by formallegal power. Conflict resolution involves threemain stakeholders (civil society, governmentand private sector) and has already begun tobe widely employed at local level. Amongregional governments, for example, the resultsof such negotiations have, at times, beenformalized and legalized as a state-approvedpolicy. The production of decrees at a local levelis a good example of the progress made in thisregard.

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RECOMMENDATIONS

1. Development of a Pro-Poor Legal System: Thisis an ideology that needs to be promotedthrough reviews of non-populist legal productsthat contradict the UUPA 1960. There is alsoa need for an addendum to the HMN thatnegates the idea that the State is the owner ofagrarian resources. The State’s role is that ofan administrator and facilitator to helpdetermine how the nation’s resources can becontrolled and utilized by the people for thewelfare of the nation.

2. Execution of Agrarian Reform: In order toachieve a pro-people legal system thegovernment has an obligation to execute theagrarian reform stipulated in the TAP No IX/2001 and Presidential Decree No. 34/2003.Pressure to accelerate this process is crucial.There is also a need to mobilize internationalsupport and strategic alliance partners to helpdeal with, lobby, and formulate feasiblecompensation for the affected TNCs. Anoperational strategy for this agrarian reformhas to be designed with a detailed work planto ensure strong implementation. Researchand comparative studies are required toinvestigate land reform and agrarian reformmodels to identify a fair and just model thatwill best fit Indonesia’s diversity, so that bothhorizontal and vertical conflicts can beminimized..

3. Ban Concessions and Privatization: Privateconcessions should not be extended andprivatization of natural resources should bestopped in order to allow wider opportunityfor agrarian reform. Until such reform isexecuted, existing concession should be usableboth by the people and the operating companypursuant to negotiations. The privatization ofwater should be stopped and no newauthorization should be issued. Any ongoingauthorizations should be brought into an open-forum dialogue at both a national andinternational level, in order to identify waysof dealing with the investments made byprivate sector actors, so that agrarian reformcan be accelerated.

4. Review of Sectoral Laws: Sectoral laws suchas those on forestry, mining, waterworks, etc.,need to be immediately reviewed and adjustedto fit within a national strategy for agrarianreform. Old laws could be revoked and newones produced to better accommodate people’sproprietary rights. Pressure needs to be put onthe Parliament to prioritize the production oflaws that will accommodate the recognition ofpeople’s proprietary rights.

5. Developing A National Strategy on ConflictResolution: A national strategy to solvemassive conflicts needs to be created, andadopted locally. It should give due respect toprevailing customary laws, marginalizedcommunities, and female empowerment. Thisresolution system should attempt to achieve awin-win solution through consultation andnegotiation among three stakeholders: civilsociety, government, and private sector. Theresults must be translated into governmentpolicy that will apply until the commencementdate of the agrarian reform.

6. Putting an End to Violent Interventions andSetting Human Rights as a Priority: To achievenational conflict resolution, violentinterventions in conflicts need to stop, and allstakeholders must embrace non-violent conflictresolution mechanisms and respect the humanrights of the other party. The government mustremain impartial in conflicts between public andprivate elements. If the conflict is between thepeople and the State, expert advisors, agreedon by both parties should be used to help reacha resolution or agreement.

7. State Institution Capacity Building: In view ofagrarian reform and conflict resolution, Stateinstitution capacity building is crucial to achievethis goal, especially in terms of confirmingtransfers of authority and responsibility. Thegovernment’s main partner will be civil society;and mass organizations in particular (thepeasant community, the fishing community, theurban poor, as well as other marginal groups).Other supporting partners include experts,academics, social activists, religious figures andother relevant organizations.

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8. Mass Organization Capacity Building: Formass organizations to be able to providestrategic inputs to State institutions that willexecute agrarian reform, the capacity of thesemass organizations need to be developed toimprove their ability to initiate conflictresolution techniques at a local level. Capacitybuilding is vital given that mass organizationsare going to secure safe, speedy, orderly, fairand just reform.

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CHAPTER IIIWORKING GROUP 3LABOR RIGHTS

This paper intends to present an observationon the relationship between the protection of

laborers and the informal economy. Indonesianinformal economy has been growing rapidly. Inthe urban context, we can see street vendorsranging from sidewalk traders (PKL) tonewspaper retailers leading the sale of productsusually targeting middle and lower class society.Also the drivers of most forms of transportation,including metromini, kopaja, mikrolet, citytransportation, port transportation, etc., exceptdrivers of State Corporation bus, can be classifiedas the workers in the informal economy sector.

The discussion will begin with an explanation onthe definition and history of the informal economy.The discussion will concentrate on explaining anddefining what the informal economy is, so that itis not confused with activities related to criminaleconomy. Further, there will be an explanationon how the government perceives and defines theinformal economy or informal sector. Theexplanation will describe the character ofIndonesian informal economy.

The next section will discuss the mapping ofinformal economy workers including trying toaddress issues relating to employmentcategorization in an informal economy. Theinstrument used for the mapping was ILOstatistical definition, which had been prepared andrecommended to the government for use toaccurately estimate growth of both the informalworkers population and the informal economy.

Data presented in this paper are secondarymaterials, results of National Consultation, FGDand other prior discussions. The discussion islimited because there are still a lot of programs byboth government and international institutionswhose successes and weaknesses have not beenacknowledged. This fact indicates the lack ofsocialization by the government and internationalinstitutions concerning their ongoing programs.

EXPLORING THE CONCEPT OFINFORMAL ECONOMY

In daily life, activities in the informal economycan be found everywhere, ranging from the ojek

(motorbike taxi) drivers up to workers in Micro,Small and Medium Businesses or usually mentionedas UMKM. In many countries, such as in Africa,this informal economy can contribute more than40 percent of state income and this conditionapparently happens in some other countries. But,this informal economy is not formally defined, doesnot pay tax, is not regulated and not reached bythe law or the existing regulation system, so that itis difficult to detect the amount of its contributionto the state economy.

The above is how ILO defines the informaleconomy. In the past, ILO used the term of informalsector in referring to this phenomenon. In aresolution on “Statistics of Employment in theInformal Sector” adopted in “FifteenthInternational Conference of Labor Statisticians in

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1993”, informal sector is defined as home industrygroups or independent industry units, owned byhouseholds including informal own-accountenterprises that employ workers and their familymembers irregularly and informal employerenterprises that fulfill one or both of the followingcriteria: the size of enterprise is under certain levelof employment and the enterprise or its workersare not registered.39 Subsequently, there was achange in terminology from the informal sectorto the informal economy. The objective being tochange the focus of attention from specificeconomic sectors to workers and enterprisesirrespective of economic sectors and also includingthose interacting with the formal economy. 40

Besides, the word of sector is frequently used torefer to industrial units.41

For some observers of workers rights and laborsunion, the term informal economy sounds likedefining an employment relationship arising fromparticular activities that can not otherwise beincluded as formal working relationships. In otherwords, the use of informal economy term wouldmean legitimating the existence of economicactivity with such features and not assuming theseactivities as illegal employment.

As unregistered and undetected entities, informaleconomic enterprises do not protect workers’rights and working status or provide socialinsurance. Workers in informal are vulnerable tounjust treatment and find it more difficult to defendthemselves because it is difficult for them toorganize themselves into labor unions. Workers

are not only vulnerable to acts by their employersbut also because employers themselves, workingin informal enterprises, are susceptible to economiccompetition. Therefore, the term used of informaleconomy is not only limited to workers who obtainwages from enterprises but also covers theemployers in the informal economy who have thesame susceptibility as hired workers.ILO is aiming to create decent work conditions ininformal economic enterprises. It is not an easyidea because parties involved in the negotiationshave different opinions or interpretations and someare even opposed to the informal economy. 42

Some economists consider the informal economyas a kind of deviating enterprise because it is notsubject to legal control. They believe therefore thatthe informal economy distorts the formal economy,and should be abolished to create a fair competition.It is argued that the larger the size of the informaleconomy the stronger the indication of a badeconomic management system in a country. 43

Those economists usually also refer to the informaleconomy as shadow economy, illegal economy,crime economy, etc.

Other economists say that informal economymanifests as a strategy to survive where formaleconomic structures fail to absorb employees.Especially in transitional countries in East Europeor Asian countries recovering from the 1997 crisis,the informal sector played a dominant role becauseat that time a stable economic structure had notbeen fully established while the old one was alreadyout of date. 44

39 International Labor Organization, “Report of the Fifteenth International Conference of Labor Statisticians,”ILO, Geneva 1993

40 Resolution Concerning Decent Work and the Informal Economy. The General Conference of the InternationalLabor Organization, meeting in its 90th Session, 2002, page 25

41 Stephen Graham Saunders, “Estimates of the Informal Economy in South Africa: some Macro Economic PolicyImplications”. (Dissertation, Faculty of Economic and Financial Sciences at the University of Johannesburg,2005), page 14

42 “Decent Work and the Informal Economy”, Report VI, International Labor Conference 90th Session 2002.43 Didik J Rahbini, “Ekonomi Informal di Tengah Kegagalan Negara” (“Informal Economy Among State Failure”),

Kompas, 15 April 200644 Sabine Bernabè, “Informal Employment in Countries in Transition: A Conceptual Framework“, CASE Paper 56,

Centre for Analysis of Social Exclusion, LSE, April 2002

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On one hand, the phenomenon of the informaleconomy is continually changing so the conceptualframework of the informal economy should alsobe redefined. In general, the economic pattern indeveloping countries before 1960s was stilldominated by agricultural economy, butcapitalistic modern economy was also starting togrow. There was an optimism that post WorldWar II development incentives would advance theeconomics of the world countries. But theoptimism was not fully materialized because insome developing countries economic activities stillexisted under the old production system and thisimpeded the growth of a modern economy.

Based on the above concern, ILO conductedresearch programs to investigate and comprehendthese impeding factors especially in developingcountries. These ILO activities were called theemployment missions. The first country visited wasKenya in 1972.45 This research discovered thatthese economic activities developed not only tomeet the costs of survival but was also to developprofitable and efficient enterprises. Therefore, theterm used to describe the phenomenon wasinformal economy, relating to small andunregistered enterprises, rather than traditionalsector, which is more feudalistic.

Efforts have been made to integrate the terminformal economy with some other concepts, suchas defining informal economy terminology asmarginal so that it is not related to the dominantcapitalist economic system. The idea hassomething to do with a belief that development ofcapitalistic economy in developing countrieswould finally eliminate those marginal and outskirteconomies. Others argue that such assumptionwill never happen for each developing country hasits own economic pattern and direction based ontheir respective social characteristics.46

Meanwhile, the world economic system isgradually changing. Activities in the informaleconomic sector, which were previously defined byold production methods that managed to surviveand turn profits in a modern capitalist economicsystem, have today been enhanced as a result ofthe distribution of labor and production acrossboarders. The distribution is the impact ofeconomy growth in developed countries such asthe US and Europe. In those countries, productionprocesses are more decentralized to a number ofsub-divisions. Today, production systems consistof a number of production units or supply chainsthat can be located anywhere including abroad. 47

Workers of those units generally lack protectionunder the law. In the US, the growing number ofsweatshops whose workers are immigrants fromcountries located along the US borders is indicativeof this situation. This phenomenon is interestingsince the strategy inflates profits, createsemployment opportunities, and expands themarket. However, the practice also highlights thatnot all available employments is desirable, and notall producers are lucky to have their marketsexpand. Global competition for capital makes itunderstandable that owners create situations whereproduction units have to be transferred to informaleconomic companies in which workers’ rights arenot protected and they are exposed to theworkplace hazards.

Considering this changing situation, ILO attemptedto expand the concept of the informal economy.Observers, experts, labor activists andgovernments made efforts to broaden the image ofthe informal economy compared with the image ofthe 1970s and also to improve the definition of“informal sector” that ILO had been using since1993 in its statistical data. Through this conceptof the informal economy, ILO attempted to

45 Martha Chen, “Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal RegulatoryEnvironment “, (EGDI and UNU-WIDER Conference Unlocking Human Potential: Linking the Informal andFormal Sectors, 17-18 September 2004, Helsinki, Finland), page 5

46 International Labor Organization, “Women and Men In the Informal Economy: Statistical Picture“, InternationalLabor Office, Geneva, 2002

47 Nina Ascoly, “The Global Garment Industry and the Informal Economy: Critical Issues for Labor RightsAdvocates“, IRENE/CCC Discussion Paper, September 2004

41

introduce informality into both relationshipsbetween companies and also the workingrelationship that emerged between thesecompanies and the informal economy.

In the broadened conceptual framework, informaleconomy is seen to consist of informal employment– where employees have insecure employment,receive no allowances and no social insurance.

1. Informal working relationships inside informalenterprises (clear entities that are note legallyregistered) can cover employers, employees,independent operators and unpaid family-based laborers, all of whom are working ininformal enterprises.

2. Informal working relationships outsideinformal enterprises (enterprise with unclearemployers, household work) includes homeservants, daily laborers, laborers withRestricted Working Contract and alsounreported laborers.48

Employees and labors included in the abovecategorization of working relationships arecharacterized as being without protection or clearemployment status. At this point, the questionarises; does this categorization include three-in-one jockeys and street singers? Can they becategorized as informal workers?

ILO underlines that the definition of informalworking relationship applies to all kinds ofemployment that provides remuneration or wages.This covers both self-employment and wage-employment workers are not acknowledged,covered or protected by the prevailing legalstructure. Also, these types of employment arenot eligible for remuneration or compensationapplied in income-producing enterprises.49

It is already well documented that laborersworking without legal protection are exposed tounfair treatment. This also occurs for independent

business owners who have to compete with largercompanies. In many cases, these informalbusinesses are suppliers of certain parts ofproduction, e.g. shoelaces or shoe makers who haveto deal with price competition. These supply-chainrelationships often make suppliers at the lower levelof the chain unable to protect themselves and theiremployees.

These kinds of organizations are differentiatedbased on their characteristics. The informaleconomy consists of informal enterprises as thatinclude medium-sized business enterprises (oneemployer and some employees), family enterprisesand also enterprises with only one owner/operator.The informal economy can also cover informalemployment. Some formal companies employworkers based on informal employment such ascontract laborers, daily laborers, etc. Homeservants can also be included in informalemployment.

DESCRIPTION OF INDONESIANINFORMAL ECONOMY

The most complete picture on informal employeesituation is portrayed in a survey conducted

by BPSN or Badan Pusat Statistik Nasional(Central Bureau of Statistics). Based on BPSN dataof 2006, the Indonesian population stood at 224millions, comprising of 106.28 million in theproductive work forces (95.18 millions areemployed and the remaining 11.1 millions areunemployed). Around 60.77 million work aslaborers, which mean that around 63.85% of thework force works in informal economic enterprises.50

48 op.cit, ILO, p. 1249 Ibid, page 550 Tiangur Sinaga, “Peran dan Kebijakan Pemerintah Dalam Peningkatan Kesejahteraan Pekerja/Buruh sektor

Informal,” A paper presented in the National Consultation of the Commission on Legal Empowerment for thePoor, Jakarta, 24-25 November 2006

42

The above data reflects that the number of peopleworking in the informal economy isincreasing yearly. In contrast, the formaleconomy is in a down turn so that it canbe said that job creation in the formaleconomy is unable to absorb the growthin the labor market. The informaleconomy is more likely to operate inenterprises that do not rely on advancededucational backgrounds and require no specialskills. As reflected in Sakernas data of 2006, 46%of work force engaged in informal activities, wereelementary school graduates, followed byemployees who had not graduated fromelementary school.

Table 2. Number of Workers in InformalActivity Based on Educational Achievement in

2006

Educational background Total Percentage <Elementary School (not finished) 14,337 23,66

Elementary School (graduated) 28,026 46,12 Lower Secondary School 12,031 19,80 Upper Secondary School 5,939 9,78

Diploma/Academy 0,166 0,27 University 0,23 0,37

Total 60,769 100 Source: BPS, in the Sakernas 2006 (February).51

Nevertheless, it has yet to be clarified whether ornot the informal economy referred to herein ismainly comprised of workers who are employedoutside the agriculture sector. Given the workforce structure based on the area of business we

might find that most of the work force is employedin informal economy of trade.

No Sector Number of Work Force (in million)

1. Agriculture 39,22 2. Processing Industry 2,84 3. Service provider 10,09 4. Consultancy 1,93 5. Others 6,68

It has to be noted that, in this paper, the statisticsprovided by BPS include all informal sectorsincluding workers in agriculture sector. This paper,however, is focusing on workers in sectors otherthan the agriculture sector. This will involve workforce mapping that will be discussed in othersections of this paper.

In addition to informal economic activities relatedto the agriculture sector and economicpatterns based on culture and localtradition, recently there has been arapidly developing informal economythat is linked to the modern economy.Although the word informal mightindicate small-scale business, theeconomic contribution of these informalactivities is significant. In 2004, the

Central Bureau of Statistics estimated the numberof Business Entities categorized as non-legal entities(Usaha Mikro, Kecil dan Menengah or Small,Micro and Medium Enterprises) at 17 millionbusiness units, employing a total of 30 millioninformally, with total production valued at Rp. 537billion.52

Year Number of

Formal Employees

Number of Informal

Employees

Productive Work Force

2004 34.5 millions 59.2 millions 93.7 millions 2005 34.5 millions 60.6 millions 94.9 millions 2006 34.4 millions 60.7 millions 95.1 millions

Resource: BPS, 2006

Table 1. Formal and Informal Employees

51 Ibid.52 Central Bureau of Statistics, “Beberapa Indikator Penting Sosial-Ekonomi Indonesia,” Directorate of Statistical

Dissemination, Jakarta, July 2006, p. 16.

Table 3. Informal Work Force DistributionBased on Business Area

43

The provinces that benefit most from theseeconomic activities are East Java and Central Java.A large number of businesses rely on andsubstantial profit is made from these informaleconomic units that draw on workers in theinformal economy. The local government ofManado, for instance, makes an income totalingRp. 175 million per month from the retributioncollected by around 5000 sidewalk traders (PKL)in the city, with an assumption that each traderpays Rp. 5,000 per day to the apparatus. Thiscalculation does not include payments forsanitation, market fees, and other retributionstotaling Rp. 77, 078, - payable per trader.53 Thisprovides an indication of the scale of the aboveeconomic activities although contributions beingpaid are beyond a doubt far larger as these figuresdo not include other unofficial fees traders haveto pay.

This phenomenon was triggered by various factorsthat can be categorized into groups. In the periodof 1996-1998, the developing world, in Asia inparticular, was facing a tremendous monetarycrisis that contributed to a large number ofbusinesses closing down due to extreme differenceof currency rate, stagnant production caused bylow buying power, and congested credit return ina number of major banks. These difficultiesgenerated massive lay-offs as a result corporatebankruptcies or closure of businesses. Since then,the affected workers have initiated businessesranging from food stall, repair station, etc., largelythrough a process of trial and error.Some have tried to survive by being self-employed,or merging their capital with others, for exampleto initiate family businesses. Others have returnedto informal economic businesses. In Semanggiarea, Jakarta, Tenda Semanggi is quite well-known. It is a complex of food stalls that providesvarious delicacies. These stalls are operatedprofessionally as reflected in the choice of interiordesign and competitive price offers.

A string of national disasters also have had theirimpact, shutting down businesses in the formaleconomy and driving workers into Indonesia’sinformal economic sector. Natural disasters thathit Aceh, Nias, North Sumatra, Yogyakarta andother areas in Indonesia force affected communitiesto change their manner of living. However, thisgenerally only creates a temporary informaleconomy because as economic recovery begins, theaffected community are able to resume their pastlivelihoods and informal economic activities,therefore, decreases.

INFORMALIZATION

One area of interest related to the informaleconomy is the informalisation of working

relations that were previously formal. Thisinformalization relates to economic developmentin developed countries such as the US and Europewhich has promoted new work divisions whereproduction becomes global. The production system,by developing supply-chain, no longer focuses oncentralized production activities but spreadsproduction to a number of regions or countriesbased on comparative competency. Hence,economic units become more flexible in dealing withcompetition.54 Meanwhile, production parts areoutsourced to the third parties.

Such transfer of production is often carried out bya number of illegal business units employing, forinstance, immigrant workers. This type ofproduction unit is what we call sweatshop. Thisphenomenon explains employment informalizationprocess. In this context, usually workers do notreceive protection of employment status or healthcare.

The new world’s work practices have an impacton Indonesia. Beginning in 1970s, a number offactories were established in different industrial

53 Fransiska R. Korompis, “Gambaran Pedagang Kaki Lima di Manado“, A Post Graduate Thesis, Universitas SamRatulangi, Manado, 2005.

54 James J. Spillane, Industri Ringan Kaki: Neoliberalisme dan Investasi Global, Neoliberalisme I., Cindelaras PustakaRakyat Cerdas, Yogyakarta, 2003, p. 172.

