Makalah International Conference 2

17 May 2013 Mukti Fajar Makalah

COMMUNITY DEVELOPMENT POLICY TOWARD POVERTY REDUCTION IN INDONESIA:

CASE STUDY OF COASTAL COMMUNITIES IN THE SOUTHERN COAST OF JAVA ISLAND[1]

Mukti Fajar ND[2]

Ahdiana Yuni Lestari

Wihandaru Sotya

Bahari Susilo

ABSTRACT

In Indonesia, coastal communities are generally including the poor societies. They have limited access to capital and entrepreneurship capabilities. Some government policies have been carried out as sustainable manner to reduce the poverty for coastal communities. It was implemented by the government in collaboration with the corporation (Bank). The implementation was realized in the form of soft loan program and established the small medium enterprise of fishery. The problems of this research are: (1) how is the implementation of government policy for the development and its influence toward improving the welfare of coastal communities?; (2) What is the policy for managing the small medium enterprise of fisheries to improve the welfare of coastal communities ?; (3) what are the factors that sustained and barrier the implementation of policy to reduction the poverty of coastal communities ?. This is a socio legal research that examines law in society. The law means a form of government policy to empowering of coastal communities, both national regulations and local regulations. The location of the research is conducted in three districts at the southern coast of Java island. The data were collected with documents study, interviews and observation. The conclusion of this research are; First, there are some problems in implementation of policies for the development of coastal communities, namely; (a) There is a gap between formal approach of government policy and the corporation (banks) with the cultural aspects that still embraced by the coastal communities. (b) The community is very dependent on natural conditions (ocean) as the basic of economic activities. Second, The presence of cooperatives is very helpful in improving the welfare of coastal communities in three districts observed. It can be seen by increasing incomes of the community.  Third, The supporting factors are communities, governments and other institutions, non-coastal communities, The SMEs fishery and management. Yet, Inhibiting Factors includes cultural factor of the coastal communities, post-production process, natural factors, perception and understanding factors of the society, Bankable approach of MFI Swamitra Mina and the several external factors, for instance economic, technological, socio-cultural policy of the government (law and politics) and industrial environments that become obstructions toward program implementation.

 

Keywords: Coastal communities, community development policy, poverty reduction



[1] This paper  will be presented on 1st Organisational Governance Conference Corporate Governance Crises: Causes, Effects and Solutions,  15 & 16 September 2011 in, De Montfort University, UK.  This paper  is written based on research by Mukti Fajar ND , Ahdiana Yunilestari Bahari Susilo and Wihandaru  in 2010.

[2] Doctor of Economic Law, Assistant Professor of School of Law University of Muhammadiyah Yogyakarta, Indonesia

 

 

 

  1. I.         INTRODUCTION

Thus far, a various results of research studies about social and economic life of coastal communities have revealed that most of them, especially those who classified as laborers or small fishermen had been living in the mud-hole of poverty. They had limited access to fulfill their minimum basic needs.[3]

Herman Soewardi in Kusnadi (2006) has identified the principal causes which lead to the fishermen’s poverty[4]:

  1. The absence of policy and application for integrated development of the fishermen communities among the actors of development.
  2. Maintaining the quantity of production, therefore social-economic activities of fisheries in the fishing villages can be keep move on.
  3. Geographic isolation problem of the fishing village, so that it is difficult for the goods, services, capital, and human to move-in and move-out. It is implied on slowing-down the dynamics of social, economic, and cultural of the fishermen communities.
  4. Limited of business capital or investment, it makes a fisherman may found difficulties to increase their fisheries economic activity.
  5. There is an exploitative socio-economic relation with boat owners and brokers (middlemen) in the fishermen communities.
  6. Low rate of fishermen’s family income, so that they may experiencing difficulties to increase business scale and improve quality of life.
  7. Lack of motivation and vitality. This is because they are living in economic hardship for long time, making them lack of desire to make changes.

The research about the level of welfare in the fishermen community has shown that poverty and socio-economic discrepancy or income-gap is a crucial problem faced by fishermen and it is not easy to be solved[5] (Kusnadi, 2002).

Other research have shown that the pressure of structural poverty that plagued the traditional fisherman’s life is caused by complex factors. These factors may related to fluctuations of fishing seasons, limited human resources, access, capital, and an exploitative trade networks of fishing toward fishermen. In addition, it may caused by the negative impact of modernization of fisheries or the Blue Revolution that led to depletion of marine resources excessively. The process is still continuing. The main impact that felt by fisherman is a declining of their income and difficulties in obtaining the haul.[6]

The Indonesian government has issued a policy, in the form of regulation, to improve the quality of life for coastal communities, Law Number 31; year 2004 on Fisheries has exuded hope for coastal communities, especially for fishermen and small fish farmers.[7] The government has done some efforts, through various policies, programs, projects and activities, in order to alleviate poverty of coastal communities, such as motorization of fishing vessels, the use of ice and cold chain, provision of port infrastructure, environmental rehabilitation in 2003 and the development of fisheries cooperatives, joint ventures and business partnerships development. However, those programs and approaches have not given a positive impact to alleviate poverty of coastal communities.[8]

Based on those matters abovementioned, it is interesting to know further about costal communities by proposing following issues: (1) how is the government policy implementation to empower coastal communities and its influence toward their welfare increment?. (2) How is the policy manifestation to manage the fisheries cooperative in order to increase the capital and welfare of coastal communities?. (3) What are the factors that may promote and obstruct the implementation of policy to diminish the poverty of coastal communities?.