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estates, prepared by the government. Theinvestors, mostly foreigners, tried to win bidsoffered by major European and Americancompanies such as Adidas, NIKE, and Reebok bytaking advantage of the comparative advantageof low-cost manpower in Indonesia. Some arguedthat those companies shifted their operations dueto strict provisions in the constitution andregulations of both Europe and the US. 55

To top it off, the world’s worsening economicsituation that caused poverty in developedcountries, compelled the global community tobecome more selective in exercising their spendingpower, and focus more on economic issues ratherthan prestige items. The Wal-Mart retail businesswhich has been rebuked for its anti-union policywas able to make major expansion because theconsumers in the country of origin no longer careabout the anti-sweatshop campaign. 56

In those days, factories employed workers in amanner that frequently contravened laws andregulations. This included employment of youngchildren, or discriminated against female workersby e.g., giving less compensation compared to theirmale counterparts. Only after internationalhuman rights organizations were focusing on thisissue did these factories improve themselves andreduced illegal practices. However, they alsotransformed their production units into smallerunits often undertaken by smaller home industries.The workers of such industries usually work basedon contract and receive remuneration based onthe size of the order they complete.

Since the enactment of the Law No. 13/2003 onManpower (further referred to as ManpowerLaw), factory owners no longer face barriers totransfer their production units. Some parts of theLaw encourage informalization of the previousformal employment. Asfinawati, Director of LBHJakarta, made a note on articles under theManpower Law that promote informalization.57

Contract. Contract-based employment was initiallyprovided under the Regulation of the Ministry ofManpower (Permenaker 2/1993). This regulationwas then replicated in the Manpower Law, whichalso means eliminating the opportunity to removecontract-based employment because according toTAP MPR III/MPR/2000 regarding Legal Resourceand Constitutional Hierarchy, Ministerial Decreesdo not represent constitutional regulations andtherefore have no legal authority. There aredifferent provisions on Time-Limited Agreementunder the Manpower Law and that under theDecree of the Minister of Manpower (Permenaker)No. 3/1992. Article 56 paragraph 2 of theManpower Law specifies that “Restricted-termemployment as specified in paragraph 1 is basedon:

1. given period of time; or2. completion of a given assignment.

The article creates regulatory dualism relating tocontractual restrictions. In other words it createsan opportunity for contracts based on time periodsto be negated if quotas for production have notbeen met. In addition to this legal anomaly, despitethe fact that the law provides for de jure time

55 Suziani, Kasus Nike di Indonesia, Meneropong Kondisi Kerja Buruh Perusahaan Sepatu Olahraga, Yakoma-PGI,Jakarta 1999, p. 20.

56 Wal-Mart is a major retailer company that expands at the highest speed in the world. In 1998 its sales hit $100 million, andin 2004 it grew almost three times as much, i.e. $276 million. Wal-Mart is also one of the private company that has thelargest employees. In 2004 it employed 1.5 million people at 3,361 outlets in the US, 1,363 retail shops, and 1,672 SuperCenters. Behind these achievements, Wal-Mart has destroyed employment opportunity and economy in US becausemost of its items are manufactured abroad. See: Bill Quin. How Wal Mart is Destroying America (and the world). AndWhat You Can Do about It, California, United States: Ten Speed Press, 2005.

57Asfinawati, “Gejala Formal ke Informal: Mungkinkah di tahan“, A paper presented in the National Consultation on theCommission of Legal Empowerment for the Poor, Jakarta, 24-25 November 2006.

45

limitations on contracts, these contracts areunrestricted in practice (de facto). Sub-ordinaterelations therefore exist between employees andemployers limiting the available options foremployees.

This contract system makes employment non-permanent, or informal, because there are noprovisions for payment of a number of benefitssuch as social insurance. The most seriousconsequence is that employees can be terminatedat any time and replaced by others withoutreceiving any severance payment. Another keyissue is the unstable nature of this kind ofemployment affects the labor union movements.Contract-based employees tend to be discouragedfrom associating themselves with labor unionsgiven their vulnerable work relation. Also, if thelabor union is company-based, organizingcontract-based employees will be hazardousconsidering the temporary nature of theemployment. Losing contract status would meanlosing union membership.

Outsourcing. The Manpower Law is the first tolegalize outsourcing practices. Article 64 of themanpower Law stipulates that:

”Company may hand over part ofits function to another companythrough … provision of laborservice/workers that is made inwriting.”

Outsourcing creates unclear work relationsbecause workers are employed by one companybut perform their duties on behalf of anothercompany. Under the Manpower Law theemploying company is referred to as ‘workersservice provider’. Such unclear relations affect theobservable entitlements of employees. This blurredwork relation weakens workers’ bargainingposition before the employer. Once problems occur,the employer refuses to take responsibilityconsidering the nature of the employment.Meanwhile, where the outsource provider isrequired to take responsibility in terms of financialmatters, as this is not the producing party it meansit generally has limited financial resources

(remember: workers work not for the outsourceagent/service provider). As management of theservice provider is generally not located in theproduction area they also have a limited role asauthorized parties.

As with the time-based contracts, outsourcingweakens labor union movements. There is atendency these days to organize workers at acompany level. When outsourcing occurs thiscreates indecisiveness. Where both outsourced andnon-outsourced employees are located with asingle given company workers are unable toassociate in a labors union because theirmovements will be automatically disrupted.

Outsourced employees also frequently receivedifferent welfare benefits and facilities. This alsocauses different interest among labors unions in onecompany, which finally leads to conflicts. The mostcrucial concern is the uncertain relation amongoutsourced employees frequently brings in fear toassociate in unions, given the weak supervision onmanpower practices.

Outsourcing also causes classification of work typesinto the core and periphery work. See Article 65paragraph 2 (c) of the Law on Manpower.

“Works that is transferable to the thirdparty as stipulated in paragraph (1)must satisfy the following conditions:are supporting activities of thecompany’s function as a whole”

Or article 66 paragraph 1

“Workers/labors of the service providercompany shall not be employed by theuser to perform main activity offunction that immediately relates withproduction process, except forsupporting service activities that do notimmediately relate to productionprocess.”

46

The above provisions were made worse by theelucidation of the manpower law as follows:

“Supporting service activity or activitythat does not directly relate toproduction process refers to an activitythat has a function other than thecompany’s core business.”

“Such activities are, among others:cleaning service, catering service forworkers, security service, supportingservice in mine and oil industries andworkers’ transportation service.”

Sub-contract. Article 64 of the Manpower Lawspecifies that companies can transfer part of theirwork performance to third parties based oncontractual agreements. People are usuallyunaware that this sub-contracting opens anopportunity to cover contract or outsourcedlabors. Where companies transfer these functionscontractually the contracted party shall onlyperform the contracted work, which is generallynon-permanent, changing the status of workers’to contractors specified time arrangements oroutsourced from the third party.

EMPLOYMENT MAPPING ININFORMAL ECONOMY

The previous section has describedthe expanded concept of informal

economy to cover new phenomenon that haveresulted from the world’s economic development.In such context, informal economy appears to bemore complicated compared to when the term wasfirst introduced back in 1970s. In Indonesiancontext almost all daily activities are inseparablefrom informal business works yet; we cannotinclude all types of not formal work as informal.

There are a number specific limitations thatprevent inclusion in informal economic activity.First, work that is under a formal business unitthat is subject to management, legal protectionand acknowledgement is in the formal economyand therefore outside of informal economic work.

No Sector Number of Manpower (in million)

1. Agriculture 39.22 2. Processing industry 2.84 3. Service provider 10.09 4. Consultancy 1.93 5. Others 6.68

Source: ILO as quoted from John Angelini KenichiHirose

Second, although work may be outside formaleconomic activity, it cannot be categorized as beingin the informal economy if it produces illegal goodsor services. This includes street singers, three-in-one jockeys, railway transport middlemen, etc.Their activities cannot be weighed against thework performed by workers in the formal economybecause these activities are unregulated. Third,domestic activities such as home-care cannot becategorized as informal economic activities. Thereason for not including these activities is that themarket generally pays a compensation forindividual work, whereas in these cases it does not.However, domestic workers like IndonesianMigrant Workers (TKI) deployed for foreignemployment under PJTKI management iscategorized as informal economy because there iscompensation for the work.

We can screen activities that are not categorizedas informal using a mapping tool that ILOproduced as mentioned above.

Table 4. Employment Status

47

Table 5. Informal Economy Employment based on Type ofBusiness and employment Status

Jobs by Status in Employment

Production units by types

Self-employed Employers Contributing

Family Workers

Employee Members of producers’

Cooperative Informal Formal Informal Formal Informal Informal Formal Informal Formal Formal Sector Enterprises

1 2

Informal Sector Enterprises

3 4 5 6 7 8

Households 9

10

The black cells represent types of employmentthat are not compatible with the above definitions.The grey cells refer to types of employment thatare not relevant to this discussion. The clear cellsare representing informal economic sectors underdiscussion.

1. Family relations are a social asset that canbe empowered into both the formal andinformal economy. Workers employing familyrelations generally have an informal status.Although they can work in formal units suchas workers of family-managed restaurants,they generally do not have employmentagreements or legal protection. This type ofemployment can be found in cells 1 and 5.

In some cases such as home industry, youngchildren are the most frequently employedmanpower. Using supporting parents as anexcuse, these children help their parents workat factories. Take for instance a homeindustry in Purwakarta where these youngchildren perform hand work for attachinglogos and labels of famous brands onproduced items. This type of informal

economy is usually located near formalfactories. Humanika Group, for instance,reported that a lot of female workers have nosecurity insurance from their employers. In mostcases this is due to their contract status. Theyare employed under a verbal agreementwithout written documents to verify theiremployment status at the said industry so theirposition becomes informal.58

Informal workers that are employed in the domesticsector are included in the informal economybecause this kind of employment does not result incompensation. Usually, this employment is amanifestation of solidarity or kinship such as in thecase where a niece or nephew lives with her/hisuncle family and expresses gratitude by helping indomestic work.

58 Ayuni and Dana Rudiono, Home Based Workers in Indonesia – A Survey Report, Committee for Asian Women, Bangkok,2002.

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Allegation Seven: Home-based Work

A lot of employees stated that they were requiredto bring work home and were paid based on thenumber of goods they completed. Some workersstated that the company pays them betweenRp.1,- to Rp.3,- per-completed good.Obviously, this amount is far below theminimum wage for overtime and far below therate for a normal working hour. Some employeessaid that there is no record of their home-basedwork so they were unable to count the overtime.Therefore it is remunerated at far below theovertime rate. Other workers complained thatthe wage paid on home-based work is usuallypaid separately from the monthly wage and isnot stated in the official salary receipt.

The managers of PT Dada declared that theydid not ask the workers to take work home andtherefore did not notice any orders given to takework home – if there actually were any. TheStandard of Engagement (SOE) team of Adidasand the Head of Local Ministry of Manpowerof Purwakarta declared that were not aware ofthis practice that involved PT Dada. It wasunclear whether Adidas or Local ManpowerAgency of Purwakarta had initiated anyinvestigation into the case.

Adidas representative said that ordering home-based work tasks is against the company Codeof Conduct. The local Manpower Agencystated that the Indonesian manpower law doesnot provide for home-based work tasks.

Nevertheless, the assigning company should notmake it an excuse for not paying the propernormal wage, overtime rate, and maintainrecords on work hours. If order on these issuesis not maintained, companies will continuouslyavoid compliance with the conditions. Thesepractices are violating the provisions in the WRCCode of Conduct, and other Universality Codesprohibiting arbitrary employment that exploitsworkers.

Source: Investigation report on PT.DadaPurwakarta Workers Rights Consortium, 2002

2. Cells 2 and 6 represent workers with informalwork both in formal and informal businessunits. Workers under set contract who do notobtain the same remuneration or social securityas permanent employees are informal workers.Prior to the implementation of the ManpowerLaw, these workers worked on ad hoc base suchas at the accessories section of garment, textile,footwear or other industries that requiretemporary workers. However, since theinformalization of formal work through themanpower law, jobs that used to be filled byformal employees are now shifting to to acontract basis. The number of non permanentworkers filling jobs that used to be reserved forpermanent work, such as sewing and cutting isconstantly increasing. These workers areemployed based on short-term contract (three-, six-, or 12- months) which is generallyterminated on completion for a month prior tothe employee receiving a new contract.

Construction workers or excavation laborerscan also be categorized as informal workersemployed in the formal sector. The regulationsstipulate that the employers must comply withstandard working procedures includingregistering employees to the social security(Jamsostek) program at the start of contracts.In practice, this does not happen becauseusually the relationship between formalbusiness units and their employees only extendsto the coordinator of the construction workers.

The working condition of those working in theinformal economy or employed by informalwork units may be of greater concern.Indonesia has no available data that reflectsworkers’ characters under this category. Indaily life, however, the category representedby cell 6 can be found in Medium and SmallEnterprises that are emerging in Indonesia (e.g.workers of repair station, stores, shoppingmalls, lower-level supply factories, publictransportation drivers, restaurants and otherinformal employment units).

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Warung Angkring (Itinerant Food Stalls)

…when critically observed, the population ofitinerant food stalls found around Yogyakartais growing. Today, we can find not only onestall in a single road section, there could be upto 3-5 of them. It indicates that the “densitylevel” in this informal business is getting higher.The number of stalls grows along with theincreasing population of DIY, Yogyakarta andSleman in particular.

The population growth is actually reflected inthe increased number of housing estates followedby support facilities such as grocery stores.Increasing motorist population also indicates thegrowing population density of Yogyakarta andSleman. Based on BPS data of 2002, there were705,559 motor vehicles in DIY (11.02 per centincrease compared to that in 2001), comprisingmostly motorbikes (84.63 per cent).

In reality, this number may be even higherbecause there are a lot of vehicles that havenot been registered to the Regional Police ofDIY, but have been used in DIY territoryparticularly by students from outsideYogyakarta. More than half of motor vehiclesin Yogyakarta were registered in Yogyakartaand Sleman cities.

Considering the development of marketopportunity, the population of itinerant foodstalls is growing rapidly. The workingassumption was that most of the itinerant foodstall owners were coming from outsideYogyakarta (Klaten). More recently, it ispossible to find food stall owners who are localresidents. It shows that this business ispromising, or at least generating additionalincome to the operators particularly when theeconomic crisis is not over yet.

Source: “Nilai Ekonomis Modal Sosial PadaSektor Informal Perkotaan” Aloysius GunadiBrata, Atmajaya University Research Institute,(aloy.gb@mail.uajy.ac.id).

Column 10 represents formal workersemployed in domestic sector. Usually this typeof employment comprises domestic servants,baby sitters, personal chauffeurs, gardenersand some security guards. We can find themin middle-class housing estates that employ alot of workers to take care of the large houses.

3. Cells 3 and 4 represent workers who, due totheir employment character, do not haveformal status. In developed countries such asthe OECD (Organization for Economic Co-operation and Development) countries, thistype of informal employment comprises 12 percent of the non-agricultural work force and isa main source to the Gross Domestic Product(GDP). Their employment can also becategorized as self-employment under the non-standard work category in the modern states.

Self-employment is regarded as non-standardemployment because the work does not resultin the payment of a wage so there is no accessto salary slips or any allowance. Self-employers depend solely on themselves in termof received salary as well as maintaining thebusiness unit to survive and grow. Nevertheless,self-employment is not uniform when we lookat the manpower involved. Self-employmentcan be classified into two categories. First isself employment that acts as employer with anumber of employees. Second is selfemployment without employee, relying solelyon oneself.

In case of Indonesia, becak, motorbike taxi(ojek), bajaj, and mikrolet drivers can becategorized as own-account workers giventhat they own their tools of production. Theincome generated in these sectors dependssignificantly on individual efforts as there areno other employees to provide assistance.Workers in this group have to deal asindividuals with city regulations such as trafficorders.

Own-account workers profession is subject topartial government policies as well aseconomic competition with other sectors. Aresearch on becak 10 years ago reflected that

50

becak drivers’ income decreased despiteincreases in average daily income.59

Meanwhile, own-account workers that areemployed in domestic areas, often alsogenerate goods to meet their own needsthrough farming or stock breeding. They arecategorized in cell 9. Consultants areexamples of middle-class own-accountworkers that, despite their informalemployment status, could be categorized asboth formal and informal economic actorsdepending on the user of service.

59 Yosh Azuma, “Socio-economic Changes Among Beca Drivers in Jakarta 1998-1999, Journal Labour and Managementin Development“, Vol 1 Number 6, Australian National University, Australia, 2000.

Daily net income of becak drivers drasticallyincreased but the actual income decreased. Thesurvey conducted during 1988-1989 period, forinstance, reflects that almost half of therespondents gained Rp. 3000,-/day (equal to 6.2kg of rice in those days). The 1998 surveyrevealed that 7.6 % becak driver made a dailyincome of Rp. 15.000,- (equal to 5.6 kg of rice).Before, only 7.6 % becak drivers’ populationfell in to this lowest category, but today itincreased to 16.7%. The income of becakdrivers has continuously decreased in the lastdecade, but it is too early to conclude that becakdrivers’ profession is no longer profitable. Thereis a confusing aspect in the research results –the proportion of drivers whose income was inthe middle level (equivalent to 4.1-6.4 kg of ricein 1988-89 period, or equal to 3.7 kg of rice in1998), increased from 20.2 % to 49.8 %.

In 1998, about half of the respondents made adaily income over Rp.10,000,-. Therespondents’ income remains an issueconsidering the consistently increasing prices ofbasic commodities, and the decreasingpopulation of becak drivers. A lot of respondentsclaimed that having a profession as becak drivergenerates income. Most becak drivers werepersistent that the operation of becak in Jakartaareas should be legalized at least until theeconomic crisis is over. If not, then a safetyprogram such as provision of Social SecurityNetwork (JPS) must be made available. These

Source: Translated from the: Sosio-economicChanges Among Beca Drivers in Jakarta 1998-1999, by Yosh Azuma

becak drivers were concerned with the possibledecrease of income along with the growingpopulation of mikrolet. The expandingcompetition between becak and mikrolet causedfrustration among becak drivers.

Another informal economic category comprisesemployers that informally have a number ofinformal workers. This type of employmentfalls in to cell 6.

GOVERNMENT POLICIES IN INFORMALSECTOR

The informal sector has become an issue undercentral government policy, specifically for the

Ministry of Manpower and Transmigration.Government policy refers to Article 39 paragraph3 of the Manpower Law that requires the bothCentral and Regional Governments accelerateemployment opportunities both formally andinformally. The government supports the ‘decentwork’ campaign initiated by ILO, particularly inthe four priority targets below:

1. Expanded employment opportunity;2. Fundamental rights at workplace3. Workers’ social security;4. Social dialogue with social partners (workers,

businessmen, and NGOs).

The four priority targets shall be translated intothe following policies:

1. Expanded Employment Opportunity. Thegovernment has confirmed that expansion ofemployment opportunities shall be encouragednot only in formal but also informal sectors.The strategy to achieve this is by developing amodel of productive employment expansionwith the provision of sustainable compensationfor the unemployed.

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2. Proper Technology Application. This programis aimed at expanding and developing local,small or medium scale industries and helpingthem to become more productive, through theapplication of appropriate technology. Modelsthat have been currently developed include:

Use of appropriate technology usingpacket system;Group based Use of appropriatetechnology;Use of Appropriate Technology usingcadres system;Use of Appropriate Technology throughadvocacy.

3. Labor-Intensive Program. This program aimsat empowering the unemployed and partially-employed workforce to construct orrehabilitate business economic facilities andinfrastructure in developing rural economies.Currently developed models include:

Employment Module through an UrbanProductive Labor Intensive program, suchas floating net fish breeding;Employment Expansion Module using aRural Labor-Intensive program such asroad construction or rehabilitation ofeconomic facilities and infrastructure.

4. Development of a Volunteer Work Force is aprogram that aims at increasing voluntaryspirit and social concern in support of nationaldevelopment through safety, reform,empowerment and social developmentinitiatives. Currently developed programsinclude:

A module to encourage domestic,professional, and independent voluntary,labor;A module to develop cooperation betweenvolunteer institutions;Development of cooperative networkthrough volunteer development centers;Young work force advancement module.

5. Development of Self-Employment andInformal Sector. This program aims atpreparing the community to becomeautonomous, new entrepreneurs based on

knowledge and skills in small scale businessmanagement. Currently developed modulesinclude:

Self-employment module through use offacilitators from local institutions;Employment expansion model through for-profit initiatives;Employment expansion model throughgrameen bank pattern;Advancement model for informal workforce.

6. Government Policy in Providing Social Securityfor Informal Workforce. The objective of theGovernment Sub-sector on the protection ofinformal workforce is to secure social securityand welfare for the informal work force. In orderto achieve this ideal a 2006-2009 Strategic Planhas been formulated to include the following:

Refinement and drafting of law on socialsecurity for the informal workforce;Pilot Project on inclusion of informalemployment in Jamsostek;Development of networks on theadvancement and administration of socialwelfare for the informal workforce;Establishment and advancement ofworkforce groups in informal sector;Development and implementation of humanresources development in the informalsector;Developing information system onworkers’ social security programs ininformal sector;Development and implementation ofprogram and monitoring -evaluationmethodology for the implementation ofsocial security programs based on the spiritof regional autonomy;Development of network on administrationand advancement workers’ safety ininformal sector.

Informal workers are beyond reach of insuranceregulation and laws that formal workers areregulated by. Therefore, workers in informal sectorare more prone to workplace hazards such asaccident and illness. Most workers in the informalsector belong to marginalized communities that are

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prioritized under protection and social securityprograms.

Government’s commitment to provide socialsecurity to informal workers has been translatedinto Law No. 40/2004 on National Social SecuritySystem (UU SJSN) that specifies each citizen hasa right to receive social welfare. In order toimplement the law, the government is currentlypreparing the operational procedures that detailsmatters related with program including fees,membership, and benefits for workers in andoutside informal sector.

Outside of the above regulations there are,however, some other examples of implementationof social security program for workers in theinformal sector, e.g. the Regulation of the Ministerof Manpower and Transmigration No. Per-24/MEN/VI/2006 regarding the OperationalPrinciples of Social Security Program for Workersof Informal Sector (TK-LHK) that was stipulatedon 1 June 2006.

A workers social security program in the informalsector was to be tested in Semarang on 1 June2006. Three pilot projects have also been initiatedin 2006 in Jambi, Central Java, and WestKalimantan involving 400 workers in the informalsector. Government Regulation (PP) No. 14/1983stipulates that PT. Jamsostek is the implementingbody of social security programs. Jamsostek wastargeting inclusion of 20,000 informal workers inthe program by the end of 2006. To date, it hasachieved 115.44% of the target.60 However,socialization of the program was not smooth. Forexample, Jamsostek Bandung was only able tooffer two of the four available insuranceprograms, i.e. Workplace Safety Insurance andDeath Insurance. Participation comprises 90persons of the targeted 100. In fact, according tothe Head of Special Program Division of PTJAmsostek Bandung branch, the number ofinformal workers in Bandung is approximately

39,202. However, the program has been able toreach all of these people due to lack of technicalguidelines for the implementation.61

BEST PRACTICES

During the National Consultation of theCommission on Legal Empowerment for The

Poor (CLEP) on 24-25 November 2006, a consensuswas achieved among the participants that thesuccess stories concerning informal workers in bothnational and local level are very limited in number.Below are the success stories that have beensummarized from the National Consultation CLEPand discussions held prior to the NationalConsultation.

1. The Story of Domestic Workers Union inYogyakarta

Domestic workers union in Yogyakartaprepared a draft agreement for domesticworkers that aims at building employers’awareness of their rights and obligations. Theunion is at this stage lobbying local governmentto make this draft contract a requirement underRegional Regulation (Perda).

2. The Story of LBH Jakarta in facilitatingInformal workers dispute.LBH Jakarta facilitated a mediation in a casethat involved public transportation owners,KSD (Koperasi Sopir Doyok) cooperative,Transportation Agency of South Jakarta, BankYB and CV. Sm. Although the deliberationattempted did not generate an agreement, LBHJakarta roles in the mediation was a successfor it managed to improve publictransportation drivers’ bargaining positionbefore a formal, legal institution.

60 Sinaga, op.cit.61 Quoted from “Jamsostek Pekerja Informal Terkendala“, an article published in Pikiran Rakyat, 7 November

2006.

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3. Trade Union Rights Centre (TURC) forLabors Information Center.TURC is a workers organization that focuseson economic, political and legal empowermentfor laborers and Indonesian Labor Unions.TURC provides improved access toinformation for organizations and the laborersthemselves. In its work program, TURC alsoconducts training for labor unions, research,and publication on labor issues.

4. LBH Bandung struggle for laborers.LBH Bandung is one of the more powerful LBHbranches in addressing labor-related cases.Some best practices that can be presented hereis advocacy on the case affecting PT. KahatexSweater (2004-2005) in Majalaya followingthe partial lay off of its workers. LBH Bandungprovided legal assistance by means of 2strategies i.e.: (1) case campaign – incooperation with International NGO CleanCloth Campaign (CCC) and Workers RightsConsortium (WRC); and (2) organizingworkers in order to resolve their problemswith the company. It resulted in the re-employment of 450 workers.

5. LBH Bandung for participation in the strugglefor workers policy in Bandung. In 2006 theregional government drafted a RegionalRegulation on Manpower. Upon this, LBHBandung together with its network conducteda study on the Perda and found out that itoverlapped the Manpower Law with someprovisions adversely affecting workers. Basedon the study results, LBH Bandung took aparticipatory initiative to oppose the DraftRegulation. It ended up with the postponementof the Perda.

CONCLUSION AND RECOMMENDATIONS

1. For developing countries such as Indonesia, theinformal sector provides an alternative inabsorbing high unemployment so its existenceshould acknowledged.

2. It is necessary to strengthen the rights ofinformal laborers. Regardless of where theywork or their status, workers have the right toprotection and social insurance withoutdiscrimination. Therefore, protection ofinformal workers is required by strengtheningworkers’ basic rights e.g. the right to assemblein association, right to join discussions, right toprotection against any kind of discriminationin work relations aspect and the right toemployment itself.

3. It is necessary to strengthen social protectionin the informal sector. In Indonesia, socialinsurance is a privilege offered to workers inthe formal sector. These companies are stilllimited in number or are export-orientedcompanies. It should be an obligation to fulfillall labor requirements. However, as explainedabove, female workers in textile and garmentfactories are often discriminated, especially ifthey are married. In this case, female workersreceive no social insurance for family healthservice (known as JPK or Health ServiceInsurance). It is assumed that female workersare not main breadwinners; it is also assumedthat their spouses are at work and thereforethey receive insurance protection from theirspouses’ workplace. Worse still is when bothfemale worker and her husband are workingin industrial homes in which the house that isalso their workplace will be fulfilled withhazardous working instruments that may easilyharm other family members.

4. The government should be aware that thefailure to provide protection for informalworkers also threatens the protection to formalworkers. When an informal economicenterprise does not protect their workers, it ismost likely that become less competitive.Formal businesses reliant on their services will

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also suffer and may gradually transform intoinformal economic enterprises. Government’seffort to provide social insurance to informalworkers through UU SJSN has not beeneffectively implemented to date. Efforts toencourage qualifying participants have notreached the targets hoped for. There are stillmany enterprises that have not understood thebenefits or usage of the program. There hasbeen no education or socialization on theimportance of social insurance. Therefore, thegovernment possibly needs to cooperate withother parties such as laborer unions or smallentrepreneurs associations to socialize thenational social insurance program.

5. Urge the government to modify policies thatviolate human rights, and to draft new policybased on the prevailing internationalprinciples. For example, in migrant workersection, we should urge the government tointroduce the principles of InternationalConvention on the Protection of MigrantWorkers and Their Family Members (1990)into government policy.

6. It is necessary to strengthen representation ofthe informal economy because informalworkers generally remain unrepresented as theresult of marginalization from the dialogueprocess. The problems they are facing in theworkplace remain unsolved. Therefore, it isimportant to consider tools and instrument forencouraging representation of informalworkers’ aspirations. The importance oflaborers representation is actually not only forworkers’ interest alone but also for the interestof those in the formal sector. Workers informal economic sector will also be threatenedif their competitors are able to operate withoutcomplying with the conditions set under theManpower Law.

7. Indonesian government, in this case theDepartment of Manpower and Transmigration,needs to clarify and monitor how far small andmiddle economic enterprises or other informaleconomic sectors should begin to satisfy therequirements of formal employment. If thegovernment has no indicators, informaleconomic actors will continue to keep theirworkers informal and this condition will neverimprove workers’ welfare.

8. Satisfying mutual need for descentemployment. The unemployment problem andan abundant, unabsorbed work force is a majorproblem in countries such as Indonesia. Makingor creating employment would be the solutionbut it does not justify unfamiliar and unprotectedemployment. An employment opportunitymight be descent if the employment created isproductive and satisfies the basic principles onworkers protection. On one hand, worker andbusiness actors should have the capacity andflexibility to improve performance. Onestrategy to achieve this condition is bypromoting employability62, which is a solutiongenerated from high quality training andeducation. The training and education willguide skill, knowledge and competence in orderto increase employees’ capability to secure andmaintain their employment and workplaceprogress, and to adapt with predicted workchanges or to enter new work places when theyquit the former one.

9. The Ministry of National Education has a rangeof vocational schools that were designed toproduce graduates capable of working inparticular industrial fields. However, untiltoday there has been no research that measureshow far the graduates can satisfy industrialstandards. Since the beginning, the governmenthas established employment training centers totrain potential work force. However, theeffectiveness of those training centers is notknown.

62 International Labour Organization, “Conclusions concerning Human Resources Training and Development”,International Labour Conference, 88th Session, Geneva, 2000

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Specific and comprehensive education as wellas training is appreciated but it should nottrigger workers’ persistence to remain ininformal economy. Instead, it shouldencourage them to enter formal economy orto support their work place to become formal.The type of required training is different fromone economic sector to another. For instance,it is important to prioritize education andtraining in agricultural sector because mostIndonesian informal work forces are inagriculture sector. The training can guideworkers in informal economy to increase theircapability in organizing agriculture usingmodern method; the training can help them toprepare for professional change outsideagricultural sector.

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When the economic crisis hit Indonesia in1997, all economic sectors were paralyzed.

The condition did not improve until 2002. Daily,the media reported the difficult state that Indonesiawas in. When examined closely, grassrootscommunity economic activities proceeded as usualand were hardly affected. The 1997 – 2002 dataprovided by the BRI Regional Office ofYogyakarta reflects this contradiction. Data onsavings at all BRI branches across Yogyakartaduring this 6 year-period (1997-2002) showed thatthe amount of savings and number of peoplesaving were consistently increasing, with averagesof 26.3 % and 16.2 % respectively, as reflectedin Table 1 below:63

Table 1. Account Holder and Saving Value inBRI DIY Province, 1997-2002

CHAPTER IVWORKING GROUP 4ENTREPRENEURSHIP: MICRO,SMALL AND MEDIUM BUSINESSSECTORS

63 See Mubyarto, “Mengembangkan Ekonomi Rakyat sebagai Landasan Ekonomi Pancasila,” Popular EconomicJournal, Edition Th. II No. 8. November 2003. http://www.ekonomirakyat.org/edisi_20/artikel_3.htm, accessedon 16 October 2006.

64 The popular economy refers to the daily informal economic activities of communities. See discussion belowSection on “Characteristics of the Popular Economy.”

65 The term UMKM is a translation of SMEs (Small and Medium Enterprises). According to Mubyarto, it isincorrect to use the term UMKM to refer to popular economic activities because the term does not representpopular economic activities such as those undertaken by shoe polishers, newspaper delivery men, barbers,mechanics, garbage collectors, sidewalk and petty traders, etc. For the interest of this study, however, the smallenterprise concept will be more applicable (and has more or less the same meaning) and will include suchpopular economic activities.

Year Savers (persons)

Change (%)

Saving Value (Rp. Billion)

Change (%)

Dec. 1997 457,496 263.02 Dec. 1998 554,354 21.2 435.72 65.7 Dec. 1999 630,708 13.8 531.36 22.0 Dec. 2000 668,324 6.0 568.87 7.1 Dec. 2001 887,631 32.8 740.19 30.1 Dec. 2002 7.14 787.76 6.4 Average 16.2 26.3

Source: Kanwil BRI Yogyakarta

According to Mubyarto, the popular economy64 inIndonesian never seriously suffered from the crisis.After a temporary shock, these small or mediumscale business enterprises (UMKM) recoveredimmediately.65 UMKM were able to bounce backthrough self-financing or support from microfinance institutions such as cooperatives, pawnshopservices, or other informal micro financeinstitutions in rural areas. The amount of creditprovided by the Perum Pegadaian, for instance,increased by 560%, and the number of its clientsincreased by 368%. Likewise, Baitul Maal WatTamwil (BMT) Beringharjo in Yogyakarta, duringa relatively short period (1995-2002), increasedtheir loan turnover from Rp.50.9 million to Rp.5.2

billion while their borrowersincreased from 393 to 1,333persons. Also, Koperasi BinaMasyarakat Mandiri, which wasestablished in Jakarta in October1998, has assisted over 24,873poor people throughout Indonesiawith loans totaling more thanRp.39 billion, a significant increase

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from the Rp.440 million for 917 people theyprovided in 1999.66

It appears that in a crisis situation, thesmall enterprises managed to survivebetter than most large scale enterprises.This is one of the reasons it is importantto study this sector. Moreover,equitable economic distribution – apriority within development policy - iseasier to achieve through the growth of smallenterprises given their labor-intensive nature.67

According to the ISBRC (Indonesian SmallBusiness Research Center) and PUPUK(Association on Small Enterprise Development),from 1997-2001 small enterprises were able toabsorb 87-88% of the population workforce, muchhigher than the 10-11% absorption rate of mediumenterprises, or the 0.5%-0.6% of large scaleenterprises.68

Small and medium enterprises contributesignificantly to economic growth in Indonesia. In2003, the Indonesia economy grew about 4.1%.Amazingly, 2.4 % was provided by small andmedium enterprises. Therefore, it seems UMKMare the very back bone of the Indonesian economy,and developing UMKM may be integral to thedevelopment of Indonesia as a whole.69

Table 2. Number of Small, Medium and LargeScale Enterprises

66 Mubyarto, Ibid.67 See Widyaningrum, et.al., Pola-pola Eksploitasi terhadap Usaha Kecil, Yayasan Akatiga, Bandung, 2003, p. 1.68 Indonesian Small Business Research Center and PUPUK, Usaha Kecil Indonesia: Tinjauan Tahun 2002 dan

Prospek Tahun 2003, ISBRC and Pupuk, Jakarta, 2003, p. 29.69 See Aburizal Bakri, “Membangun UKM, Membangun Ekonomi Indonesia,” in Winning People’s Hearts Through

Nationalism, Democracy and Economic Development: Aburizal Bakri’s Conceptual Contribution, PT PrimamediaPustaka, Jakarta, 2004, p. 161.

70 For further explanation see TAP MPR No. 16/MPR/1998 regarding Political Economic in View of EconomicDemocracy.

Business Scale Year 2004 (Unit)

Year 2005 (Unit)

Small 43,641,094 44,621,823 Medium 66,318 67,765 Large 4,068 4,171 Total 43,711,480 44,693,759

Source: State Ministry of Small and MediumEnterprise and Cooperative, 2006.

Business Scale Year 2004 (people)

Year 2005 (people)

Small 69,166,801 71,187,153 Medium 6,323,722 6,491,345 Large 2,646,775 2,590,275 Total 78,137,298 80,268,773

Source: State Ministry of Small and MediumEnterprise and Cooperative, 2006.

In theory, the Indonesian Constitution addresseshow small and medium enterprises should betreated. Article 33 of the 1945 Constitution refersto the articles that expound on such economicmatters. The article on ‘Social Welfare” in theConstitution declares that development means thatsocial welfare is an inseparable element of theaspirations of independence. There is also a politicalcommitment in the Constitution that is expressedin TAP MPR No. 16/MPR/1998 regarding PoliticalEconomy in View of Economic Democracy, whichis commonly referred to as “popular economy”. Anumber of key ideas confirmed in the TAP MPRare:70

Avoidance of an accumulation of assets andeconomic power in any particular group orcompany that does not comply with the

principles of justice and evendistribution. (Article 3);

Fair treatment of smalleconomic entrepreneurs, includingencouragement and assistancedeveloping their business and

Table 3. Amount of Manpower Absorbed bySmall, Medium and Large Scale Enterprises

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economic interests, particularly in relation tothe utilization of natural resources. (Article 4);Cooperatives, as well as small and mediumbusiness enterprises are the main pillars of thenational economy and must be givenopportunity and support—withoutdisregarding the roles of larger enterprisessuch as BUMN—because they are the formsof business which provide the greatest benefitto the people. (Article 5);Banks and financial institution shall be fair andgenerous to cooperatives, as well as small andmedium enterprises. (Article 7).

These normative provisions of the Constitution,as well as the political commitments theyrepresent, must be embraced in order to increaseentrepreneurship within the society and overcomemany of the problems faced by UMKM. Smalland medium enterprises have helped thegovernment create employment opportunities,Their ability to create self-employment is aprecious asset which has helped decrease theunemployment rate. Moreover, the number ofUMKM is expected to increase providing evengreater employment and absorbing moremanpower. Hence, empowering small andmedium enterprises falls squarely under a povertyreduction program. However, such empowermentis not an easy task and there are a lot of obstacles.

BARRIERS TO STRENGTHENING MICRO,SMALL AND MEDIUM SCALE ENTERPRISES(UMKM)

In an effort to empower UMKM, in order toreduce poverty, the Commission on Legal

Empowerment of the Poor (CLEP) has consultedwith a number of parties to identify the barriersthat UMKM are facing in Indonesia and discussand how to address them. During the NationalConsultation of CLEP held on 24-25 November2006, and the discussions held on 21 December2006, various obstacles impeding the development

of UMKM in Indonesia were identified. Theseobstacles can be separated into two categories:internal and external.

1. Internal Obstacles :

a. Access to Bank Capital. Credit issue forsmall businesses can be put into fourcategories:71 First, from the perspective ofa bank making an offer to provide creditfacilities, there is a likelihood that a bankwill not have funding schemes designed tofit the needs of small businesses. Fundingschemes that banks develop are mostlyoriented to large scale business.

The BPS (Central Bureau of Statistics) datafrom 2000 noted that only 246,700 (0.6%)businesses were legal entities, the other 39.3million (99.4%) businesses were not legalentities. If being a legal entity is aprerequisite to obtaining a bank loan, thanless than 1% of existing business have thepotential to borrow from a bank. Lookedat another way, 99% of Indonesianenterprises (mostly micro, small andmedium scale businesses) are unable toaccess bank credit. This is unfortunate andunnecessary especially considering that anoverwhelming number of large scalebusinesses fail to pay back their bankloans.72

A study on the effectiveness of KURK(Small Enterprise Credit Program) in EastJava (1991) confirms the abovephenomenon. Although the credit schemewas targeted to the poor, some of theofficers in charge of making loans werereluctant to provide their services to poorpeople. They thought that helping the poorget credit would be administrativelycomplicated, inefficient, and not worth thepotential profit. They also believed thatpoor people would be unable to repay their

71 See Erna Ermawati Chotim and Juni Thamrin, ibid.72 Setyo Budiantoro, Robohnya Ilmu Ekonomi Ortodoks. op.cit.

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debts. As a result, they prioritized moreeconomically established clients over poorclients whose entrepreneurial capabilitieswere unknown.73

Second, from the perspective of demand,the small business community is in need ofcredit. There has been a tendency to creategeneralized loan policies which treat smallbusinesses as if they are homogenous.However, there is a need for policies basedon an in-depth understanding of thevariations between small businesses andhow their demand for credit arises.

To produce credit policies suited to thesmall business community, the governmentneeds to understand the anatomy of smallbusinesses better. There are a wide varietyof small businesses providing an array ofgood and services in disparateenvironments. Such heterogeneity makesa comprehensive national policy for theempowerment of small business anenormous challenge.74

Third, from the perspective of fundraising,small businesses have tended to ignorealternatives to formal fundraising thatcould enable wider access to bank capital.Small businesses have a tendency to relyon formal credit loans. Yet, there are alot of alternative credit options for smallbusinesses. Arisan75 for instance, providesa model for small business funding, orgroup credit loans which are quite flexibleand informal. Unfortunately, many smallbusiness entrepreneurs have failed to takeadvantage of this alternative. Smallbusinesses could also develop a variety ofinformal funding models to fit theirrespective business situations. A

combination between lottery systems, likethe one practiced in Arisan, with banksupport to strengthen the money cycle,would be an alternative option banks couldconsider.

Fourth, from a macro policy perspective,there is a need to encourage deregulationthat both directly and indirectly promotessmall business growth. High leveldecision-makers have a tendency to makesmall business a target or object of aprogram rather than the subject of theprogram, thereby not including them aspartners in the program. Hence, smallbusinesses’ varied aspirations andconditions are not accommodated forunder credit schemes. On the other hand,credit policy packages tend to have anintensive political agenda, and a creditscheme may include additional incentivesand disincentives that are irrelevant to thestated objectives of the scheme.