Conceptually, coastal communities are defined as groups of people living in coastal areas and their income depend directly on the utilization of marine and coastal resources. They are consists of fishermen owners, fishermen workers, fish and other marine organisms farmers, fish traders, fish processors, suppliers of fishery production facilities. In the field of non-fisheries, coastal communities may consist of coastal tourism services provider, transportation services provider, as well as other community groups that utilize non-living marine and coastal resources to support their life.[9]

Poverty is complex and multidimensional problem, both in terms of cultural and structural aspects. There are four main problems that may cause poverty, namely lack of opportunity, low of capabilities, low-level security and the limitations of social rights, economics and politics which may cause vulnerability, voicelessness, and powerlessness in all aspects. The points abovementioned are also experienced by coastal communities, especially fishermen.[10]

Some researches found that traditional fishermen live in poverty and appalling conditions. According to Siahaan, generally, coastal areas are regions of very chronic structural poverty which may cause by economic pressure and the exploitation from community groups, therefore the poor fishermen remain very marginal.[11]

Compared to national as well as other provinces in Java, the poverty rate of Yogyakarta Province between the years 2006 – 2009 is relatively high. It was between 20% – 24%. However, if it compared with the average of Indonesian poverty rate of 16.6%, it can be concluded that poverty rate in Yogyakarta Province is still above the average of poverty rate of Indonesia.[12]

In the year of 2007, the average of poverty rate in Yogyakarta Province alone was 19.14%, with the order of the district which has the highest poverty rates are: (1) Gunung Kidul District (25.2%), (2) Kulon Progo District (25.1 %), (3) Bantul District (18.6%), (4) Sleman District (15.5%) and (5) The city of Yogyakarta (12.8%). [13]

Geographically, the Province of Yogyakarta has 3 districts bordering to the ocean of Indonesia, they are District of Kulon Progo, District of Bantul and District of Gunung Kidul. Coastal communities in Kulon Progo District are about 443 families that rely on marine resources economically. While Bantul District has 261 fishermen families and Gunung Kidul District has 1768 fishermen families. Most of the coastal communities in those 3 districts mention above are 83% still live in poverty from the total number of 2472 fishermen families.[14]

Generally, communities in coastal areas, their life are depending on marine and coastal resources exploitation which is required a large investment, season dependent, and vulnerable to pollution and destruction of the coastal environment. They were only able to work as a small fisherman with simple tools or as a fisherman labor, as a processor or small-scale fish trader where it only needs a small investment. Small fishermen has limited capabilities to exploit the coastal areas resources that the results are tend to decline due to competition with immigrant fishermen from other areas who have more experience and more capital.[15] Another factor is the large south sea waves that make the most of the local fishermen use outboard motor boat find difficulty to go to sea at any time. The small number of catches is also weakening their position in the sales transaction. In addition, the work pattern of fishing that is seasonal and erratic makes the poor at coastal areas difficult to climb out of poverty. Poverty experienced by fishing communities causing intergenerational inheritance of poverty.[16]

Government options to form fishing cooperative is considered to be in accordance with the communal character of Indonesian society [17]

Mohammad Hatta argued that cooperative is a joint effort to lift the economc livelihood based on helping. They are motivated by the spirit to give service to companion. “One for all and all for one” is the main principle. It is called Auto Activity Group that consists of: (1) Solidarity (2) Individuality, (3) Self-help and be honest. [18] The purpose of cooperative is to make social and economic conditions of their members better than before joining with it. It can be achieved as each member deposit their capital fairly and democratic supervision with principle of one man one vote, besides they do activities for the sustainable community development based on policies decided by the members meeting.[19]

To unite and work together, in a cooperative fishery, the fishermen can gain capital and seek to improve their business by not rely on brokers or the investors.

Quantitatively, the cooperative fishery experienced a fairly rapid growth. By the year of 2003, the number of Koperasi Unit Desa Mina (Rural Unit of SMEs Fishery) in Indonesia reached 887 units.[20] They were joined in the 15 KUD Mina Center / Center for Cooperative Fisheries (PUSKUD Mina / PKP).[21] However, the movements of cooperative fishery companies in Indonesia face many obstacles and problems. Cooperative fisheries in Indonesia can not be used as a pillar of the national economic development as such success stories that we can see in Germany, Denmark, Japan, Canada and other countries.[22] In the developed countries, it proved that cooperatives have been played a role as one of the cornerstones of the national economic development that it can brings prosperity to its member and also become one of the determining factor for progress and prosperity of the nation.