In addition to these four issues, womenwho run micro and small businesses oftenface problems accessing capital. Whilethere are a wide range of generalconditions that mold UMKM and bankrelations, there is one condition inparticular that prevents women who runmacro and small businesses from gettinga capital loan from the bank: therequirement of spousal consent orguarantee. This prerequisite isunnecessary and irrelevant as it has nobearing on the ability to pay back the loan.The available data reflects that there areat least 64 networks of women runningmicro and small businesses, spread across64 districts throughout the Indonesianarchipelago, with a total of 75,000members.76

73 See Daru Priyambodo and Bagong Suyanto, “Pemanfaatan dan Pelayanan Kredit Usaha Rakyat Kecil: Penelitiandi Tiga Kecamatan Propinsi Jawa Timur,” in Prisma, Ed. No. 11 Year XX, November, 1991, pp. 42-43.

74 Faisal Basri, “Restrukturisasi UKM: Antara Mitos dan Rasa Keadilan“ in Analisis Ekonomi Faisal Basri: KitaHarus Berubah!, Kompas Book Publishing, Jakarta, 2005, p. 8.

75 A traditional form of savings pool, where members contribute regularly and take turns using larger sums.

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b. Standardization of the Quality of UMKMGoods and Services. UMKM also faceproblems related to business developmentregarding their ability to improve thequality of the goods and services theyprovide. For businesses producing goods,quality relates to the attributes of theirproducts while for service businesses,quality relates to the value attached to theservice rendered.

Consumers’ desires for goods and servicesare usually driven by the need for comfort,or a particular taste. A consumer is notjust paying for the chair he is paying forthe comfort of sitting in the chair, he is notjust paying for the food in a restaurant,but for the comfort the restaurant isoffering. Hence, quality has a specificvalue which attaches to a product orservice. An inability to create this quality-value can impede a small businesses abilityto compete.

One of the factors that contribute to thisinability to provide quality-value is themanagement’s confusion over whether tofocus on quantity or quality. This is usuallycaused by lack of strategic thinking andconfidence. In general focus onoperational matters should be followed bystrategic thinking on how to developproducts or services based on corecompetencies and consumer desires.Psychological barriers, like fears ofventuring into new ideas or trying toattract new customers, have to beaddressed; otherwise they will affectUMKM competitiveness.

Another area of concern is the ability ofUMKM to sustain their existing level ofquality. Consistent quality is the key towinning contracts with large scale

businesses. This consistency requires three“propers”: proper quality (not damaged);proper quantity (not lacking) and propertiming (not delayed). When a large scalecompany contracts with a UMKM, thesethree conditions are generally the mostvulnerable to complaints. In brief, theability to maintain a consistent,standardized product remains a challengefor UMKM.

c. Marketing. In the end, the capability toopen a new market while sustaining theexisting one is essential. One of UMKM’smain difficulties is their lack of promotiondue to an inability to access modernpromotional media, such as radio ortelevision. Promotion efforts frequentlygenerate problems for UMKM becausethey are too concerned with exhibitionneeds, such as promotion space andpromotion tools. In many cases thesignificant costs outweigh perspectivebenefits.

UMKM’s inability to open new marketswhile sustaining old ones are the result of aparticular uniqueness of UMKM:Consumers frequently are not able todistinguish one company’s goods or servicesfrom another. An issue that results from thequality-value of the goods and services.

2. External Obstacles

a. Approach based on “Giving” rather than“Empowering”. Up to now, policies fordealing with UMKM have been focusedmore on “giving” rather than“empowering”. This is a result of the beliefthat UMKM are generally powerless. Thisperception has been used as the basis forwhy institutions need to provide outsidehelp to UMKM. Yet, this results in programs

76 Yuni Pristiwati, “Strategi dan Kekuatan Rakyat untuk bertahan Hidup (pengalaman sukses para perempuanusaha kecil-mikro)”, A paper presented in the National Consultation of the Commission on Legal Empwoermentfor the Poor, Jakarta, 24-25 November 2006.

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that are implemented withoutconsideration for the characteristics orcapacities of the UMKM,, resulting inconflict and agitation, as UMKM are notincluded as partners in these programs.

b. Poor Coordination between GovernmentAgencies. There are currently severaldepartments and government institutionsthat have UMKM advancementprograms, including: the Ministry ofIndustrial Affairs, the Ministry of Trade,and the State Ministry of Cooperative andSmall and Medium Enterprise. Moreover,other financial institutions, like banks andstate-owned companies (BUMN), alsohave UMKM advancement programs. Inmany cases a UMKM has to send its staffto training programs in three places atonce. They must also keep track of andfulfill a wide range of conditions in orderto get assistance from these variousinstitutions. It might seem trivial, but whenwe consider that UMKM already lack thetime and resources of larger companies theproblem becomes clear. Having two orthree staff members attending a training,convention, or similar activity all at thesame time strongly affects the ability ofthe UMKM to do business. The knowledgethese trainings convey may be important,but the training methodology should put agreater emphasis on advocacy by usingtrainers that have the necessaryknowledge and expertise specificallyrelated to the needs of UMKM.

c. Unfair Competition. Althoughtheoretically, small enterprises are assuredequal treatment, in practice smallenterprise activities are frequently

impaired by industrial policies whichprovide benefits to large scale companiesin the form of investment protections, loans,and taxes. A study by Bruch and Hiemenzshows that ASEAN countries provide verylittle protection to small scale businesses.77

Likewise, a study by Saleh reveals that inASEAN countries, sales tax promotesvertical integration in production processes,providing an unseen benefit to larger scaleenterprises.78 Moreover, small businessesare frequently disadvantaged by economicpolicies that aggressively invite the in-flowof foreign capital.79

Other seemingly innocent policies putUMKM at a comparative disadvantage, byproviding preferential treatment to largercompanies that can contribute significantincome to the government. The clearestexample is the arbitrary treatment oftraditional traders who are prone to forcedeviction from their place of business. Bycontrast companies that can rent modernstores can gain consistent access to astrategic location.

The shear volume of UMKM also createsa negative impact on each UMKM’sbargaining leverage. This provides largerenterprises with an advantage because theycan easily terminate their contract and findan alternate supplier or purchaser whenthey are unhappy with their UMKMpartner.

77 Mathias Bruch and Ulrich Hiemenz, Small and Medium-Scale Industries in the ASEAN Countries: Agents orVictims of Economic Development?, Westview Press, Boulder and London, 1984, pp. 58-59.

78 Irsan Azhary Saleh, Industri Kecil: Sebuah Tinjauan Perbandingan, LP3ES, Jakarta, 1991, p. 6.79 Hendrawan Supratikno, et.al. “Pengembangan Industri Kecil di Indonesia: Pelajaran Analisa Dampak dari

Jawa Tengah,” Article Published on Prisma Magazine Ed 9/ XXIII, September 1994, p. 28.

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CHARACTERISTICS OF THE POPULARECONOMY

Data provided by BPS places Indonesianeconomic entrepreneurs into two group’s: 1)

large enterprise and conglomerates; 2) small andmedium enterprises and cooperatives.

Small enterprises make up the majority of thesecond classification. According to data providedby the Ministry of Cooperative and Small andMedium Enterprise, in 2004, there were 43.7million UMKM and most of them, 43.6 million,were small enterprises. In the same year, thissector employed 69 million persons.80

Popular economic activities have been classifiedinto the following groups: 81

Primary and secondary activities: agriculture,plantation farming, animal husbandry, fishfarming (all on a subsistence or limited scale),making small handicrafts, tailoring, producinghome-made snacks, and the like;

Tertiary activities: transportation (of differentkinds), renting and leasing of housing, land,or production tools;

Distribution activities: market traders,groceries traders, sidewalk traders, supplierand agents, and the like;

Other service activities: street singers, shoepolishers, barbers, mechanics, garbage men,street photographers, etc.

The popular economy refers to a wide variety ofeconomic activities and thus its characteristics varydepending on the type of activity. Nevertheless,as noted by Bambang Irawan, all activities withinthe popular economy have the following basiccharacteristics:82

Informality. The majority of popular economyentrepreneurs work outside the legal and regulatoryframework. The lack of regulations, the weaknessof existing regulation, or the government’s inabilityto maximize the effectiveness of what regulationsit has, frequently harms small businessentrepreneurs. According to Hernando de Soto,the informality of the popular economy means thatassets in the popular economy cannot be used forcapitalization or economic transactions.Informality also impedes popular economyentrepreneurs from accessing formal financialinstitution, forcing them to seek informal loans withhigh interest.

Mobility. Informality also results in theadaptability of the ongoing activity. Governmentpolicies can dramatically affect the sustainabilityof a given activity in the popular economy. Thepopular economy is a relatively easy-come-easy-go sector. If a given activity brings in ample gains,many other entrepreneurs will attempt to capturea share of the gains. Conversely, once thesustainability of a given activity is challenged manyentrepreneurs will immediately leave it and moveto another business. This adaptation is not asprevalent with primary economic activities likeagriculture where the doer seldom leaves hisroutine. Instead, such small businessmen usuallydiversify with off-the-farm economic activities.

A range of activities carried out by one family.In general, family members are involved in morethan one popular economy activity. Thisdiversification is a way of dealing with insecurityand unpredictability within the popular economy,so that entrepreneurs have alternatives to replaceany activity that must be ceased. When nothinghappens, however, the accumulation of profits froma variety of these economic activities are stillneeded to fulfill their basic needs.

80 Ministry of Cooperative and Small and Médium Enterprises, 2006. http://www.depkop.go.id; accessed on 30October 2006.

81 Quoted from Bambang Ismawan, “Ekonomi Rakyat: Sebuah Pengantar,“ Article published in Popular EconomyJournal Th. I No. 1, Mach 2002. http://www.ekonomirakyat.org/edisi_1/artikel_6.htm, accessed on 16 October2006.

82 Quoted from Bambang Ismawan, Ibid.

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Independence. There is a misperception thatbecause of the nature of the popular economy,institutions, either intentionally or not, limit theirinteraction with this sector. The government onlyworks with the popular economy on projects thatfall under poverty reduction programs, or UMKMempowerment. Meanwhile, financial institutionsusing a range of internal regulations also limit theirconnection with the popular economy sector. Ingeneral, the popular economy sector is stillperceived as being “financially unfeasible”(unbankable) and high risk. This assumption andits resultant outcomes certainly need to becritically evaluated, especially consideringexperiences with large companies andconglomerates during the 1997 economic crisis.

Relationship with the formal sector. Althoughthe popular economy is informal, it has a closerelationship with the formal sector. Thisrelationship is sometimes referred to as “the darkside of the formal sector.” It is denied most of thetime because it means that formal sector isworking with illegal entities. However, theinformal popular economy often supports theformal sector. Examples of this relationshipinclude: a publishing company that works withnewspaper delivery man, a food stall that providesmeals for business workers, a small retailer whois hired to distribute products in rural areas, etc.

In addition to the characteristics mentioned above,popular economy and small businesses generallyhave a flat organizational structure. Theorganization is usually slim with loose workdistribution, and a compressed hierarchy. Only asmall number are formalized, very few undertakeplanning processes, and hardly any provide stafftraining. Another characteristic of popular

economy businesses is that they are often unableto keep the necessary financial distinctions betweenpersonal assets and corporate assets, and, as aresult, are unable to maintain a good accountingsystem, if any.83 One important result of theseaccounting problems is that small enterprises aregenerally unable to obtain financial resources fromthe capital markets because in order to get supportin the capital markets, a company has to use astandard accounting system and comply withconditions of financial transparency.

GOVERNMENT’S ROLES

The Indonesian government has made efforts toaddress the issues that small and medium

enterprises are facing. Laws have been passed toaid the development of small and mediumenterprises. There are eight major legal regulationson small and medium enterprises, namely: (1) LawNo. 25/1992 regarding Cooperatives; (2) Law No9/1995 regarding Small Enterprises; (3) Law No.32/2004 regarding Regional Government; (4)Regional Regulation No. 44/1997 regardingPartnerships; (5)Government Regulation No. 32regarding Small Enterprise Advancement andDevelopment; (6) Presidential Decree No. 187M/2004, dated 20 October 2004 regarding theEstablishment of New Cabinet Indonesia Bersatu;(7) Presidential Regulation No. 7/2005 regardinga Medium Term Development Plan (RPJM) Period2005-2009; (8) Presidential Regulation No. 62/2005regarding an Amendment to PresidentialRegulation No. 9/2005, dated 31 January 2005regarding Position, Task, Function, Structure ofMinisterial Organization and Management of theRepublic of Indonesia.84

83 Henry Mitzerg, Strategic Management, Prentice Hall, New York, 1992. See also the similar characteristics ofsmall enterprises put forward by Musselman and Hughes. Introduction to Modern Business. New York, McGraw Hill Inc., 1992.

84 State Ministry of Cooperative, Small and Médium Enterprise. “Bahan Forum Konsultasi Nasional KomisiPemberdayaan Hukum Masyarakat Miskin (Commission on Legal Empowerment of the Poor)”, A paper presentedin the National of the Commission on Legal Empowerment for the Poor, Jakarta, 24-25 November 2006.

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Law No. 9/1995 in particular, provides thegovernment with the authority to develop aclimate more suitable to small enterprise throughthe enactment of regulations or policies on:funding, competition, provision of infrastructure,information, partnerships, business permits andprotection. Meanwhile, in view of these effortsto help small enterprise, the government, togetherwith the business community and the public, hasprovided funding options for small businesses.These options are generated from bank creditloans, non-bank financial institution loans, venturecapital, loans from saving of partial interests madeby state-owned companies (BUMN), grants, andother types of funding. Some of the availablemodels of funding or financial service providedby the private sector, government or otherinstitutions will be presented in the followingsection.

There have been several agreements madebetween government institutions concerning smalland medium enterprises development. Two of themost important are: (1) The Memorandum ofUnderstanding between the Coordinating Ministerof Social Welfare as the Head of PovertyReduction Committee (KPK) and Governor ofBank Indonesia (BI) No. 11/KEP/MENKO/KESRA/IV/2002 and No. 4/2/KEP.GBI/2002regarding Poverty Reduction through theEmpowerment of Micro, Small and MediumEnterprises (UMKM). UMKM empowerment,particularly to micro enterprises, shall be in theform of expanding employment opportunities,building business capacity, and empoweringentrepreneurship in poor communities. (2) TheMemorandum of Understanding between theSecretary of the Poverty Reduction Committeeand the Deputy Governor of Bank Indonesia No.001/MOU-KPK/II/03 and No. 5/1/DpG/DPBPRregarding the establishment of a Task Unit on theEmpowerment Financial Consultants/Facilitatorsin Bank Partners for Micro, Small and MediumEnterprises (KKMB). KKMB acts as the facilitatorbetween UMKM and any bank that is expectedto accelerate credit disbursement to UMKMcompliant with the bank credit business plan.

With regard to access to capital, the IndonesianPresident launched a new scheme called KUM-LTA(Proper Micro Enterprise Credit Scheme withoutAdditional Collateral) on 7 June 2004 in Jakarta.This is a program partially supported by PKBL(Environment and Partnership Program) of thestate-owned company, BUMN, as an assurance tomicro enterprise credit loans.

The goals of KUM-LTA are: (i) to acceleratepoverty reduction programs through microenterprise empowerment; (ii) to accelerate microenterprise empowerment efforts through post-program credit provisions for micro enterprise orcommunity groups (Pokmas); (iii) to increasemaximum utilization of the EnvironmentalDevelopment and Partnership Program (PKBL) byBUMN through a credit assurance funding schemefor micro enterprise; (iv) to accelerate therealization of credit launching from bank businessplans to micro, small and medium enterprises,particularly to micro enterprises; (v) to promotethe growth and development of popular productiveeconomic initiatives with the goal of expandingemployment opportunities and reducing theunemployment rate; (vi) to promote professionaland sustainable partnerships among business actorsin the productive sectors and the financial serviceindustries.

The beneficiaries of the KUM-LTA scheme areproductive poor communities that either havemicro enterprises linked to village groups inpoverty reduction programs or other microenterprises that are feasible or bankable. Thescheme is implemented throughout Indonesia, bothin urban and rural areas, based on a network ofthe implementing financial institutions connectedwith the program. The scheme is implementedusing a community empowerment approach fordeveloping the capacity of productive poorcommunities (community development). Under thiscommunity development approach the goals of thescheme are achieved using a combination offacilitation, technical assistance, and business creditprovided without collateral (a financialintervention).

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With the aim of improving the quality of goodsand services produced by micro, small and mediumenterprise businesses, the Ministry of IndustrialAffairs holds annual Quality Control Conventionsboth at regional and national levels. Theseconventions aim to encourage micro, small andmedium enterprise businesses to continuouslyundertake quality improvement. Participants atthe conventions are members of the UMKMcommunity, including: automotive componentsmanufacturers, photo frame producers, and coffeemillers. The Minister of Industrial Affairs has alsoissued Decree No.34/MPP/SK/2/1996 regardingGuidelines for Quality Management SystemAudits for Small Industry, which discusses theimplementation of quality management systemsin small industries and refers to ISO 9000.

EFFORTS TO IMPROVE ACCESS FORSMALL ENTERPRISES

There are three approaches that the governmentis using to help develop small businesses:85

First, the government is using a non-policyapproach. This approach is optimal for smallindustries conducting marginal activities becausegovernment intervention usually generates highbureaucratic costs for such industries. Animportant proponent of this non-policy approachis Hernando de Soto. In his book The OtherPath86. De Soto argued that governmentintervention frequently creates distortions thatrestrict growth and can potentially even destroythe informal sector and small businesses. Second,the government has issued protections for smallindustries. These protections are usually in theform of barring larger companies from producingparticular products, barring the importation ofsubstitution goods, and placing controls on thedissemination of technology innovation which maycause disturbances in small industries. Thisapproach has been criticized because it isconsidered disadvantageous to consumers. Third,

the government has embraced a stimulationapproach. This approach usually focuses on supplyside issues, in the form of the provision of credit,raw materials, tools, and courses. However, thisapproach is dangerous because it can effectivelyhurt those businesses that do not benefit from theseprograms.

Until recently, conventional growth-orienteddevelopment practices have been unable to removedualism, and have, in fact, often strengthen it. Theuneven distribution of income and welfare isbecoming more obvious in economic development.Therefore, only by designing developmentprograms that are able to improve the Poor’swelfare can we improve social welfare. Economicjustice is the foundation of economic relationsbased on ethical principles, while social justice isthe result of compliance with the principles ofeconomic justice.

INSTITUTIONAL AND LEGAL REFORM

Efforts to improve small enterprises’ access toservices should include institutional and legal

reform, which support a pro-poor business climate.

In the legal sector, the government needs to takethe necessary steps to improve the regulatoryframework in order to secure entrepreneurs’ accessto resources, technology, market and fundingresources. According to the results of the focusgroup discussion on the drafting of the CLEPpaperwork that was held by YLBHI – UNDP on 4November 2006, there are a number of legalavenues that need to be followed up on in order tostrengthen the position of micro and smallenterprise entrepreneurs, namely:

There needs to be a recognition that theinformal character of small business is a keystrength of the popular economy. The Stateshould both acknowledge and protect this

85 Quoted from Hendrawan Supratikno, et.al., “Pengembangan Industri Kecil di Indonesia: Pelajaran AnalisaDampak dari Jawa Tengah,” article Publisher in Prisma, Ed. No. 9/ XXIII September 1994, p. 28.

86 New York, Perennial Library, 1989.

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informality. It should also protect smallbusinesses to enable them to develop based ontheir particular characteristics.

The government needs to implement a rangeof regulations to help protect and fulfill therights of micro and small enterprises. Theserights include: access to credit, a stable placeof business, and legal certainty and security.The government must also recognize womenas independent business entrepreneurs,regardless of their marital status. Within thiscontext, the government needs to reviewpolicies that are not in line with thiscommitment to support the growth of microand small enterprises such as the MarriageLaw, the Law on Small and MediumEnterprises and the Investment Law, as wellas regional regulations that exploit micro andsmall enterprises.

The government should support tax reformswhich incentive economic investment in micro,small and medium enterprises by large scaleenterprises. The data suggests that, inaddition to a number of government and civilsociety initiatives, several large scaleenterprises have expressed interest in makingsocial investments by supporting the smallbusiness community, especially in relatedindustries. Providing tax incentives will bothencourage such investments and make themmore sustainable.

The State must implement and enforce thepolicies to support popular economydevelopment, which are already in place.Regulations such as Law No. 9/1995 (SmallEnterprise Law), include policies to strengthenthe small business climate (Article 7), facilitateand secure the small business sector (Article21), and protect places of business (Article 13).These regulations have to be consistentlypromoted, implemented, and enforced. Microand small scale enterprises should not only be

accommodated in the text of the Law, theselaws must also be implemented and enforced.

In terms of institutions, a mediating organizationis needed to help empower members of the poorcommunity and prevent economic marginalization.Models of such a mediating institutions exist, andinclude the arisan model (RT, marker traders, dasawisma, etc.), credit unions, the Plasma system(People’s Core Plantation), the People’s Self-SupportCommunity (KSM). Once such an institution isestablished it would need to be refined in order tofulfill the specific needs of the small businesscommunity.

Small business opportunities need to be based onregional demands and competencies and as a resultthere will need to be a certain amount of RegionalAutonomy (Law No. 32/2004) to deal with thediversity of local small business units. In thiscontext, regional governments will have togenerate many of their own regulations to createa climate supportive of the small businesses in theirarea.

The banking industry, as an intermediary financialinstitution that has been developing rapidly bytaking advantage of deregulation policies, needsto start developing micro finance programs to helpempower the popular economy. Such bankingpractices, when possible, should be based onindigenous, communal financial traditions longapplied in poor communities.

In relation to distribution policy, organized crimewithin the chain of distribution causes exploitationof and inefficiencies in small business and needs tobe seriously addressed. This not only requires animproved ability to seek legal recourse but alsogreater assurances that government institutionswill be proactive in preventing such crime byenforcing the law. In addition, there should be an

87 Fredrik Benu, “Ekonomi Kerakyatan dan Pemberdayaan Ekonomi Rakyat: Suatu Kajian Konseptual,” Articlepublisher in Jurnal Ekonomi Rakyat Ed. Th. I No. 10, December 2002. (http://www.ekonomirakyat.org/edisi_10/rtikel_3.htm, 16 October 2006).

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effort to create an alternative marketing chainthat would prove more profitable for smallbusinesses.

It is necessary to emphasize that the populareconomy cannot be developed by mere politicalcommitments to change the pro-capital-owner andpro-conglomerate tendencies of the New Ordereconomic system. Development can only beachieved by focusing on poor people as the coreof an operational program that promotesproductive economic activities at the grassrootslevel, and builds an entrepreneurial spirit.87 Thegovernment must also ensure fair marketmechanisms to encourage the development of thepopular economy.

Regarding financial services, the government hasto create a policy concerning collateralrequirements, which is one of the greatestobstacles for small enterprises to obtain a loan.The government should produce regulations thatenable and create incentives for banks to providecredit loans to economically challengedcommunities. To help overcome bank perceptionsthat credit loans for the poor are insecure, thegovernment should establish a joint venture, withcapital supplied by both the government and largescale enterprises, which could serve as assurancesfor the credit provided by the bank. In addition,to help improve the financial performance ofcredit beneficiaries and minimize potentialrepayment problems, banks should increase theirsupervision, and guidance to KUK (Small BusinessCredit Loan) beneficiaries.88

Small business observers as well as regional andinternational institutions such as the ADB, haverecommended that small enterprise promotionprograms be demand-driven and generated from

the real needs of small business. These promotionprograms must also be market-driven, meaning bothdemand and supply should be determined by themarket, not government regulation.89 Thegovernment should merely set the regulations thatenable business transactions to proceed as desired.

Today, the sharia banking system, a system whichcould help promote popular economyempowerment, is expanding. This system is notonly based on financial interests, i.e. sellingproducts and services, it also has an ethical elementwhich promotes working with clients to improvetheir welfare or their financial situation.90 Thismakes the sharia banking system particularly suitedto help popular economy entrepreneurs. It would,therefore, be beneficial to formulate effectivepartnerships with sharia banks.

BEST PRACTICES – NON GOVERNMENTALORGANIZATIONS FOR COMMUNITYDEVELOPMENT

Community-based economic developmentrequires the participation of the people. NGOs

have been aware of this so many of their membershave made a commitment to working in economicdevelopment for small enterprises.

Most NGOs focus their economic programs oncredit services of savings and loans. A number ofNGOs have also introduced other types ofbusinesses such as trading (communal trade),communal animal husbandry, agriculture, and eventtransportation (transportation cooperatives).

Below are a number of NGO program initiativesattempting to in develop popular economies:

88 See Subiakto Tjakrawerdaja, “Profil Sektor Usaha Kecil di Indonesia dan Upaya Optimalisasi PenyaluranKredit Usaha Kecil,” in Mohamad Ikhsan, 1994. op.cit. p. 39.

89 See The Kian Wee, in Widyaningrum, 2003. op.cit. p. v.90 Mubyarto, Ekonomi Rakyat, Perbankan Etik, dan Krisis Moneter 1997/1998, Article published in Jurnal Ekonomi

Rakyat Ed. Th. I No. 1, March 2002.http://www.ekonomirakyat.org/edisi_1/artikel_3.htm, accessed on 16October 2006.

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1. Yayasan Mitra Usaha

Yayasan Mitra Usaha (YMU) was establishedin September 1993 with the aim of improvingpeople’s economic condition and welfare, andincreasing NGO independence. Investmentprograms initiated by YMU include:- Establishing Bank Perkreditan Rakyat

(Village Credit and Loan Bank) incooperation with local NGOs, CommunityOrganizations (KSM), or individuals.Examples can be found in Bandung,Pontianak, Bogor, Banjarmasin, Padang,and Maumere.

- Cooperating with LP3M and Cooperative“Kospi” to develop a taxi cooperative inKendari.

- Working with local cooperatives inJakarta and Yogyakarta to develop ahandicraft export business to Greece.

- Cooperating with YDP Bali to develop apopular hotel in the Tabanan district.

A breakthrough that YMU achieved wasplacing fund guarantees at a number of itsBPRs in order to provide micro credit (less thanRp.1 million) without collateral. Even in caseswhere collateral was needed, the BPRs wouldbe flexible – for example, allowing the use ofa wedding certificate as collateral.

2. Suara Ibu Peduli (SIP)Suara Ibu Peduli (SIP) was founded on 23February 1998 by a group of housewives whowere concerned about poor families that wereunable to provide their young children withmilk because of prolonged financial difficulties.Unexpectedly, this movement garnered widesupport from various social elements inJakarta. They began creating long-termprograms to empower their beneficiaries’through greater financial independence.

SIP empowerment programs include:

- The Joint Economic Enterprise Program:This program enables members to borrowa certain amount of money for businesscapital with provisions that help ensure aneasy repayment of the loan withoutburdening the client. The initial fund of

Rp.70 million was obtained from MercyCorp. This fund was lent to members whoconducted joint economic activities using acooperative format. This programattracted many housewives, who appliedto join in and get a loan. By 2004, SIP hadgrown to include around 600 membersspread across 15 working areas in Jakarta;

- Tanggung Renteng Community: This groupwas developed to secure existingcooperatives as well facilitate buildingcooperation and kinship relations. Thisgroup serves several important functions,including: deliberating and deciding onmembers’ expansion requests and loanproposals, addressing members’ repaymentdifficulties, and providing groupadministration and facilitation in the field.

3. HAPSARI FSPM (Federation of IndependentWomen’s Unions)

This institution was established in March 1990.Initially it was a small group named the VillageWomen’s Working Group and it focused on pre-school children and developed a play groupnamed HAPSARI (Harapan Desa Sukasari /The Hope of Sukasari Village). The groupempowered housewives, who took their kids toschool and picked them up, to initiate jointeconomic enterprises, such as producing barsof soap, cookies and cakes, arisan, and breedingbees. Gradually, this group developed into apowerful tool, helping to empower villagewomen.

In addition to its activities related to the strugglefor justice and gender equality on behalf ofwomen, as it progressed, HAPSARI developedbusiness units for village women. It has alsocreated a number of constituent groups tomanage various business units such as snackproduction, livestock breeding, and agriculture.Today, the business units that HAPSARI hasdeveloped include: poultry breeding, riceagriculture using the pawn brokering system,egg production and distribution, snack

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production and distribution, car rentals, amulti-function cooperative to meet villagewomen’s needs, and a radio station ownedjointly with a local radio station.

Table 4. Models of NGO Initiatives in Micro/Small Business

No Institution Program Initiative Model

1 Association of Facilitation for Women in Small Enterprise (ASPPUK)

Micro Credit Program for Strengthening Women in Small Enterprises (PUK)-Mikro. This program was designed not only as a means to strengthen women who rely on business for their livelihood, but also to integrate advocacy-oriented activities and micro credit management.

Activities include: training, credit provision, advocacy, and networking.

The program targets women in small enterprise (PUK) who are members of the Savings and Loan of Small Enterprise Women (KPUK) a constituent of ASPPUK.

The program operates in 43 districts in 14 provinces (NAD, North Sumatra, South Sumatra, West Sumatra, Bengkulu, West Java, Central Java, DI Yogyakarta, East Jawa, NTB, NTT, West Kalimantan, North Sulawesi and Central Sulawesi).

Program Objective: the target is micro and small enterprises run by women’s groups formed from women’s micro-finance programs of NGOs that are members of ASPPUK. These women’s groups have administrators, regular meetings, standardized bookkeeping systems, written group regulations, have invested some of their own funds and have agreed to a system of joint liability.

The program’s funding is approximately Rp.623.7 million with funding originating from Terre des Hommes, the New Zealand Embassy and Canada Fund. This funding is a grant from the donors for ASPPUK to use for revolving micro credit funds. The funding ASPPUK provides to NGO members is in the form of a loan with interest at 11% per year for business loans but is interest free for loans for women’s needs. However, the funds provided from the NGO members to the women’s micro finance groups is in the form of a loan with 2-3% interest per month; these groups then loan to the actual women’s micro business with interest of between 2-2.5% per month with loan periods from 6-12 months. There are two forms of loans that women can obtain from this program, credit for business activities and credit to meet women’s needs including education (children and women), health (pregnancy), shelter and purchase of productive assets. From 1998-2002 over Rp.1,337.95 million was provided to 38 NGO members, 330 women’s groups totaling 3,545 beneficiaries.

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2 Bina Desa Popular Economy Advocacy and Development. The core of the program is the development of the popular economy and advocacy concerning popular economy development. Its objective is to organize the community and develop joint enterprises at a group level and promote advocacy for group businesses. Bina Desa works with Karya Insani Cooperative and Community Independent Groups (KSM) to conduct its implementation.

Activities include: education, feasibility studies, exploration of business potency, market studies, business feasibility studies (SKU), bookkeeping training, business organization and management, and credit facilitation.

It has conducted activities in South Sumatra, Lampung, Central Java, Yogyakarta, East Java and West Java.

The majority of its program beneficiaries are farmers (80%) who do not have their own-business; they work in 55 groups (KSM) of 10-30 people. Funding for the program was initially provided by Germany in 1994 in the form of a Rp.600 million interest-free loan.

This program is designed to develop agriculture-based businesses and increase group capacity through training based on market studies, profit-loss analysis, and managing agricultural harvests.

3 Bina Masyarakat Sejahtera

BMT Community of Street Children Parents (BMT Al Inayah Unit III). This program is based on the idea that the number of street children will never decrease if their families’ financial situations do not improve. The children are on the streets because the families need the money. Therefore, this program was designed to improve the financial condition of the families of street children in order to decrease the number of children on the street.

The main activity of this program is credit provision. The amount of the loans varies depending on the business group. Each business group has to undergo a training program where it learns about the basics of business, how to select a business, financial management systems, and the socialization of BMT and its benefits.

Programs have been conducted in the Bekasi district, West Java. The targets are the parents of street children, both those whom already have a business and those who do not. The strategies applied include introducing parents groups to the BMS program, and screening them based on the same basic criteria, i.e. being native to BMT target areas, and having a commitment to improving their family’s welfare and financial situation.

The funding, totaling Rp.7.5 million, is a gift from Department of Social Welfare, West Jawa that was increased with a grant of Rp.25 million from Terre des Hommes, Netherlands in 2000. The program initially only targeted 25 people but now assists 105 people with repayment rates at 90%.

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4 Bina Sumberdaya Mitra (BISMI)

BMT BISMI is a model of micro credit using the Islamic cooperative system, which was developed in response to the weaknesses of the Grameen Bank system. Hence, BMT is basically a combination of the Grameen Bank system and the Sharia bank system. This program aims to improve people’s economic condition so that they can pursue business initiatives.

Activities include: credit provision, advocacy, savings and loans, and training. The program targets small businesses, individuals and groups in Bekasi City, West Java.

5 Bina Swadaya Civil Society Community and Bank Relation Program (PHBK). The main objective of this program is to help poor people, unable to provide the necessary collateral, to access a bank’s financial services.

Activities include: establishment of KSM, basic training programs, bookkeeping training, advocacy (including organizational, administrative, capital, productive business, and networking), and credit provisions for KSM.

The program was conducted in 15 provinces, targeting male and female members of constituent KSMs that generally run micro businesses.

The program can either function by the Bank providing credit directly to the community groups (KSM) involving an NGO as a mentor, or by the Bank providing credit to the NGO for them to loan money to the KSM. In the first model, the Bank charges interest of approximately 30% per year and the NGO obtains a fee of 0.5% per year. In the second model, the Bank charges interest of 15-18% per year to the NGO and the NGO charges interest of 30-33% to the KSM.

In order to access this credit the KSM needs to contribute some of its own savings, between 20-25% of the total loan. The loans provided to members are micro loans without collateral, with the maximum loan being for Rp.1,000,000 per member.

6 Forum of Indonesian Cooperative Development Movement (Formasi Indonesia)

Formasi Development Fund (FDF). FDF is partnership between Formasi and CCA (Canadian Co-operative Association) to initiate cooperative pilot projects or KUBs (Joint Enterprise Communities) by funding businesses (with credit and capital investment) using hunting approach for participating members of the Forum. The program’s objective is to provide business capital to cooperatives and KUBs so that they can develop into models for cooperative/pre-cooperative projects and KUBs elsewhere.

Activities include: credit provision, investment, training and consultation.

Coverage areas include: DKI Jakarta, West Java, Central Java, East Java, and NTB. Target beneficiaries are: cooperative/pre-cooperatives and KUB members of the Forum

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7 LP3ES (Institute of Research, Education and Social and Economic Enlightenment)

Marketing and Management Training for the Informal Sector and the Micro Entrepreneur. This is marketing and management training for the informal sector and micro entrepreneurs teaching them to operate their business activities more effectively. This program was conducted by LP3ES and BKPAI starting in 1997, and was designed to increase the managerial capability of the informal sector and micro entrepreneurs in Jakarta.

As much as Rp.125 million of in-kind funding was received from the DKI Local Government. LP3ES conducted three-days of training that was divided into groups of 40 trainees.

Training included materials on: bookkeeping, building relationship with material sellers, strategic business planning, and information on Local DKI Regulations related to micro business, the informal sector and cooperatives.

200 informal sector and micro business entrepreneurs (20% women) participated in the training.

SOCIAL RESPONSIBILITY AS ANOPPORTUNITY

Corporate social responsibility (CSR) has beenbecome a major part of many large

companies’ businesses, and is being integrated intoaccepted modern business practices. The worldof business is not only about running a business,but many believe it should also serve a socialpurpose, i.e. curing disease or reducing poverty.This mission has become a priority for manycontemporary business leaders.92

Why should the business community pay as muchattention to social responsibility as it does its

91 See www.smeru.or.id/report/research/usahamikronarasi/Buku, accessed on November 18, 200692 Lawrence M. Miller, “Vision of a New Corporate Culture,” in William Du Bois and R. Dean Wright, Applying

Sociology: Making a Better World, Pearson Education Company, Needham Heights, MA, 2001, p. 76.93 See George A. Steiner and John F. Steiner, Business, Government, and Society:A Managerial Perspective, Text

and Cases, McGraw-Hill, Singapore, 1994, pages 116-117.94 Steiner describes that in 1984 Robert Ford and Frank McLaughin conducted a survey with 116 CEOs in America.

The result showed that 71% respondents agree that if a company has acts more socially responsible on its own,it will result in less government regulation. (Robert Ford and Frank McLaughin, in Academy of ManagementJournal, September 1984; as quoted by Steiner, 1994, ibid.)

95 See Hamid Abidin, Profil dan Potensi Kedermawanan Perusahaan di Indonesia: Sebuah Studi Pendahuluan (ACompany’s Profile and Generosity Potency in Indonesia: An Introductory Study), Piramedia, Jakarta, 2001,pages 20-21.

Resource: SMERU, December 2003.91

primary business practice? According toSteiner,93there are at least three important reasons:

First, a company is a social “creature” andtherefore should respond to societal requests.When society changes its ideas of how a companyshould function, the company should adaptaccordingly.

Second, long-term business interests benefit fromsocially responsible behavior. In the long term, acompany’s survival depends on its effort to besocially responsible in conducting its businessactivities. In contrast, the public’s welfare depends

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on the benefits produced by a given company andits business practices.

Third, socially responsible activities are onestrategy to reduce or avoid criticism from thepublic, and help influence or prevent governmentpolicy.94 If a company can avoid the imposition ofa government regulation by merely responding tosocial demands, doing so should also help reducethe company’s cost. This may prove better thanforcing such activities through government’sregulations which often increase a company’scosts and affect its operational flexibility.

The issue of social responsibility seems to beexpanding in line with initiatives of theinternational community, which are currentlydiscussing social responsibility in an ISOdocument (ISO 26000 – Guidance on SocialResponsibility). The discussion in ISO 26000commenced in 2004 and its policies should belaunched in 2008.

1. National Private Business Responses toCommunity Development

Nowadays, big companies in Indonesia arewilling to fund community development.Generally they facilitate programs in thecommunity health sector, education, cleanwater infrastructure, environmentalsanitation, and the productive economy(developing agriculture, animal husbandry,entrepreneur training), etc. A surveyconducted by PIRAC in 2001 recorded thatthere are 20 big companies working with civilsociety organizations (CSO) to conduct thecompany’s social activities; these companieshave spent around $10 million US fundingthese activities.95

96 Zaim Saidi, et.al., Sumbangan Sosial Perusahaan, Profil dan Pola Distribusinya di Indonesia: Survai 226Perusahaan di 10 Kota (A Company’s Social Donation, Its Profile and Distribution Patterns in Indonesia: Surveyof 226 Companies in 10 Cities), Piramedia, Jakarta, 2003, p. 5.

97 Ibid., p. 49.98 Adapted from Rustam Ibrahim, Bukan Sekadar Berbisnis: Keterlibatan Perusahaan dalam Pemberdayaan

Masyarakat (Not Just Business: A Company’s Involvement in Community Empowerment), Piramedia, Jakarta,2005, p. 1.

In another study, PIRAC recorded that the averageannual donation from multinational companiesstood at Rp.236 million, far greater than theaverage donation from national and localcompanies, which gave Rp.45 million and Rp.16million respectively. 96 The study also found that37% respondents stated clearly that they wouldincrease their donation if the government providedtax incentives for their donations to thecommunity.97

The above data demonstrates that big companieshave a powerful ability to help develop the populareconomy. As an illustration, Table 6 depictsprograms conducted by some large companies inIndonesia to help small industry and economicdevelopment.98

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Resource: Rustam Ibrahim, 2005.

Company Main Program

Small and medium enterprise development

Business cmarketingproduct dbusinesse

1. Bogasari Flour Mills

Community economic empowerment

Micro cre

2. Citibank Peka Community Development

Credit serindustry e

3. Coca-cola Foundation

Poverty Reduction Program in Micro Enterprise Development (MED)

Micro crefor small

Development of an Integrated Agricultural System

Animal hhorticultuintegratedinformati

4. PT Riau Pulp

Small and Medium Industries (UKM) Development

Small sca

Agricultural program

Food endimprovemfarmers

5. Yayasan Rio Tinto

UKM development Micro creit

Table 5. Popular Economy Development ProgramsFrom Five Large Companies in Indonesia

2. Normative Framework of the Small Businessand BUMN Partnership99

Today, BUMN permanently supports smalland medium enterprises, cooperatives, andother social programs. In BUMN’s MasterPlan 2002-2006, BUMN’s social role remains

strong despite its declared vision of “makingBUMN a strong, globally competitivecorporation that is able to fulfill stakeholderexpectations”. The Government’s desire to makeBUMN a strong, professional corporation doesnot decrease its social role and functions. Oneof its missions clearly remains: “improving

99 Some quotations regarding the small business and BUMN partnership are from Chapter III of Writer’s bookentitled,Tanggungjawab Sosial BUMN: Analisis terhadap Model Kedermawanan Sosial PT Krakatau Steel, PTPertamina, dan PT Telekomunikasi Indonesia (BUMN Social Responsibility: Analysis of the Social GenerosityModel of PT Krakatau Steel, PT Pertamina and PT Telekomunikasi Indonesia), Piramedia, Jakarta, 2006.

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BUMN’s role to address environmentalconcerns, community development, andguiding small and medium businesses, as wellas cooperatives in its partnership program.”

This is compatible with Law Number 19/2003that was passed a year later. The newest Lawon BUMN, it states that in addition tocontributing to national economicdevelopment, state revenues, and companyprofits, one aim of BUMN is to “activelyparticipate in providing guidance and supportto entrepreneurs, cooperatives and thecommunity.”100 To achieve this goal, BUMNcan use some of its net profits to help assistsmall businesses, cooperatives, and thesurrounding society.101 BUMN can also makecharitable donations pursuant to prevailingrules and regulations.102

In the same year, the government, through theBUMN Minister, issued Minister Decree Number:KEP-236/MBU/2003 concerning Small Businessand the BUMN Partnership Program andEnvironment Development Program. This decreewas issued on 17 June 2003, and it regulates theimplementation of the Partnership Program andEnvironment Development Program by BUMN,referred to as PKBL. The Partnership Programaims to strengthen the capabilities of smallbusinesses and promote their independence usingdonations from BUMN’s profits. The EnvironmentDevelopment Program is a program focused onthe empowerment of social communities inBUMN-related business areas, using donationsfrom the same resource. Both programs must beconducted by BUMN, either as a shareholder oras the leader.