The government has also taken diverse policies to improve the welfare of coastal communities. Conceptually, policy, often referred to as public policy, has a broad definition. Policy, in the narrow sense, is often manifested in the form of laws to solve public or government issues in the nation development. Nevertheless, there is also more technical definition that the policy is the strategic consumption of existing resources to solve public or government problems. In addition, it can be defined as a series of actions which have a specific goal and then followed and implemented by someone or group of people in order to solve the problems. In a broader sense, public policy is the relationship of government units to its environment.[23]

With means of abovementioned, the policies that implemented by the government for coastal communities can be: (1) regulating the behavior, (2) providing equal access to certain resources, (3) redistributing and (4) protecting the citizen (Constituent). It is manifested in several of arrangements and programs for community development of coastal communities.[24]

There are five approaches of coastal communities’ empowerment carried out by the Ministry of Maritime Affairs and Fisheries, other government agencies, local governments, NGOs in the form of foundation and cooperative, namely[25]:

  1. To create alternative employments as other sources of family’s income.
  2. To make the community close to the source of capital with emphasizing on self-sufficient mechanisms.
  3. To make the community close to the source of new successful technologies and worthwhile.
  4. To make the community close to the market.
  5. To build the solidarity and collective action in society.

Based on the background and concepts that have been discussed, this research was conducted to further examine and argue in accordance with objects and subjects studied.

 

  1. II.           RESEARCH METHODOLOGY

This research was used Socio Legal Research method.[26] It means to examine the various policies and regulations as well as implementation of coastal communities’ empowerment programs. The process is carried out with the identification and evaluation of various factors related to community empowerment program for poverty alleviation in coastal communities which located in the south coast of Java Island. This research conducted in several sites of Yogyakarta Province, i.e. Kulonprogo, Bantul and Gunungkidul district.

The data consist of primary and secondary. Primary data is empirical facts that taken from human behavior both verbal behavior, obtained through interviews, and real behavior through direct observation.[27]

Interviews were conducted on respondents who represent coastal communities consisting of groups of fishermen, processors and fish traders and fish farmers. Interviews wera also conducted to the board of Indonesian Fishermen Association, Chairman of Maritime Affairs and Fisheries, the board of cooperative of LEPP-M3, and the board of Swamitra Mina in Kulonprogo, Bantul and Gunungkidul.

A broad range of documents were used as secondary data, such as legislation, books, research results, statistical data, images and from the results of human behaviors which means of physical heritages and archives concerning to policies and programs for economic empowerment of coastal communities.

Data obtained was compiled systematically and analyzed with descriptive evaluative[28] and qualitative approach. [29] It means to give exposure and explain in a holistic and profound (Verstehen), based on the words that arranged in a natural[30] setting to discover what is behind the real events, before and after, with the intention to evaluate and identify the research object.

 

  1. III.        DISCUSSION
    1. A.    Implementation of Government Policy on Economic Empowerment  to Address Poverty of Coastal Communities

In order to improve the welfare of coastal communities, since the year 2001-2008, the Government of Indonesia through the Ministry of Maritime Affairs and Fisheries has been implementing policies and Coastal Community Economic Empowerment Program (PEMP) in a planned manner, structured and directly reached to coastal communities. The legal basis for policies and programs of PEMP are:

  1. Decree of Chairman of Bappenas Number 2605/Ka/06/2001 issued on June 18, 2001 junto Decree of Chairman of Bappenas Number 2888/Ka/09/2001 issued on July 4, 2001 regarding Program in Response to Reduce the Impact of Energy Subsidies (PPD-PSE).
  2. Decree of Minister of Maritime Affairs and Fisheries Number: KEP.18/MEN/2004 on Guidelines for Implementation of the Coastal Community Economic Empowerment Program.
  3. Decree of Director General of Marine, Coastal and Small Islands Number: SK.07/KP3K/I/2006 on Guidelines for the Implementation of Coastal Community Economic Empowerment Program for Fiscal Year 2006.
  4. Decree of Director General of Marine, Coastal and Small Islands Number: SK.10/KP3K/I/2007 on Guidelines for the Implementation of the Coastal Community Economic Empowerment Program for Fiscal Year 2007.
  5. Decree of Director General of Marine, Coastal and Small Islands Number: SK.11/KP3K/III/2008 on Guidelines for the Implementation of the Coastal Community Economic Empowerment Program for Fiscal Year 2008.
  6. Regulation of Minister of Maritime Affairs and Fisheries Number 7/PER/MEN/2008 on Social Assistance of PEMP.

PEMP Program is not a charity program, but it is for community empowerment, therefore the activities of PEMP is still running with the growing development of capital venture to be managed by community in the coastal areas for the benefit of their businesses[31].

Periodically, this program is divided into three periods, namely: [32]

  1. Initiation period (2001-2003) was a period of build, motivate and facilitate the coastal communities to be able to get benefit from economic institutions (LEPP-M3). This period is an effort that made in order to solve the problem of entrepreneurial culture of the community and obstacle on accessing the capital.
  2. Institutionalization period (2004 – 2006) was a period which marked as an effort to make LEPP – M3 become legal entities. With status of legal entities, the LEPP M3 is able to expand the economic business lawfully.
  3. Diversification Period (2007 – 2009) was a period to extend the cooperative business units of LEPP – M3/fishery cooperative. It was expected to reduce the burden on coastal communities.

There are 5 parties involved in Organizational and institutional of PEMP, i.e.: (1) Government, (2) Management Consultant, (3) Personnel Assistant of Village, (4) Cooperative Body for Economic Development of Coastal Area Mikro Mitra Mina (LEPP M3) or Fisheries SMEs, and (5) Banking Institution[33]

In order to realize the goal of PEMP Program, the approaches are below:[34]

  1. Community involvement in planning, implementation, supervision, development and sustainability development.
  2. Partnerships between communities, government officials and private sector to develop the activities.
  3. Self-reliance (autonomy) community in the development of society and its territory.

The main program of PEMP is the development of marine resources in the form of community empowerment activities, in the sector of economic, social, cultural, entrepreneurial actor in businesses fishery. The activities are implemented by providing assistance by means of Productive Economy Fund (hereinafter called DEP) as capital reinforcement for the coastal communities, mentoring, consultancy management and administration.[35]

DEP is funding for the business development of the targeted society. DEP fund is a venture capital fund for the community economic development. Therefore, the community itself is determine the use of the fund  through KMP which is formed based on consensus.[36]

Distribution and payment of grants of PEMP program will follow the existing procedures, as mention in the Circular of Directorate General of Budgeting Number 120/PB/2006 as this program of PEMP can achieve their purposes in a rapid, precise, administered properly and accountable. As for the distribution and disbursement mechanisms can be seen below:[37]

 

 

Efforts to achieve the success of the PEMP program begins with socialization to all relevant parties, including technical agency, targeted communities, community leaders and others in order to get responses and feedback to improve the programs that have been designed. Regarding the insufficient social conditions of the coastal communities, it is required to provide professional assistance in order to ensure the program running and sustainable. To ensure the programs are running as expected, it needs monitoring and evaluation.[38]

PEMP development program model can be seen below[39]:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government policy in the form of simple and inexpensive relief program has many benefits for improving the welfare of coastal communities. Yet, it is often meets obstruction caused by different perception with the community. They consider this assistantship as pure grants and not need to be returned, while it supposed a loan.

This issue is admitted and thus there should be more intense socialization from the government to the community. Furthermore, it is expected to reach an equal perception between the government and the community regarding program’s goals. The government also needs to consider their education level to form a proper model of counseling and socialization, so it will be more easily understood.[40]

Generally, coastal communities who live in those 3 districts are taking advantage from the implementation of PEMP Program. In addition, they felt those government assistantships can lift their prosperity.

However, some respondents are felt more comfortable borrowing some money from the owners or their group leader because those assistantships are channeled by Microfinance Institutions (MFIs) Swamitra Mina which is established by the government. It is because of the ease and lightness in terms of installment loans, which is tailored pieces with a fluctuating income, without interest and without collateral. In addition, the relationship between fishermen and the owners are culturally perceived as being more comfortable than formal relationship with the MFI Swamitra Mina. The cultural approach which is based on a sense of solidarity and trust is being ignored by the government. Though, such approach would be needed, beside the formal approach.

Emile Durkheim declared that society will develop because of the solidarity which became an instrument to build up social relationships. If the social unity is exist, then the trust will grow naturally and each member will maintain it[41]. Furthermore, elements of collateral as loan guarantee are not the most important thing, yet it is mutual trust.

PEMP program is not solely a funding grants but it also conducted training activities addressed to the board of Microfinance Institutions (MFIs). MFI is expected to be function as an alternative financing support and it will swap the role of “loan shark” soon or later. Banking can also provide the credit through MFIs with indirect scheme (two steps loan). The credits granted to MFIs and then distribute it to the communities with micro credit scheme which is fit for the coastal communities.

Another programs of PEMP are to strengthen SMEs institutions[42], under supervision of Bank Bukopin, Bank Rakyat Indonesia and Bank Syariah Mandiri.[43] The objective of institutional strengthening in LEPP M3 in cooperative format is to enhance the institutional status. The institutional status enhancement was followed by changes in the distribution system of DEP, which originally existed as a rotating fund managed by LEPP M3 thus became grants to cooperative which pledged to banks.[44] The system changing is intended to improve the welfare of coastal communities in a holistic and systematic in accordance with the principles of empowerment, that is Helping the poor to help themselves.