Even though both programs are funded fromBUMN profits, the utilization and allocation ofdonations for each are different. PartnershipProgram donations (1%-3% of BUMN profits,

100 Law Number 19/2003 on State-Owned Corporation (BUMN), Article 2 paragraph 1(e).101 Ibid., Article 88 paragraph 1.102 Ibid., Article 90.103 Aburizal Bakri, op.cit., pp. 171-172.

after tax deductions) are generally allocated forsmall business loans, which can be used as businesscapital or for buying production materials. A smallpart of these donations (a maximum of 20%) canalso be in the form of a grant which could be usedfor education costs, trainings, apprenticeships,marketing, promotions, etc. The EnvironmentDevelopment Program donations (a maximum of1% of profits, after tax deductions) are used tobenefit the community in the requisite business areaby providing aid for natural disaster victims,education, training, health improvement, publicinfrastructure development, and the developmentof religious service infrastructure.

The monetary support for small businessentrepreneurs provided by large companies andBUMN can help accommodate many small businessneeds, e.g. education and management training inareas related to large scale businesses and BUMN.Another available strategy is to establishconsortiums, especially aimed to developmanagerial competence (for business management)and mastering technological know-how (to activateinnovation) both of which may be essential to enterthe modern business arena (formal system).103

CONCLUSION ANDRECOMMENDATIONS

The government, NGOs, and private sectororganizations have all attempted to empower

UMKM as part of various poverty reductionprograms. Unfortunately, most of these programsare still a long way from reaching their goals. Thenumber of poor people continues to increase.Moreover, there appears to be no significantimprovement in condition of UMKM. Thesegroups have come to the realization thatstrengthening entrepreneurship and UMKM is notan easy task because it requires changes in variousareas, i.e. psychology, sociology, anthropology,

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economy and political will. However,consultations have identified a variety of problemsand generated several ideas regarding how theycan be addressed. Some recommendations thatshould be considered are:

First, provide support to help strengthen thebusiness climate among the poor by means ofimproved mediation structures. Existing mediatingstructures need to be supported and revitalized sothat they can adequately support small scalebusinesses. In addition, it is necessary to establisha forum for the various institutions and large scalebusinesses that share a desire to reduce povertyby helping to develop UMKM. The forum couldfunction as means of communication, consultationand coordination, providing a place for sharing,seeking solutions to problems encountered in thefield, and coordinating programs to avoid overlap.

Second, support concerned parties, especially thegovernment, other entrepreneurs, and civilsociety, so that they can focus on helping the poorthrough their operational programs designed tostimulate productive economic activity, andcultivate a spirit of entrepreneurship. Theprograms they develop should really be effectivein addressing the interest of the people andUMKM.

Third, it is necessary to make modifications totraining methods. UMKM training could be moreeffective if it is targeted directly at UMKM orUMKM centers, and utilizes the skills that alreadyexist in these organizations. This could moredirectly address the interests of the relevantUMKM or UMKM centers. Good facilitators arealso essential to help UMKM solve their problems.Therefore, the trainers who are employed mustunderstand and be specially trained on theproblems and characteristics that are unique toUMKM. The trainers’ aim is to improve UMKMperformance through better service and productquality, and strengthen the UMKM’scompetitiveness.

Fourth, facilitate efforts made by government andNGOs to support capacity building for small scaleentrepreneurs with a view toward business equality,and competitive capacity. This can be achievedthrough greater knowledge about modernmanagement and business strategies. Suchknowledge will provide them with the analyticalability to make strategic decision concerning theirbusinesses. The aim is to improve the ability toinnovate and open new market for products andservices.

Fifth, support efforts for tax reform directed atproviding incentives to large scale businesses thatcontribute part of their profits to programs thatpromote societal development and encourage thepopular economy.

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Legal empowerment of the poor is expectedto be the means to provide poor communities

with opportunities to enable them to have a rightfor better life. Active participation from allstakeholders is the main key to suppressingpoverty.

So many different approaches to empoweringthe poor in Indonesia have been undertaken byvarious parties, including central and localgovernment, non-governmental organization,entrepreneurs, and the poor themselves.However, the results are far from theexpectation.

CHAPTER IVTOOLKITLEGAL EMPOWERMENT OF THEPOOR

From the facts above, this toolkit attempts to analyzethe current legal empowerment situation, challenges,solutions and initiatives. It contains four main themesof legal empowerment of the poor, i.e.: 1. Access toJustice and Rule of Law; 2. Property Rights; 3. LaborRights; and 4. Entrepreneurship: Micro, Small andMedium Enterprises.

The toolkit will hopefully become a reference forempowerment approaches in the future. It isdedicated to all stakeholders involved in the effort oflegal empowerment of the poor.

MODULE 1ACCESS TO JUSTICE AND RULE OF LAW

Situation

Efforts in solving legal issues and obtainingface stumbling block. Justice, it can be spoor. The formal legal system related to legal police, prosecutors and courts, are believeand make access harder for the poor. As a are taken away, and they do not obtain just

Challenges

Community’s lack of trust in the formal leg Court case process, from registration to veris expensive. Case management is also terri Professionalism of security forces, includingpoorly administered education. The lack of independency of formal legal in Lack of transparency in law enforcement bexample, it is hard to access the processes a

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Solution and Recommendation

Sincerity in implementing the principle of justice: simple, fast, and economical. Capacity building of security forces, by improving recruitment system and education. Improving the efficiency of monitoring mechanism, both internal and external, of the institution and security forces. Legal socialization for the poor using simple and comprehensible language. Ongoing legal assistance for the poor accessing the justice system Legal support services in favor of the poor. This could be accomplished through:

• The ratification of a draft Law on Legal Assistance, which provides legal basic for paralegals (Pengabdi Bantuan Hukum - PBH), in providing legal services for the poor.

• Actual implementation of Law on Advocates, which obliges

advocates to provide legal services for poor justice–seekers (UU No.18/2003)

Availability of clearer mechanism on regulation of Law on Advocates for better implementation in giving legal services to the poor: the government should promptly ratify Government Regulation on Requirement and Procedures in Providing Free Legal Assistance. Until today, the ratification of this regulation remains unclear.

The poor are regarded as the object of every attempt in the establishment of law and regulation. Full and meaningful community participation in the formation of law and regulation has yet to be maximized. Limited access to legal support. The amount of legal support services (lawyer and advocates) is very low for the poor. The poor is also lacking knowledge on their legal rights guaranteed by the nation. Legal resolution model that is not understood by the poor. Lack of synergy in legal empowerment approaches, by the government as well as the non-governmental organization. Thus, the expected results are not obtained and the goals are missed. Civillians suffer from discrimination based on their origins and political views, in attempt to obtain justice through the formal legal system.

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The needs to synergize the efforts of developing access to justice for the poor. This synergy absolutely has to be done by various stakeholders, including central and local governments, non-governmental organization and the international community. Integrated legal empowerment that is aware of the needs of the poor, such as through addressing concrete cases that arise in the communities. Real support from the government to non-governmental organizations, i.e. through incorporating legal assistance programs for the poor to a concrete government program, and funded directly from state and local budgets. Removal of stereotypes and discriminative practices. For example, the Chinese descents are assumed to be all rich, entrepeuneurs and capital owners, which leads to discrimination faced by the large population of poor of Chinese origin.

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MODULE 2PROPERTY AND NATURAL RESOURCES RIGHTS

The history of property rights in Indonesia is closely related to land issues. Formost Indonesians, land is the vital factor of their life. Not only is a productionfactor in economic term, land also has social, political, cultural, and even reli-gious values. From this understanding, we can comprehend why people are per-sistent in holding on to their lands, even if they have to die for it, on land conflicts.This context clearly describes how land issues become one of the main problemsfaced by the state and private corporations in Indonesia.

The disappearing of property rights of the people, particularly property rights onland based on local law or traditional norm.

Legal regulations in regard to property rights on natural resources have become anation problem. They are affected by demands and pressures from capital owners,investor countries, or international monetary agencies.

Definition of property, should not only have economic value, but also social values.

Inbalance use of land, between commercial needs and farming needs, causing anincreased amount of farmers without land.

Women vulnerability on property rights. Women’s rights to property are oftenmarginalized. This usually occurs in collective wealth management and inheritance.

Situation

Challenges

Solutionand

Recommendation

Policies that exaggerate privatization (such as through selling state corporationsand legalizing privatization of natural resources management rights to nationaland multinational companies) should be evaluated in order to respect civillians’property rights.

Legal documents on property rights should be derived from nation culture, basedon the needs of communities and focused on those needs.

The need to understand that property does not only carry economic value in theform of commodity, but also social values. As an example, a land for farmerscontains social meaning as an identity within their rural life; a forrest for thesurrounded community is the basis for binding every meaning and life of itssociety; similarly, the sea for the fishermen and such domains for othercommunities carry deeper social values. Every community has an attachmentto socio-economic values in the form of communal and individual bond to theproperty in order to protect the sustainability of their life, practically alsobecome their social security network that protects them from falling to poverty.

The need to rearrange the use of land in order to minimize agrarian conflicts.

Property policies should focus on women rights and interest, by opening genderequality opportunities in front of property law.

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Department of Housing and Transmigration: Free Housing. Department of Housingand Transmigrasi developed 6000 free houses for remote villages in Papua. UrbanPoor provided technical assistance, financial support and access to credit for thepoor in Jakarta, Bandung, Solo, Surabaya, Malang, Lombok, Makassar, and Ambon.

NGO Coalition (Koalisi LSM): Agrarian Reformation. The National AssemblyDecree No. IX/2001 on “Agrarian Reformation and Management of NaturalResources” is the result of advocacy and lobbying by NGO Coalition and poorpeople’s union (farmers, fishermen and the poor in urban areas) to the Assembly.The birth of this decree marked that agrarian reformation issue was back to be themain national concern. The decree also encourages various parties to perceive thelaw as the national agrarian umbrella in Indonesia.

Counsultative Adat Council of West Sumatra (Kerapatan Adat Nagari SumatraBarat): Pro-Women Property Policy. Some heads of the Council made pro-womendecisions and recommendations to solve issues on inheritance (family and adat)discrimination and collective wealth in marriage. The access was opened throughthe impementation of Law No.7/1984 and regulation under The Convention on theElimination of All Forms of Discrimination against Women (CEDAW), andamendments of Law on Marriage.

Alliance of Northern Lombok Adat Community (Komunitas Adat Perekat Ombara):Adat Court. The alliance of Northern Lombok Adat Community established adatcourt, consisting of government representatives, community leaders and religiousleaders in 32 villages. It validated adat norms and legal procedure. Theestablishment of the court aimed to ensure property rights based on adat regulationis sustained and protected.

Kulawi Adat Community: For the Protection of Adat Land. The community livedon the land that subsequently turned into Lore Lindu National Park, CentralSulawesi. Their access was limited, while the 200 hectares of land outside the parkwere controlled by a private corporation. They could not expand their coffeeplantation. By learning about history and adat knowledge of their property rightson forest, they divided the use of it into several zones. This genuine informationbecame the basis to negotiate with the park’s council. At last, they earned formalacknowledgment: Head of Council’s Decree No.651/VI.BTNLL.1/2000 dated June18, 2000. This letter explicitly stated: “Acknowledged Ngata Toro area of +18.360hectare within the area of Lore Lindu National Park, which would be managedaccording the category of Toro area, due to equality of access to the zoning systemof the Park.”

Kembang Tani Organization: People’s Struggle for Land Rights. After 60 years ofstruggle, Kembang Tani Organization in Kebumen village, Tulis subdistrict, Batangdistrict, Central Java, finally earned back their land. Their land was originallycontrolled by Ambarawamaju Pty. Ltd. After undertaking reclaim process andnegotiation among Kembang Tani, local government, and National Land Agency(BPN – Badan Pertanahan Negara), a decree was finally issued. The Central JavaBPN Decree No.55/32/33/2002 distribute lands into the following: Batang local

GreatestStories

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government (15 hectare), public facility (5.5 hectare), former rights owner (5hectare) and farmers (26.5 hectare). The farmers’ land was distributed to 800farmers, who were members of Kembang Tani, 300 meter each and an agreementthat it will not be sold for ten years. Certification fee was subsidized so eachmember only paid Rp.100.000 in late October 2002, when they received thecertificate. At the time, the land had turned into a settlement.

Sidewalk Traders of Baiturahman: Struggle for Approval. Sidewalk traders ofBaiturahman were small traders who sell their products in Simpang Lima, indowntown Semarang of Central Java. Their existence was blamed for the creationof slum area in the front part of the Mosque. The mosque officers complained tothe city government to clean the area from the traders. Semarang city governmentthen appointed security forces to move the traders because they were assumed toviolate Local Law Np.11/2000 and Mayor Decree No.511.3/16. After goingthrough several negotiations, the traders earned the legality to work in the area,witnessed by City Market Office. The existence was legalized through a decreethat authorize them for using the area for trading at the agreed time.

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MODULE 3LABOR RIGHTS

As undetected and undocumented entities, informal business units fail their workersin providing protection over their labor rights, social welfare and their workingstatus. The workers of informal businesses are at risk of unfair treatment and theycannot defend themselves since they face difficulties in organizing into labor union.

Situation

Workers in the informal businesses are in vulnerable position, as they cannot obtainany protection.

There is no clear definition of informal workers. Thus, no comprehensive descriptionof the nature and types of informal workers.

To date, there is no law and regulation that provides warranty and protection forthe informal workers and their types of work.

Formalization of informal workers have yet to improve their welfare.

Outsourcing phenomenon generates categorization and discrimination on thedivision of labor. It also inflames relationship at work and manipulates the laborers.

Current law and regulation should be consistent to the international legal standardon labor.

Discrimination against women laborers is still high. Poor women laborers as avulnerable community often are neglected, both in the law and regulation as wellas the reality in the field.

Challenges

Solutionand

Recommendation

Reinforce labor rights, provide social security for informal workers and increasevoices and representatives from the informal sector

Government should fulfill, respect and protect, as well as provide assurance toinformal and formal workers, based on universal principles.

Eliminate every policy in local and national levels that do not meet human rightsprinciples or violate constitutional rights, including rights of women and minorities’.

Good implementation of Law no.04/2004 on National Social Security System. Thelaw affirms that every citizen has the right to obtain social security. For itsimplementation, the government has to prepare regulations detailing matters suchas program, fees, membership and benefit for workers, both within or beyond theinformal activity.

There needs to be a greater availability of government policies in the informal sector,i.e.: applied technology for right use, solid work system, development of volunteers,development of independent laborers, and informal sector.

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There is a need to modify policies that violate human rights, and to generate newpolicy based on international principles. In the area of migrant laborers, particularly,International Convention of Protection of Migrant Workers and Their Family(Konvensi Internasional Perlindungan Buruh Migran dan Anggota Keluarganya)should be introduced in every policy.

The need of training, protection, and social security for the workers in the informalsector. Until today, there is no specific regulation discussing the informal sectorworkers.

Re-assessment of regulation in regards to outsourcing, which clearly harm laborrights.

Concentration on fulfilling the rights of poor women laborers. Law and regulationshould be more sensitive on the vulnerability of women, and be focused on itsimplementation stage.

SuccessStories

Department of Manpower and Transmigration: Pilot project on manpower sector.The Department of Manpower and Transmigration established a pilot project inthe informal sector that protects social security and health of ojek (motorbiketransport) drivers in Jakarta area.

Domestic Workers Union (Serikat Pekerja Rumah Tangga – SPRT) in Yogyakarta:Work Agreement Initiative. SPRT in Yogyakarta developed a working agreementconcept for the domestic workers, with the aim to alert their employers on theirrights and duties. At this time SPRT is in the process of lobbying the local governmentfor inserting the agreement into a local regulation. This is a success story, since todate there is no “formalization” of government policies on informal workers indomestic area. It is expected to be the model of informal workers’ struggle in othersectors.

Jakarta Legal Aid Institution (LBH Jakarta): Facilitation on informal labor dispute.LBH Jakarta facilitated mediation over dispute between owners of angkot (localtransport providers), Drivers Cooperation (Koperasi Sopir Doyok -KSD), SouthJakarta Transportation Office, YB Bank and CV.Sm. Even though community couldnot come up with any agreement, LBH Jakarta was successful in improvingbargaining position of the drivers as informal workers in front of the formal legalinstitution.

Bandung Legal Aid Institution (LBH Bandung): Labors’ struggle. LBH Bandung isa strong organization for handling labor cases. Some of the success stories are:

Advocation for the case of Kahatex Sweater Pty.Ltd. (2004-2005) in Majalayaarea, in which the corporation unfairly fired its labors. LBH Bandungundertook legal assistance through two strategies: (1) case campaigns, incollaboration with international NGOs, which were Clean Cloth Campaign(CCC) and Workers Rights Consortium (WRC); and (2) organization of laborsfor addressing their problems to the corporation. The result was rehiring of450 labors.

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Participation on labor policies in Bandung area. In 2006, the local governmentarranged draft local regulation on manpower. LBH Bandung, along with thelabor network, undertook a study of the regulation and found out that itoverlapped with Law on Manpower and some articles even more harmed thelabors. As a result of the study, LBH Bandung implemented participativeinitiative to reject the draft local regulation. The result was suspension ofregulation.

Trade Union Rights Centre (TURC): Information Center of Labor. TURC is anorganization serving labor assistance, with the focus on legal empowerment, politicsand economy of labors and Indonesian Labor Union. TURC provides a breath offresh air to the improvement of access to information, both for the organizationand for the laborers themselves. In its work program, YURC also undertook trainingactivity for labor union, research and publication in the area of labor.

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In difficult situations, small enterprises evidently have a strong survival power, com-pare to most of the big enterprises. It is one of the factors why this sector is impor-tant. In addition, an approach of equitable distribution in the economy – a mainobjective of development policy – would be more effective if implemented throughsmall enterprise development since the amount is small and the nature is solid work.

MODULE 4ENTREPENEURSHIP: MICRO, SMALL, AND MEDIUM ENTERPRISES (USAHA

MIKRO, KECIL dan MENENGAH - UMKM)

Situation

Challenges

Weak access to banking capital since there is a tendency that the banks are notoriented to financil small enterprises. Financial schemes are mostly for bigenterprises.

Tendency that UMKM always rely on formal credit system, whereas creditopportunities beyond formal credit could be used for small enterprises.

Incorrect understanding of small enterprises, i.e.:characteristics of UMKM vary, often unrealized, so the development approachfaces many challenges;The government place UMKM as the program target, not the program actors,so implemented approach is only top-down, resulting in the delivery ofirrelevant policy;Approach involves “giving” rather than “empowering” because UMKM isseen to be weak and powerless.

Weak position of women in small enterprises in obtaining credit from the bank,because there is a condition that they have to get permission by the husband. Incontrast the data indicates that there are at the very least 64 women in micro businessnetworks in at least 64 districts of Indonesia, with at least 75,000 participatingmembers.

Weak standardization of UMKM product and service quality, because:lack of management orientation from weak strategic thinking in implementingthe business;weak competition ability;lack of consistency in maintaining product quality standard;lack of marketing/promotion;lack of ability in maintaining and opening new market because the productsare not unique.

Weak coordination among government institution in training UMKM.

Unfair competition between UMKM and big industries.

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Situationand

Recommen-dation

The need to generate mediating structure to empower the poor so they don’t feelisolated in facing economic reality. One example is finding opportunities beyondformal financing scheme in enable bigger opportunity of access to credit.

UMKM training program should be implemented with solid coordination. To date,more than one government department and institutions have UMKM trainingprograms (e.g. Department of Industrial Affairs, Department of Trade, Ministry ofCooperation and Small Enterprise, and National Development Planning Agency),but coordination among the programs is not well implemented.

Legal guarantee of peoples’ economic activities are available, but the fact showsthat the development of small industries are often harmed by industrial policy thatbenefit the big industries, such as in protection, investment, credit and tax. Inaddition, small industries often become the first victim to economic policies, whichaggressively invite foreign capital in-flow. The government should focus on this inorder to improve UMKM.

The needs to improve access to service for UMKM should meet legal affairsreformation. Management and organization should support a more condusive andpro-poor enterprise climate.

Informal characteristic of small enterprise actors is people’s economic power. Thisshould be realized and protected by law. UMKM should get protection from thegovernment in order for them to grow according to their unique characteristic.