Other implementations of policy of economic empowerment of coastal communities (PEMP) are creation of Coast Store, Business Clinic, regeneration  of fishermen and Facilities Assistantship for Fisheries Business. Further explanations of each are:

  1. Coastal Store is a business unit that aims to serve the basic needs and the business needs of coastal communities. It is an outlets with self-service systems and located in center of business activities. The Coastal Store also acts as supplier of similar shops in surrounding area.
  2. Business Clinic is a business unit which provides business consulting for people who need. The consultation are related to the business plan, market share, business partners, the ratio of profits and business development in the near future. The target for this unit is primarily the customers of MFIs
  3. Regeneration of fishermen is a program to develop the quality of human resources of fishermen, in particular for younger generation, through knowledge sharing, skills and abilities, thus they has eminence than their predecessor. This program is conducted through education and training
  4. Facilities Assistantship for Fisheries Business can be a means of fishing, fish processing facilities and other fisheries production facilities.  It is managed by cooperative and become part of the diversification of cooperative business units. In order to develop the activities of these business units, it needs to cooperate with other parties, both government and private.

 

  1. B.     SMEs Management and Coastal Community Welfare Improvement 

The existence of economic institutions or economic agency is required in order to raise fishing capacity in terms of providing facilities and capital and also increasing the bargaining position (economic position). Joint agency is an alternative which expected to be a solution for the fishermen to reach better standard of life. One of the appropriate agency is cooperative. The role of cooperatives in the community are: (1) Enhance the business scale and efficiency, (2) Improving the bargaining position and (3) social benefits.51

Ideally, cooperative fisheries could facilitate the coastal community activities ranging from pre-production activities include: provision of facilities and infrastructure, capital support, provision of supplies; production activities include the financial support for fish auction activity; and post-production activities include marketing activity for fishery products.

Various activities of cooperative fisheries, located in Bantul, Kulon Progo and Gunungkidul district, are to facilitate the activities of coastal communities. It consists of pre-production activities include: (1) the provision of facilities and infrastructure, for example fishing gear, (2) capital support, (3) provision of supplies such as fuel and ice; production activity for instance financing the fish auction; and post-production activities include the marketing of fishery products.[45]

Because it is a communal business, cooperative can be observed from management of funds and its welfare benefits for the community. Furthermore, it will describe the existence of cooperative in the coastal communities based on observations and interviews with respondents in three districts.

 

  1. 1.      Kulon Progo District

LEPP-M3 Kulon Progo was established under The Decree of Chief of Agriculture and Marine NO 521/1237/XI/2001 as an  implementation of the PEMP Program in 2001 and then on February 18th, 2002 to be named as KSU LEPP-M3 KP with a Certificate of Legal Entity No 518/8/BH/II/2002. The board of this institution is taken from representatives of each Coastal Community Group (KMP). Currently, the members reaches 1203 persons engaged in trade, fishing and aquaculture. Supporting sector was assisting for establishment of Ice Factory and Store Coasts.

Productive Economy Fund, managed by KSU LEPP-M3, has been progressing with total deposits of Rp. 752 196 158, – (Seven hundred fifty-two million one hundred ninety six thousand one hundred and fifty-six rupiah) as of October 2008. With a total loan of Rp. 2,714,013,754, – (two billion seven hundred and fourteen million thirteen thousand seven hundred fifty rupiah) given to 381 debtor. Total assets owned by the KSU LEPPM3 in Kulon Progo District was Rp. 4,654,308,828, – (Four billion, six hundred and fifty four million three hundred eight thousand eight hundred twenty-eight dollars)[46] as of 2008. Other business expansions are clinic and business coast.

According to Zainuri, group leader of Laut Merah[i] and fish traders in Kulon Progo District, generally, coastal communities in Kulon Progo could gain benefits from implementation of the PEMP Program conducted by the government. They felt that those government assistanships can lift their prosperity. Formerly, their average income ranges from Rp.10.000, – to Rp. 20.000, – per day, yet their average net income nowadays, for fishermen, fish traders and others, were Rp. 20,000 to Rp 50,000 per day. For them, it was quite sufficient to support their family and pay the capital loan that obtained from KSU LEPPM3 Kulon Progo in cooperation with Bank Bukopin.

 

  1. 2.      Bantul District

LEPP-M3 has been formed in Coastal Community Group of Bantul District since 2001 . DEP initiated was Rp. 645.000.000,- (six hundred forty five million rupiahs).[47]

Subsequently in 2003, it has obtained legality as a cooperative institution under Decree Number: 028/BH/IX/2003 September 11, 2003.

Nowadays, it is managing DEP Rp. 970.000.000, – (nine hundred seventy million rupiah) and Rp. 150.000.000, – (one hundred and fifty million rupiah) derived from the local government budget of year 2003. The funds are channeled to 6 KMP[48]. The funds, since 2004,  has been managed by USP Swamitra Mina, a savings and loans business unit of the cooperatives LEPP-M3, that has been legitimated and has an inclusion investment from Bank Bukopin as partners of LEPP-M3. The funds are used for productive activities, in particular activities related to utilize the marine resources and other activities related to utilize the coastal resources, for instance expanding the business of marine and fisheries in terms of capturing, cultivating, processing and marketing.

According to Partono, a board member of LEPP M3 Bantul District, this program has many benefits for improving the welfare of coastal communities. It was caused by government policy to provide economical and simple grants.