More specifically, some regulations related to security of guarantees and fulfillmentof UMKM’s rights should be implemented by the government, including access tocredit, business location, security and legal warranty, and acknowledgement ofwomen as independent business actors. The government should evaluate someregulations that do not support the development of small business, and exploitativelocal regulation to UMKM.

Corporate Social Responsibility (CSR) ideas should be developed in supporting thegrowth of UMKM.

Implementation of validated policies supporting the development of people’s economyand the availability of security in the implementation of those policies.

Adjustment of small industries development opportunities to meet the potential ofthe regions, related to Regional Autonomy implementation in order to generatevarious markets of small businesses. Local regulations that support a conduciveenvironment for small business are expected to be issued.

The need of distribution policy. Mafia, creditors and illegal extortion in the chain ofbusiness lead to the occurrence of exploitative relating to small industries. Theyshould be removed.

The need of healthy market mechanism in supporting people’s economy in order tosustain the development.

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SuccessStories

Yogyakarta City Government: Structuring Sidewalk Traders. From Local RegulationNo.26/2005, the City Government provided protection and acknowledgment ofsidewalk traders in Yogyakarta. The regulation is also a strong legal foundation toimplement training, ruling and control over sidewalk traders. It contains articles onpermission, locations, rights and duties, facilitation, and development of sidewalktraders.

Yayasan Mitra Usaha (YMU): Improvement of people’s economy. YMU aimed atimproving people’s economy for their welfare, and enhancing independency of NGOsin Indonesia. Types of successful coordinated programs include the establishment ofPeople Credit Bank (Bank Perkreditan Rakyat – BPR) in Kendari, and founding ofInti Rakyat Hotel in Tabanan district. One breakthrough of YMU is placing fund-guarantee to several BPR in order to provide micro credit service (less then 1 millionrupiah) without any collateral. If collateral were needed, it would be very flexible,such as marriage licence.

Suara Ibu Peduli (SIP): Concern leading to empowerment. Started off from ahousewives movement that was concerned about the struggle of families that couldnot provide milk for their babies because of the monetary crisis, this movement gavebirth to long-term empowerment programs to improve independency of its members.The programs include:

Collective Business Program; members could take credit as their businesscapital, with simple regulation for easy return;Tanggung Renteng Group: developed with objectives to protect availablecooperation business, and to raise mutual cooperation aspect.

Padang Legal Aid Institution (LBH Padang): Advocacy for the Rights of SidewalkTraders. The case began with removal of sidewalk traders at Pasar Pagi, Padang,along with violence by the security forces. Traders went to LBH Padang for supportto file complaints and asked their help to fight for their rights, since most of themwere poor. LBH Padang were directly involved in this case, resulting in relocationof sidewalk traders in exclusive area and refund by Padang City Government.

HAPSARI FSPM: Independent Women Union. It began with a small group calledVillage Women Working Group who provided assistance to pre-school aged children.They established a playground, named HAPSARI (acronym of Harapan DesaSukasari). Mothers who took the children their were invited to participate in collectivebusiness activities, such as baking cake, making soap, organizing arisan, and farmingbee. The group grew and firmed its commitment for village women empowerment.Aside from the activity as the space for women to obtain justice and gender equality,HAPSARI also developed productive business units for village women and has severaltrained groups who managed various forms of businesses, such as snacks, animalhusbandry and farming.

Association for Women in Small Business Assistance: Micro Credit Program forEmpowering Women in Small-Micro Business. The program was designed not onlyas a means to empower women, but also a combination of advocacy and managementactivities of micro credit. Some activities are training, provision of credit, advocacy,

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and establishment of women in small business network. Location is in 43 districtsaround 14 provinces (Aceh, North Sumatra, South Sumatra, West Sumatra,Bengkulu, West Java, Central Java, Yogyakarta, East Java, West Nusa Tenggara,East Nusa Tenggara, West Kalimantan, Southeast Sulawesi, and Central Sulawesi).

Bina Desa: People’s Economic Development and Advocacy. The basis of this programis people’s economic development and advocacy in relations to people’s economicdevelopment; aimed at organization in people level and development of collectivebusiness in group level, as well as advocacy related to the collective business. In itsimplementation, Bina Desa collaborated with Karya Insani Cooperation andcommunity groups. Types of activities: feasibility study of potential business, marketstudy, business feasibility study, training, accounting, management and organization,and credit facility.

National Private Business: Community Development. Some of the best examplesare:

Bogasari Flour Mills with its small to medium enterprise development andpeople’s economic empowerment by providing micro credit.Citibank Peka, provided credit, training and awards for micro business.Coca Cola Foundation, provided micro credit and capacity building for smallindustries.Riau Pulp Pty.Ltd., developed solid farming system and developed small tomedium industries.Rio Tinto Foundation, provided training, assistance, micro credit service, andSaving and Credit Cooperative (simpan pinjam).Astra International Pty.Ltd. through Dhana Bhakti Astra Foundation,organized training for small to medium industries, both related or unrelatedto Astra production.

Edam Burger: Succesful Initiative of Small Business. Edam Burger is a brand ofquickly developed franchise. The name Edam is a reverse of the owner’s nameMade Ngurah Bagiana, who started his business in 1996 with capital of Rp.1.5million. His hardwork and courage had shown a great result. Today, Edam Burgerhas 300 burger carts and 100 workers within Jakarta, Bogor, Bandung, Surabaya,and Semarang. This method of franchise had encouraged other businessmen in thesame industry. One of them is Mr. Burger, under the flag of Gempita IndonesiaMuda Pty.Ltd. Now Mr. Burger owns 300 counters and stands in 13 cities of Indonesiaincluding Jakarta, Batam, Cirebon, Banding, Purwakarta, Semarang and Bali.Furthermore, Edam Burger also inspired another franchise, Edola Burger, with amain office in Jakarta.

Sinjai District Government: Socialization of local products and market promotionapproach. Potential analysis, undertaken by the local government of Sinjai, includesorganizing farming group and empowering UMKM by providing technical assistanceand business tools. One of the satisfied local enterprises is Susin (Sinjai Milk andice cream), which now conducts successful marketing beyond Sinjai. The localgovernment favor was then empowered by Head of District Letter No.524.22/260/set on Instruction of the Use of Prepared Milk and Passion Fruit Juice. The localgovernment has proved successful in providing initiative for empowering thecommunity.

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The poor have had the ability to survivewithout any support by the government.

They differ from those businessmen who, forexample, benefited from the Central BankLiquidity Support (BLBI - Bantuan LikuiditasBank Indonesia), harming the nation up to trillionsof rupiah. Again they completely differ from thoselocal legislative leaders and members, comingfrom various part of Indonesia asking for morebenefits by rallying to the House of Parliamentbuildings in Jakarta. The poor survive throughtheir own determination and assets!

Alongside Kuningan, a major road in the nation’scapital, we can see people selling shrimp crackersright in the middle of the road, while a bunch ofelite cars are stuck in the late afternoon traffic.Even on the side of the busy road, we can see abakpao trader parking his cart to sell the warmwhite bread filled with meat or green beans.

Approaching 10:00 a.m. or 4:00 p.m., thosewithout capital stand in a row to provide theirservices as a joki – paid passengers for elite carsheading towards “3 in 1” traffic zone – onSudirman road.In the real estate complex, it is common to seevendors wandering around to sell food, ice ordrinks. In the middle to lower communities’housing complex, we can even find numerousvendors selling various goods, from housewareutensils to jewels: buy in cash or credit.

EPILOGUE

On the sides of the roads, alleys, and open spaces;by the train tracks and riverside; even in markets,the small traders struggle to make ends meet. Thepoor often use their house or hut as their businesssite. In some cases, business sites such cigarettestands double as the family’s daily shelters.

In the rural areas and in the satellite areas of bigcities, many residents have changed theirprofession, former farmers tried to find livelihoodsin big cities or turn to be farming laborers. Personallands, which have been owned and managed byfamilies over generations, have been converted intobuilding rights on land or cultivation rights on land,owned by businessmen and capitalists – thosewhose businesses were owned by credit andreceived support by the government and privatebanks.

They, the urban and rural residents, have rarelybeen pampered by government or received banksupport, nor have they ever enjoyed the right tojustice.

Some best stories and narrations from this bookhopefully will provide inspiration on how legalempowerment, public access to economic resources(credit, financial facilities) and right to justice forthe laborers are real challenges. They representthe ideal form of the social justice and liberty inthe life of civilians. The presence of Commissionon Legal Empowerment of The Poor (CLEP) can

91

possibly encourage policy change around theworld, including Indonesia.

CLEP: The Queen of Justice at the GlobalLevel?

The Commission on Legal Empowerment of ThePoor was formed by a noble goal, to end povertythrough legal empowerment. Promotingexecution is closely related to the aim ofdeveloping policy and regulations, which provideformal legality over property rights as thefoundation for legal empowerment in endingpoverty.

As an illustration, the Commission’s ideas andprograms may be formed as an acknowledgmentand provision of guaranteed property rights onland, such as provision of property rights on landcertificate; provision of legal guarantees for theworkers, laborers and entrepreneurs in theinformal sector.

Why are those action needed, and why should theybe facilitated by policy makers at the global,national as well as local level? To open what iscan be referred to as “the bell jar” – theoreticallydeveloped as a concept by Fernand Braudel, andthen quoted by Hernando de Soto, a Peruvianeconomist and the co-chair of CLEP, andMadeleine Albright, a former US Secretary ofState – to analyze the development of globalcapitalism. In short, “capitalism” is assumed tobe an exclusive area for a few of those who live in“the bell jar”, while most people, particularly thepoor, live outside this jar: this group keeps on livingin poverty. The solution is to integrate orconsolidate dead capital – owned by the poor – tothe formal capitalism system, thus turning intoliving capital, by opening the jar. Dead capital onits own has a meaning, it generally refers to thetype of capital that cannot be accumulated, cannotbe marketed and cannot be used as security toacquire credit from the creditors.

Living capital may emerge from the availabilityof formal ownership system, which enables theprocess, formation, regulation and management

of assets in a certain condition. According to deSoto’s research, in the West, capitalism coulddevelop because those countries regulate propertyunder clear and exact legal system, like having a“black on white” contract. Such contracts thencan be used for generating their assets to be utilizedproductively.

This book shows clearly, one of the obstacles formicro, small and medium enterprise is: the difficultyof acquiring banking capital or loans. Why? Simple,because they do not have the collateral to obtaincredit. The same case occurred in the informalenterprise sectors – included in the category of thepoor. However, the business cycle in this informalsector is great. According to de Soto’s research, insome farming sector in Asia, Africa, The Middle-East, and Latin America, most of the poor generallyhave assets to succeed in the capitalism system.

Moreover, de Soto stated that savings value amongthe poor is no less than 40 times of all the foreignsupport ever received in the whole world since1945. According to the data, the wealth of thepoor in Egypt reach 55 times of the whole foreigninvestment through direct foreign investment everinvested, including investment for Suez canal andthe giant Aswam dam. Another example, Haiti,the poorest country in Latin America, places thetotal assets of the poor up to 150 times higher thanall foreign investment ever received in the countrysince its independence from France in 1804.

One more time: why are the poor from thosecountries, including Indonesia, still poor and whydo they keep on being poor? The answer, accordingto de Soto, is there are facts that show inefficienciesin the form and resources or assets owned by thepoor. For instance: the poor live in the house ontheir own land that has not been properlydocumented, their enterprises are not managed aslegal enterprises (they are unincorporated business)with undefined liability, or businesses are locatedat places that are unknown by investors – unclearaddress or identity and are not listed formally.

At a glance, the vision and mission of theCommission is marvelous: is this “the global Queenof Justice” long awaited by billions of poor

92

individuals around the world? If the Commissionis following the capitalism politic economic logic,it is hard to place overwhelming optimism in it.However, after hearing direct explanation fromHernando de Soto; Ashraf Ghani, Commissionmember from Afghanistan; and Naresh Singh,Secretariat Executive Director of the Commissionin New York, I personally was amazed: “wow,increasing prosperity for the poor is that easy; justopen the jar”.

Internal Nation: Decide; External: OnlyInfluence!

My surprise was not limited to the matter ofopening the bell jar, but continued to the issue ofwho is the actual party that decides thedevelopment programs and end-of-povertyprogram in Indonesia?This is the story. When Ashraf Ghani came toJakarta, the Indonesian Legal Aid Institute (YLBHI– Yayasan Lembaga Bantuan Hukum Indonesia)organized a limited discussion regarding Ashraf’sthoughts on the Commission. At the time I statedthat many regulations in Indonesia was “dictated”by the International Monetary Fund (IMF). Thisconclusion was based on the research on contentsof laws and regulations, developed from 1997 to2002, compared to the content of IMF letter ofintent signed by the Government of Indonesia. Theresult: they both were very similar. And then Iasked Ashraf: how significant was the influenceof international monetary organizations indirecting the economic policy and politics of anation, including Indonesia?

Ashraf answered in ease: “Your government is thedecision-maker, not the international monetaryorganizations. How can IMF or the World Bankdecide on the policy direction in your country?From the total budget acquired, less than 20percent is paid for loans, and the 80 percent canstill be used for your country’s matters!” I thinkAshraf is right. The Government of Indonesia –central and local – should be the one deciding ongenuine programs for the welfare of its civilians.This book contains some good initiatives that weredone by several local governments. The greatexamples in the book will hopefully give

inspiration, which then lead to the establishmentof massive and mass national programs.

But it is risky if “legal empowerment of the poor”is only a jargon. Policy is only a lip service – fullof promises, lacking in proof. These kinds ofworries are slightly dissolved when hearing andseeing directly the dedication of Erna Witoelar, amember of the Commission, who is also the UNSpecial Ambassador for Millennium DevelopmentGoals (MDG) for the Asia Pacific region. Hercommitment as well as her sharp statementscriticizing policies and implementations ofregulations that is not “pro-poor”. Her expectationbecomes a commitment for all policy-makers of thecountry.

Jakarta Vice Governor, Fauzi Bowo, and theDistrict Head of Sinjai, Andi Rudiyanto Asapauttered similar commitments. If executed, it willbenefit the poor. Jakarta Vice Governor once saidthat he is committed to facilitate free advocacy tothe poor, while District Head of Sinjai outlinedseveral ideas on providing facilitation for small andmedium enterprises in his area: including, whenneeded, shifting the front yard of the district officeas the collateral in the bank – a prank to illustratehow hard it is for the poor in order to get businesscapital from the banks.

Point on Own Forehead

For you who have never experienced being poor –just imagine, better yet don’t. It is the responsibilityof all of those with the “sufficiency” to findsolutions.

The book does not only contain governmentinitiatives, but also non-governmentalorganizations (NGOs) and other civil societyorganizations initiatives, as well as business sectorideas for empowering the poor.

Some NGOs initiatives were done earlier, beforegovernment, in executing legal empowerment ofthe poor. YLBHI is an example. The 36 years ofjourney (since October 28, 1970) was a good caseof institutional development of legal aid in this

93

country. This is a good reference for theCommission to be developed in other emergingnations.

In the future, YLBHI is planning to keep ondocumenting success stories for inspiration. Theorganization will also identify advocates who aregenuine in executing legal and economicempowerment for the poor.

Today, empowerment programs, either legal oreconomic, are leaving a question: why are there“supposedly” many initiatives and programs fromthe government, business sector and NGOs, butin fact the majority of Indonesians are still poor?Don’t point on others’ forehead: point on yourown!

A. Patra M. ZenChairperson YLBHI

94

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97

APPENDIX 1

Jakarta, 05 November 2006

LIST OF PARTICIPANTSFOCUS GROUP DISCUSSION

InstitutionYLBHIELSAMYLBHIICELSC NC CLEPUPCLBH JakartaYLBHIAMANHUMASPQTSC NC CLEPRural Development InstituteYLBHIYLBHIAliansi Buruh MenggugatOC NC CLEPSerikat Buruh JakartaSPRTYLBHILP3ESAPPSIAPPSIAPKLIUNDP

26.27.28.

29.30.31.

ASPUKYLBHIYLBHI/Assistant ProgramManagerYLBHI/Program ManagerYLBHICLEP

Yuni PristiwatiRicky GunawanSri Nur Fathya

Restu MahyuniA. Patra M. ZenErna Witoelar

NameErna RatnaningsihSupriyadi Widodo Ediyono,S.H.Ricky Gunawan, S.H.Diah ParamitaPhilippa VenningDiantri IrawatiHermawantoTaufik BasariErasmus CahyadiAsep Yunan FirdausMujabMatt StephensRobert MitchellEdy Halomoan GurningTabrani AbbyIlhamsyahMatt ZurtrassenSuliyemLita AnggrainiFerry P. SiahaanFajar NursahidHasan BasriYudi LazuardiNesya Hughes

No1.2.3.4.5.6.7.8.9.10.11.12.13.14.15.16.17.18.19.20.21.22.23.24.25.

98

APPENDIX 2

Jakarta, 24-25 November 2006

LIST OF PARTICIPANTSNATIONAL CONSULTATION

NameA. WaidlEry Sandra AmeliaArezka AriAgnes GurningLidiaAmirudinJack PaskalisHasan BasriEdwin P.Yuni PristiwatiWarhiyahIntanYatiWartiahSuliyemDian Tri IrawatyHarminiMela NuhAndi Tenri DalaPuwandonoChrisMila Ruh

Muslimin

No12345678910111213141516171819202122

23

InstitutionP3MOnghokham InstituteOntrack Media IndonesiaIKOHIYAPPIKAELSAMDPW APPSI JakartaDPW APPSI JakartaKontraSJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputJaringan Perempuan Akar RumputYPB/LEAD IndonesiaInzpire TechKomphalindoGARPUYayasan PembangunanBerkesinambunganKKP

RACA InstituteAMANAPPKLIAPPKLIAPPKLIAPPKLIICELURDIHRWGCGIINTILADILADI

Poltak Ike WibowoErasmus CahyadiDina SavitriYudi LazuardiSumarlanFathoniWiwiek AwiatiWahyu MaulanaAkbarMargarethaUlung RusmanRebecca HarsonoLiliana

24252627282930313233343536

99

LBH JakartaM. BaruLSPPHuMAKRHNRDIYPHILP3ESFrontline InstituteBirdlife Indonesia, BogorBantaya, JakartaLP3ESLBH JakartaKPAGTZGTZHIVOSLDFLDFBirdlife Indonesia - MFP - DFIDPartnershipWorld BankWorld BankIDLOPartnershipBritish Council/UEThe Asia FoundationLDFWorld BankTifa FoundationTifa FoundationUNDPUNDPUNDPDep. Arsitektur Lansekap IPBUniversity of IndonesiaUniversity of IndonesiaSekolah Tinggi Pertanahan NasionalBPNJurnal Nasionalhukumonline.comMedia IndonesiaLativiKoran Sindo

Nurcholis HidayatDellaSulastioStenyFathoniAhmad SafikEric TampubolonBurhanudinSukarmanTA. Budi AuliaHedar LaujengBurhanuddinAsfinawatiIdhamLars KnorrRimmele PeterDiah Tantri DwiandaniPatrick BurgessSally LowTengku Ahmad Budi AuliaM. SobaryPerry U. FaruhMatt Z.Erica HarperNenad BagoCathy McWilliamHestiStewartMatt. SAndi AchdianRenataEwa WMas Achmad SantosaDody KusadriantoAris MunandarIwan GunawanNur HabibiEndriatmo SutartoGunawan SasmitaAtiyehImam H.MJ SihaloloAgungSM Said

3738394041424344454647484950515253545556575859606162636465666768697071727374757677787980

100

81828384858687888990919293949596979899100101102102103104105106107108109110111112113114115116117118119120121122123

YulisPhilippa VenningAninditoAzis GunawanRickyRachmatTiknoDodo JulimanAdnan Buyung NasutionSakurayati TrisnaAndang SetyobudiG. RahayuAprizul GumantiKolierH. HamdanAmranaOla SetiabudiIrwansyahYuana SutyowatiTianggur SinagaHafid AbbasFauzi BowoAA PutrayasaAndi Rudiyanto AsapaAlamsyahSyamsul Rizal AmirNyadinSyaiful ArisHendrisyaAlvon PalmaAdi MansarNurkholisAnggiatAgung Dwi AstikaM. IrsyadGatotAmaluddinTandyono BaworPaskalis LetsoinAfridal DarmiM Hasbi AbdullahWiwiedPuji LestariSusi Aprianti

PERSDAJustice for the PoorUN-HabitatAPHI JakartaPOLDA Metro JayaPemerhati PolitikPOLRES JakPusUN-HabitatDewan Pembina YLBHIDewan Pembina YLBHIBIDepkumhamBAPPENASDepkumhamDepkumhamBIBIBappenasMenkop dan UKMDepnakerDephukhamDKI JakartaKabupaten JembranaBupati SinjaiKabupaten SinjaiKabupaten SinjaiBMT Pahlawan, Tulung AgungLBH SemarangLBH PekanbaruLBH PadangLBH MedanLBH PalembangLBH PalembangLBH BaliLBH YogyakartaLBH BandungLBH Bandar LampungLBH SemarangLBH PapuaLBH Banda AcehLBH MakassarSPRT Tunas Mulya, YogyakartaSPRT Tunas Mulya, YogyakartaSPRT Tunas Mulya, Yogyakarta

101

John GaneshaHedarMunzirinMujabRudiFaridaHasminiSugiarsiLoringSukayanto

LIKOS, Pangkal PinangPerkumpulan BantayaGravitasi, LombokSPPQT, SalatigaICS PapuaSBR SurabayaSBR SurabayaSukowati, SragenSPP GarutGerak, Ungaran

124125126127128129130131132133

102

APPENDIX 3

Jakarta, 21 December 2006

LIST OF PARTICIPANTSDISCUSSION AFTER NATIONAL CONSULTATION

NameRetna KustiyahAzas Tigor NainggolanDodo JulimanMindo PangaribuanSuaraiSoepeno SahidM. ZurstrassenNesya HughesSri Nur Fathya (Ade)Ricky GunawanRestu Mahyuni-ReinhardtM. Doddy K.Rheinatus B.Lana WinayantiP. Soepono D.SuyatnoAgus NefoNoer SoetrisnoFirsta JusraAstika UtamaIsmantoUmi HanikPatra M. Zen

No1234567891011121314151617181920212223

InstitutionBadan Pertanahan NasionalFAKTAUN-HabitatFreeport Indonesia Kementerian KesraJustice for the Poor, World BankUNDPYLBHIYLBHIYLBHIUNDPPenelitiKementerian Perumahan RakyatPT ISM BogasariBAPPENASBina Progkara DJCK PUSET MENPERAMedco E&P IndonesiaEDAM BurgerBank Rakyat IndonesiaBAPPENASYLBHI

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Aliansi Buruh MenggugatJl. Basuki Rahmat No. 25 Jakarta Timur,Tel / Fax. (021) 85912703E-mail: bpn.abm@telkom.net.id

Aliansi Masyarakat Adat NusantaraJl. B No. 4 Rt. 01, Rw. 06 Rawa Bambu Satu, PasarMinggu,Jakarta Selatan. Tel / Fax. (021)7802771

Anum Lio Foundation (dahulu Rio Tinto Foundation)Desa Bigung Baru, Kec. Linggang Bigung, Kab.Kutai BaratPO Box 269, Balikpapan, Kalimantan Timur 76114Tel. (0542) 760871 Fax. (0542) 762827

Asosiasi Pedagang Pasar Seluruh Indonesia, DPWJakartaSentra Mampang Blok C-3, Lt. 2,Jl. Mampang Raya No. 28 Jakarta Selatan,Tel. (021) 7982161

Asosiasi Pendamping Perempuan Usaha Kecil(ASPPUK)Kav.PTB.DKI Jl. Ruyung Blok.A19 No.29, JakartaTimur 13450,Tel. (021)86902636. Fax. (021) 8641653.E-mail :asppuk@indo.net.id /sekretariat@asppuk.or.idWebsite : www.asppuk.or.idBadan Pertanahan NasionalJl. Sisingamangaraja No. 2, Kebayoran BaruJakarta Selatan. Tel. (021) 7393939,E-mail: mail@bpn.go.id - Website: http://www.bpn.go.id

Bank IndonesiaJl. MH Thamrin 2, Jakarta 10010,Tel. (021) 2310847. Fax. (021) 3501867

Bina SwadayaJl. Gunung Sahari III No. 7 Jakarta Pusat 10610PO Box 1456, Jakarta 10014. Tel. (021) 4204402.Fax. (021) 4208412E-mail: bsawadaya@cbn.net.id

Birdlife Indonesia-MFP-INFIDJl. Dadali No. 32, Bogor Tel. (0251) 357222

BMT Al- InayahJl. Subyadinata No. 52 Rt. 03/06, Garut

BMT PahlawanJl. KH R Abdul Faithah Komplek Ruko Ngemplas 33,Tulung Agung Jawa Timur. Tel. (0355) 328350

British CouncilJakarta Stock Exchange, Tower II, 16th floorJl. Jendral Sudirman Kav 52-53 Jakarta 12190Tel. (021) 515 5561. Fax. (021) 515 5562

Clean Clothes CampaignInternational Secretariat, Poostbus 11584, 1001 GNAmsterdam,The NetherlandsTel. (31) (20) 4122785 Fax. (31) (20) 4122786E-mail: info@cleanclothes.org - Website: http://www.cleanclothes.orgCommon Ground IndonesiaJl. Wijaya III/5, Kebayoran Baru Jakarta SelatanTel. (021) 7254080

Departemen Kehakiman dan Hak Asasi Manusia(HAM):Jl. H.R. Rasuna Said Kav. 6-7 Kuningan, Jakarta12940Tel. (021) 5253004Fax. (021) 5263082

Departemen KehutananGedung Manggala WanabaktiJl. Jend. Gatot Subroto JakartaTel. (021) 5731820.Fax. (021) 5700226

Departemen KeuanganJl. Lap. Banteng Timur No. 2 - 4 Jakarta 10710,Tel. (021) 3841067. Fax. (021) 3808395Departemen Perindustrian dan PerdaganganJl. Jend. Gatot Subroto Kav. 52-53 Jakarta 12950,Tel. (021) 5256548. Fax. (021) 5229592

Departemen Permukiman dan Prasarana WilayahJl. Pattimura No. 20 Jakarta 12110,Tel. (021)7247564. Fax.(021) 7260855

Departemen PertanianJl. Harsono RM. No. 3 Jakarta 12550,Tel. (021) 7804056. Fax. (021) 7804237

APPENDIX 4LIST OF CONTACTS

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Departemen SosialJl. Salemba Raya No. 28 Jakarta 10430,Tel. (021) 310-3781. Fax. (021) 310-3783Departemen Tenaga Kerja dan TransmigrasiJl. Jend. Gatot Subroto Kav. 51 Jakarta 12950,Tel. (021) 5229285, (021) 7989924. Fax. (021)7974488

EDAM BurgerJl. Malaka Raya No. 84, Perumnas Kelender JakartaTimur,Tel. (021) 8621610, (021) 70750285

ELSAMJl. Siaga II No. 31, Pejaten Barat, Jakarta 12510,Tel. (021) 7972662. Fax. (021)79192519E-mail: elsam.@nusa.or.id - Website: http://www.elsam.or.id

Fakultas Hukum Universitas IndonesiaKampus UI Depok, Jawa Barat,Tel. (021) 7270030, (021) 7863442 Fax. (021) 7270052E-Mail: efhaui@makara.cso.ui.ac.id - Website :http://www.law.ui.ac.id

Fakultas Pertanian Institut Pertanian BogorJl. Meranti , Kampus IPB Darmaga Bogor 16680Tel. (0251)629346 Fax. (0251) 629352E- mail : faperta@ipb.ac.id

Gerakan Perempuan untuk Perlindungan BuruhMigranJl. Laturharhari No. 4B Jakarta Pusat, Tel. (021)3903963Gravitasi MataramJl. Danau Surubik No. 27, BTN Pagutan, MataramNusa Tenggara Barat, Tel. (0370) 627171

GTZ Office JakartaDeutsche Bank Building, 20th floor,Jl. Imam Bonjol No. 80 Jakarta 10310Tel. (021) 31924007 Fax. (021) 31924070HIVOSJl. Brawijaya Raya No. 12A, Kebayoran BaruJakarta SelatanTel. (021) 7244432

HuMaJl. Jati Agung No. 8, Jati PadangPasar Minggu Jakarta SelatanTel. (021) 70733505

Human Rights Working GroupBOR Building Lt. 3, Jl. Pegangsaan Timur No. 21Jakarta PusatTel. (021) 70733505E-mail: hr_wg@hotmail.com

ICELJl. Dempo II No. 21 Jakarta 12120Tel. (021) 7262740 Fax. (021) 7269331E-mail : advokasi@icel.or.id / umum@icel.or.id

ICS PapuaJl. Arwana Gang II No. 1, Wamena, PapuaTel. (0967) 573495

IKOHIJl. Mandala I No.5 Jakarta Pusat, Tel. (021) 3157915

ILO - International Labour OrganizationUnited Nations Bld, 5th Floor, Jl MH Thamrin 14,Jakarta PusatTel. (021) 3141308 Fax. (021) 3100766E-mail: jakarta@ilo.org

Indonesian-Australian Legal Development FacilitySuite 1704 Plaza Mutiara, Jl. Lingkar MegaKuningan Jakarta 12950, Tel. (021) 5764318Jakarta Focus InstituteKomplek Perkantoran Cempaka Mas Blok O/35Jakarta 10640Tel. (021) 42889208E-mail: jakartafocus@gmail.com

Justice for The PoorJl. Cik Ditiro 68A Jakarta 10310Tel. (021) 391 1908, (021)310 7158. Fax. (021) 3924640Website: http://www.justiceforthepoor.or.id

Kejaksaan AgungJl. Sultan Hasanudin No. 1 Jakarta 12160Tel. (021) 7208577. Fax. (021) 7251277

Kementerian Badan Usaha Milik NegaraJl. Dr. Wahidin Raya No. 2 Jakarta 10710Tel. (021) 5772776 Fax. (021) 3841094

Kementerian Komunikasi dan InformasiJl. Medan Merdeka Barat No. 9 Jakarta 10110Tel. (021) 3844227 Fax. (021) 3867600

Kementerian Koperasi dan Usaha Kecil MenengahJl. H.R. Rasuna Said Kav. 3-5, Jakarta 12940Tel (021) 5204375 Fax. (021) 5220849

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Kementerian Lingkungan HidupB Building, Lt. 2, Jl. DI. Panjaitan, Kav. 24Kebon Nanas Jakarta 13410,Tel. (021) 8580103. Fax. (021) 8580101

Kementerian Pemberdayaan PerempuanJl. Medan Merdeka Barat No. 15 Jakarta 10110Tel . (021) 380539. Fax. (021) 3810052Kementerian Pendayagunaan Aparatur NegaraJl. Jend. Sudirman Kav. 69 JakartaTel. (021) 7398381, (021) 7398341. Fax. (021)7398385Kementerian Percepatan Pembangunan KawasanTimur IndonesiaMenara Saidah Lt. 18 , Jl. MT Haryono Kav. 29-30JakartaTel. (021) 79186444. Fax. (021) 79186654

Kementerian Perencanaan Pembangunan NasionalJl. Taman Suropati No. 2 Jakarta PusatTel. (021) 31906288. Fax. (021) 3145374

Komisi Nasional Hak Azasi Manusia (KomnasHAM)Jl. Latuharhari 48 Jakarta 10310Tel. (021) 3925230. Fax. (021) 3925227

KomphalindoJl. Pasar Minggu, Ruko Permata Pancoran No. 156Jakarta SelatanTel. (021) 79198018

Konsorsium Pembaruan AgrariaJl. Cihiyur No, 44, Cilaci, Bandung, Tel. (022)7214706

Konsorsium Reformasi Hukum NasionalJl. Talang No. 23 Jakarta Pusat, Tel. (021) 3904381

KOPBUMIJl. Aren IV No. 6, Rawamangun Jakarta TimurTel / Fax. (021) 4706377. E-mail:seknas.kopbumi@lycos.com

LBH ApikJl. Raya Tengah No. 16, Kampung Tengah JakartaTimurTel. (021) 87797289E-mail: lbhapik@centrin.net.idLBH BaliJl. Plawa 57, Denpasar, Tel / Fax. (0361) 223010, E-mail: lbhbali@indo.net.id

LBH Banda AcehJl. Elang Timur Lampoh Bungong Baing No. 12 ADesa Blangcut, Banda Aceh, Tel / Fax. (0651) 22940

LBH BandungJl. Pagadegan No. 21, Bandung 40291, Tel. (022)7206243 Fax. (022) 7203812 E-mail: lbh-bdg@indo.net.id

LBH JakartaJl. Diponegoro 74 Jakarta 10320, Tel. (021) 3145518Fax. (021) 3912377E-mail: lbhjkt@cbn.net.id

LBH MakasarJl. Macan No. 70 Makasar, Tel. (0411) 871757 Fax.(0411) 873239E-mail: lbhmks@indosat.net.id

LBH ManadoJl. Arnold Monotutu No. 29 ManadoTel. (0431) 859962 Fax. (0431) 859963

LBH MedanJl. Hindu No. 12 Medan 20111Tel (061) 4515340 Fax. (061) 4569749E-mail: prodeo@indo.net.id

LBH PadangJl. Pekanbaru No. 21, Padang Sumatera BaratTel. (0791) 7051750 Fax. (021) 7056059LBH PalembangJl. Sumpah Pemuda Blok K No 21/1790,Kampus Palembang Rt. 32/09, Kel. Lorok Pakjo,PalembangTel / Fax. (0711) 353803. E-mail: lbhplg@yahoo.com

LBH PapuaJl. Gerilyawan No. 46, Jayapura 99352, PapuaTel. (0967) 581710. Fax. (0967) 582559

LBH PekanbaruJl. Utama Nenas Gg. Tanjung No. 21, Sukajadi,PekanbaruTel /Fax. (0761) 46676E-mail: lbhpku@plasa.com

LBH SemarangJl. Parang Kembang No. 14, Bumi Tlogosari,SemarangTel. (024) 6710687 Fax. (024) 6710495E-mail: lbhsmg@indosat.net.id

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LBH SurabayaJl. Kidal 6 Surabaya 60131, Tel. (031) 5022273.Fax. (031) 5024717E-mail:lbhsby@telkom.net

LBH YogyakartaJl. Agus Salim No. 36 Yogyakarta, Tel / Fax. (0274)376316E-mail: lbhyogyaprogram@yahoo.com

Lembaga Anti Diskriminasi IndonesiaJl. Pelopor Blok M VII No. 19, Tegal Alur JakartaBaratTel. (021) 5561935

Lembaga Ilmu Kajian Politik – DemokrasiJl. Sungaiselan No. 5, Pangkal Pinang Bangka, Tel.(0717) 422359E-mail: likosinstitute@plasa.com

Lembaga Studi Pers dan PembangunanKomplek Keuangan No. 12, Pejompongan JakartaPusatTel. (021) 5746656. E-mail: lspp@centrin.net.id

LP3ESJl. Letjen S. Parman Kav. 81, Jakarta 11420Tel. (021) 5674211 Fax. (021) 56964691

Mahkamah AgungJl. Medan Merdeka Utara No. 9-13, Jakarta PusatTel. (021) 3848848. Website: http://www.mari.go.id

Ongokham InstituteJl. Cakrawijaya IX Blok D No. 11, Kavling DiskumCipinang Muara, Jakarta Timur, Tel. (021) 8509472

Ontrack Media IndonesiaJl. Kalibata Utara II No. 25 Jakarta SelatanTel. (021) 7985520. E-mail: info@ontrackmedia.or.id

P3MJl. Cililitan Kecil III/12 Jakarta Timur, Tel. (021)8091617

Partnership for Governance ReformGedung Surya Lt. 10, Jl. M.H. Thamrin Kav 9Jakarta 10350Tel (021) 3902626 Fax. (021) 2302933

Pemerintah Daerah Kabupaten JembranaJl. Surapati No. 1 Negara 82217, KabupatenJembrana, BaliTelp. (0365) 41210

Pemerintah Daerah Kabupaten SinjaiJl. Jend. Ahmad Yani No 1, Kabupaten Sinjai,Sulawesi SelatanTel. (0482) 21002. Website: http://www.sinjai.go.idPemerintah Propinsi DKI JakartaJl. Merdeka Selatan Blok.8-9 Jakarta Pusat, Tel.(021)3823288E-mail: dkiweb@jakarta.go.id

Pemerintah Daerah Istimewa YogyakartaWebsite: http://www.pemda-diy.go.id

Perekat OmbaraJl. Menjangan No.9, GBK Batu, Mataram, NusaTenggara BaratTel. (0370) 621029. E-mail:perekatombara@yahoo.com

Perhimpunan INTIJl. Roa Malaka Utara No. 5 c-d Jakarta 11230Tel. (021) 6915891 Fax. (021) 6915893E-mail: indidpp@cbn.net.id - Website: http://id.inti.or.id

Perkumpulan BantayaJl. MH Thamrin No. 63, Palu Sulawesi Tengah, Tel.(0450) 4703393

Pusat Kajian Bina SwadayaJl. Gunung Sahari III No. 7 Jakarta Pusat, Tel. (021)4204402E-mail: pkp@binaswadaya.org

Pusat Kajian Pembangunan Masyarakat UniversitasAtmajayaGedung K-II Lt. 3, Jl. Jend. Sudirman Kav. 51 Jakarta12930Tel. (021) 5703306

RACA Institute (Rapid Agrarian Conflict Appraisal)Jl Rasalama I No 13 A Rt 05 Rw 09 Menteng Dalam,Jakarta SelatanTel / Fax: (021) 8356779. E-mail:info@racainstitute.org

Rural Development InstituteProgram Pascasarjana Fakultas Hukum UniversitasIndonesia Jl. Salemba Raya No. 4 Jakarta Pusat, Tel. (021)3919190

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Sekolah Tinggi Pertanahan NasionalJl. Tata Bumi No.5, Banyuraden, GampinganSleman 55293 YogyakartaTel. (0274) 587239, (0274) 587138,Fax. (0274) 587138

Sekretariat Bina DesaJl. Saleh Abud no 18-19, Otto Iskandardinata -Jakarta 13330Tel. (021) 8519611, 8199749. Fax. (021) 850052E-mail: binadesa@indo.net.id

Serikat Paguyuban Petani Qaryah ThayyibahJl. Samarang No. 108A, Tarogong Garut. Tel.(0262) 231849

Social Development InstituteKomplek Waringin Permai, Jl. Wirayuda I No. B/20,Jatiwaringin Jakarta. Tel. (021) 68239970E-mail: sdi_indonesia@yahoo.com

Suara Ibu PeduliGedung Biro Oktroi Rooseno (BOR) Lantai 2 Komp.MegariaJln. Pegangsaan Timur No.21, Jakarta PusatTel / Fax. (021) 391 1231E-mail: suara@indo.net.id

Taman Nasional Lore LinduJl. Prof. M. Yamin No. 19 Palu 94114 SulawesiTengah,Tel. (0451) 21106

The Asia FoundationJl. Adityawarman No. 40, Jakarta 12160Tel. (021) 72788424. Fax. (021) 7203123E-mail: general@tafindo.orgWebsite: http://www.asiafoundation.orgTifa FoundationJl. Jaya Mandala II No. 14E Jakarta 12870Tel. (021) 8292776.Fax. (021) 837 83648E-mail: public@tifafoundation.orgTim Koordinasi Penanggulangan KemiskinanRepublik IndonesiaJl. Merdeka Barat No. 3 Jakarta 10110Tel / Fax. (021) 3860565

Trade Union Rights CentreJl. Pejompongan Baru I No. 6 Jakarta 10210. Tel / Fax. (021) 5708777

UNDP-United Nations Development ProgrammeUnited Nations Bld, Jl MH Thamrin 14, JakartaPusatTel. (021) 3141308.Fax. (021) 314251, (021) 3100158

United Nations Human Settlements ProgrammeMenara Thamrin Bldg, 14th Floor, Suite 1406Jl. M.H. Thamrin Kav. 3, Jakarta 10250Tel. (021) 3141308. Fax. (021) 316 0449Website: http://www.unhabitat.org,http://www.undp.org

Urban and Regional Development InstituteWisma Bakti Mulya Lt. 3, Jl. Kramat Raya 160Jakarta PusatTel. (021) 3918485

Urban Poor ConsortiumKomplek Billymoon Blok H1 No. 7 Jakarta TimurTel. (021) 86902407E-mail: upc@urbanpoor.co.idWahana Lingkungan Hidup Indonesia (Walhi)Jl Mampang Prapatan IV/37 Gg. K Jakarta 12790Tel. (021) 7941672. Fax. (021) 7941673

World BankLippo Life Bld. Lt. 3, Jl HR Rasuna Said B-10Jakarta 12940Tel. (021) 2520316. Fax. (021) 2522438

YappikaJl. Pedati Raya No. 20 Rt. 007/09, Jakarta TimurTel. (021) 8191623Yayasan Dana Bhakti AstraJl. Majapahit 16 Jakarta 10160Tel. (021) 3865831 Fax. (021) 3865833

Yayasan Lembaga Bantuan Hukum IndonesiaJl. Diponegoro 74 Jakarta 10320Tel. (021) 3140024 Fax. (021) 31930140E-mail: info@ylbhi.or.id - Website: http://www.ylbhi.or.id

Yayasan Pengkajian Hukum IndonesiaJl. Gading Kirana Jakarta UtaraTel. (021) 45874046

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