Based on the interview with several respondents in Depok Beach, Parangtritis, the welfare of coastal communities in Bantul district was quite good. It is including the owners, fisherman workers, fish traders or fish processor and food stall owner. They used to earn income ranging between Rp 500,000 – Rp 1,500,000 per month. Yet, nowadays, they earn an average of Rp 3,000,000 per month and it will increase during the holidays. It is because of the establishment of Fish Auction Place (TPI), in 1998, in Depok Beach which became tourist destination for local and foreign visitor. Thus it gives a positive impact on society. The community was starting to open food stalls of fresh fish and then, finally, it will increase the transactions and the need for fish in the TPI market. This situation is good for both fishermen and coastal communities in Bantul district.

 

  1. 3.      Gunung Kidul District

LEPP-M3 Insan Samodra in Gunung Kidul District was established in 2001 as a community empowerment program under the Decree of Department of Marine Affairs and Fisheries and The General Guidelines of PEMP. In 2005, it was constituted as legal body of Cooperative under Number: 518.0018/BH/VI/2005 and then it formed a business unit, called MFI Swamitra Mina in 2007.

The first investment obtained from the government grant amounting to Rp.571.780.000,-. The Cooperative was cooperating with Bank Bukopin, as it is a direct order from the central government through Department of Maritime Affairs and Fisheries, to increase the cash flow. With this cooperation, Bank Bukopin lends amounting Rp. 5 billion rupiah to the cooperative. In addition, since the partnership with Bank Bukopin, the distribution of financial assistance was based on banking regulation. For instance, contractual relationship in personal savings and loans (not groups), collateral, interest and a fix amount of installments payment each month.[49]

According to Wahyu Wibowo Sulistyo, manager of Swamitra Mina, tentatively, the program is still limited to saving and credit that targeted to coastal community for about 300 people.

According to the interview with some respondents, the Group of Coastal Communities (KMP) Gunung Kidul is considered the most prosperous. It is due to natural factors that favorable and good attention from the local government.

After they got the fund and joint as cooperative members, their income can increase ranging between Rp. 30.000, – up to Rp. 70.000, – on average each day. It is only income from the husband; meanwhile, generally, their wives are also working as fish traders in TPI. Therefore, they have an extra income.

According to them, this amount is fairly enough to sustain life and educate their children. Most of them are student of vocational schools, SMK Kelautan Gunungkidul, which is considering as a commitment from coastal communities to preserve their hereditary profession.

 

  1. C.    Supporting and Inhibiting Factors in Implementation of Policy and Program for Economic Empowerment of Coastal Communities

The success of implementation of PEMP program are strongly determined by the seriousness of the coastal communities in using and developing the funds in a responsible and sustainable manner, maximizing performance of inter-institution coordination or among relevant parties to implement and monitor the programs and the accuracy of the approach for empowerment programs. It indicates that the PEMP program is not solely the responsibility of government, especially the Ministry of Maritime Affairs and Fisheries as well as technical Department at the provincial and district levels, but also responsibility of all parties who have a big concern towards fishermen’s poverty alleviation and improve their welfare.

Following will be mentioned range of supporting and inhibiting factors for the success of PEMP program in DIY .[50]

  1. Supporting Factors
    1. There is a need of society for government assistance in terms of capital reinforcement, empowerment such like training, and expansion of business.
    2. In the community, government and other supporting institutions point of view that PEMP were appropriate to lift the welfare of coastal communities who is life-dependent to maritime sector.
    3. Overwhelming support from outside of the community (non-coastal communities) on the business development of coastal communities, for instance the TPI and shops that can enhance comfort and enjoyment of the public to go to the beach.
    4. Cooperative Fishery in the district of Bantul, Kulon Progo and Gunungkidul are generally in form of savings and credit. The main business activity is providing capital for coastal communities. It is very helpful in overcoming capital constraints. Therefore, their existence will affect to increase the welfare of coastal communities.
    5. In the management point of view, functions of management have been adopted by cooperative fisheries in the districts of Bantul and Gunungkidul. Planning aspects of working program carried out through the mechanism of annual meeting for members. While aspects of organization and management of the cooperative have been formed in a clear organizational structure with its roles and responsibilities. Furthermore, aspects of the movement can be reaching through two-way communication activities, giving guidance and instruction and motivation. Monitoring and supervision are also carried out by internal and external monitoring meetings.
    6. Inhibiting Factor.

There are several obstacles that can be categorized in several ways, namely:

  1. In general, the culture of coastal communities in Yogyakarta is an agrarian society. The cultural change from an agricultural into a maritime may takes a long time and it should be accompanied by the willingness from the society itself to change the behavior of its culture.
  2. Cooperatives, in general, that were observed as an object of research have not done the research and development. It is because of the limited knowledge and insight of human resources among the cooperative board members. Research and development activities have not become their working program. As a result, since their establishment, there are less innovation and creativity in finding alternative of cooperative business development rather than only as a savings and credit cooperative.
  3. Post-production process, starting from the fish auction in TPI until the distribution of fishery products, is not conducted by the cooperative directly. This is the weakness of the cooperative fishery in Bantul, Kulon Progo and Gunungkidul, because fishermen as members of cooperative does not have a good bargaining position when dealing with other private parties as a fish trader.
  4. Operation of management functions has not been fully implemented professionally because, some cooperatives that became research sample, chief of cooperative are very influential figure, so that other board members simply follow the will of the chief of cooperative.
  5. The financial statement is not prepared to meet the Statement of Financial Accounting Standards (PSAK) Number 27 of 1998 on Cooperative Accounting. If the financial statements fulfill those standards it will become easier to do the supervision and assessment for the performance of cooperatives in accordance with the Regulation of the Minister of Cooperatives and Small Medium Enterprises of the Republic of Indonesia Number: 14/Per/M.KUM/XII/2009.
  6. Natural factors are oftenly become obstacle to the fishermen to sail, due to large waves, high tides, rain storms, or fish migration. Those factors make the income of the fishermen unpredictable. Furthermore, the broader impact is disturbing the economic activity of coastal communities.
  7. Factor of perception and understanding  among the society, government and supporting institutions (MFIs Swamitra Mina) affects several things :

1)        PEMP program, normatively, is quite helpful to improve the welfare of coastal communities, but less supported by the process of socialization that meet the socio-cultural conditions as well as community education. Consequently, many provisions which are interpreted differently by each party. The government needs to make cultural approaches because it proved that the formal approach raises structural barriers to the PEMP program. Furthermore, communication initiated by the government, in the process of socialization, supervision and evaluation, should be more personal and humanist, so the atmosphere can be conducive to obtain truthful information (valid) for all the problems faced by society.

2)        MFI Swamitra Mina, as cooperative on savings and credit business unit of KSU LEPP-M3, should put themselves become part of the community. To date, Swamitra Mina positioned themself as a different party of the society and thus it was a cause of many technical problems. In addition, Swamitra Mina, in managing the financial assitanship of coastal communities, should not use rigid banking system approach (Bankable approach), for instance installments payment should not be fixed in amount and constant for each month. Swamitra Mina has to pay attention to fluctuations of income of coastal communities that depend on the sea (natural factors).

Beside those abovementioned factors, there are some external factors that require attention and identify threats to the cooperative fisheries businesses that need to be anticipated. These analysis on external factors are several number of main factors beyond the control of cooperative fishery and is expected to be opportunity or threat of cooperative Fisheries in Bantul, Kulon Progo and Gunungkidul District.

External factors include: (1) economic factors, (2) technology, (3) socio-cultural, (4) government policy (law and politics) and, (5) industrial environment. The explanaton of external factors are as follows:[51]

  1. Economic factors include levels of society consumption, purchase power and demand for fishery commodities. This variable provides a real impact for members of the cooperative that consists of fishermen and traders. It can be illustrated as follows: the purchase of fishery commodities catches, at the time of auction, by fishermen of cooperative member depending upon public demand. Demand for commodities is influenced by the level of consumption, income and purchasing level of the society. The increase in consumption and income which followed by an increase in purchasing power will increase the demand for fishery commodities.
  2. The use of fishing technology in these three districts are still simple, only depending on season and weather. Furthermore, the majority of fish landing sites do not yet have the quay. These conditions influence to fish catches by fishermen, thus indirectly shows the weakness of cooperative in the face of opportunities for market absorption of fishery production.
  3. Social and cultural factors are also very influential. Social culture connection will encourage the business more productive. Fishery cooperative in the district of Bantul, Kulon Progo and Gunungkidul District located that always crowded by tourist visit in a holidays. Coastal communities in both districts are integrating social and cultural elements in the activity called sedekah laut. It is carried out once a year and supported by the cooperative fisheries.
  4. Government policy factor is the government’s will to develop cooperative as one of the economic cornerstone especially in rural areas. With the development of cooperative in rural areas, thus it is expected to achieve the distribution of economic activities. Diverse programs have been initiated in order to empower cooperative, including compensation programs on fuel subvention reduction (PKPS-BBM), whether initiated by the Ministry of Maritime Affairs and Fisheries or by Ministry of Cooperative and SMEs.
  5. Industrial environmental factors include the nature and the level of competition. According to Sulistyo that industrial environmental factors did not significantly influence the development of cooperative fishery in the Bantul and Gunungkidul District.[52] It is because the cooperative at the 3 districts are only supporting the fishermen for the pre-production and the production phase. Yet, the post production phase was handled by private party. [53]

 

  1. IV.              CONCLUSION

Based on the analysis above, it can be concluded as follows:

  1. Government, through the Ministry of Maritime Affairs and Fisheries, has implemented the policy of Coastal Community Economic Empowerment program (PEMP) that launched in 2001-2008. The policy was fully focused on the development of productive economic activities, in the form of rotating funds, and then it applies uniformly to all coastal villages in Indonesia. Normatively, PEMP program is good, but the approaches used in socialization, mentoring, supervision and evaluation are still not appropriate with socio-cultural conditions as well as education level of the community. PEMP program, in terms of rotating funds, is in accordance with the needs of coastal communities. Furthermore, there is, generally, an improvement in prosperity of the community, although it is not quite significant and widespread. However, there are some weaknesses in term of its implementations that are less to accommodate the interests, needs, values and culture of the community,  so that these policies, in the implementation, lead to technical barriers.
  2. The presence of cooperatives is very helpful in improving the welfare of coastal communities in three districts observed. It can be seen by increasing incomes of the community. However, there is problem when the cooperative work with the Bank. Model of the grants which channeled in banking mechanisms sometimes have problems. It is because the income of coastal communities does not depend on the fish catch that is always diverse each month.
  1. There are several factors supporting and inhibiting for the successful implementation of PEMP program, namely:

a. Supporting factors include:

1)      The needs of the community regarding the program

2)      Communities, governments and other supporting institutions notice that PEMP were in line with business opportunities for improved welfare of coastal communities that their life is dependent from sea.

3)      Overwhelming support from the outside communities (non-coastal communities) on the business development of the coastal communities, for instance the TPI and food stalls that can enhance comfort and enjoyment for public to go a trip to the coast.

4)      The cooperative fishery, in general, is a savings and credit cooperative. It is very helpful to overcome capital constrains.

5)      The management functions have been implemented by the cooperative fisheries including monitoring system as well as internal and external supervision.

  1. Inhibiting Factors include:

1).    Cultural factor of the coastal communities.

2).    Cooperatives, in general, that were observed as an object of research have not done the research and development. It is because of the limited knowledge and insight of human resources among the cooperative board members.

3).    Post-production process, starting from the fish auction in TPI until the distribution of fishery products, is not conducted by the cooperative directly. This is the weakness of the cooperative fishery because fishermen as members of cooperative does not have a good bargaining position when dealing with other private parties as a fish trader.

4).    Natural factors often make the income of other fishermen unpredictable, therefore it disrupted the economic activities of coastal communities.

5).    Perception and understanding factors of the society, the government and the other supporting institutions (MFIs Swamitra Mina) are sometimes different.

6).    MFI Swamitra Mina still positioned themself as a different party of the society and the approaches are still using a rigid banking system (Bankable approach).

7).    There are several external factors, for instance economic, technological, socio-cultural policy of the government (law and politics) and industrial environments that become obstructions toward program implementation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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[1] This paper  will be presented on 1st Organisational Governance Conference Corporate Governance Crises: Causes, Effects and Solutions,  15 & 16 September 2011 in, De Montfort University, UK.  This paper  is written based on research by Mukti Fajar ND , Ahdiana Yunilestari and Wihandaru  in 2010.

[2] Doctor of Economic Law, Assistant Professor of School of Law University of Muhammadiyah Yogyakarta, Indonesia

[3]Kusnadi, Fishermen: Adaptation Strategies and Social Networks, Bandung, Utama Humanities Press, (2002):40

[4]Herman Soewardi in Kusnadi, Fishermen: Adaptation Strategies and Social Networks, Bandung, Utama Humanities Press (2002):12

[5] Ibid,

[6]Arif Satria, Dynamics of Fisheries Modernization: Social Formation and Mobility Fishermen, Bandung, Utama Humanities Press (2001) :11

[7] Ibid.

[8] Victor P.H. Nikijuluw, Population and Social Economy of Coastal Communities and Empowerment Strategies in the Context of Those in Integrated Coastal Resources Management, Paper on Integrated Coastal Management Training, Project Coast, the Center for Coastal and Marine Resources Studies, Bogor Agricultural Institutes, Hotel Permata, (October 29, 2001) : 2

[9] Ibid: 1

[10] Thoby Mutis, Prayitno & Budi Santoso in Mulyadi for the Marine, Jakarta, PT. King Grafindo Persada (2005):213

[11] Siahaan, Design for Community Empowerment in Poverty Reduction Fishermen in Indonesia, Jakarta, Ministry of Social Affairs P3KS (2005):201

[12] Center for Statistic Body Yogyakarta, Indonesia 2009

[13] Center for Statistic Body Yogyakarta, Indonesia 2007

[14] Statistical data of Fishermen in Daerah Istimewa Yogyakarta, Indonesia in 2006

[15] Maarif Institut for Culture and Humanity, Preliminary Study of Poverty in Gunung Kidul (2007): 9

[16] Dedi M. Masykur, Coastal Resources Development Policy as an Alternative Future Development of Indonesia, Paper presented at the National Dissemination Program MFCDP in Jakarta (September 22, 2004):4

[17] The founding father of the Indonesian Nation aspires to make the SMEs as a cornerstone of the economy Indonesia. The idea was first developed by Mohammad Hatta, Indonesia’s first Vice President.

[18] According to Article 1 of Law No. 25 of 1992 concerning  SME, that is the SMEs is a business entity consisting of a SMEs or a legal entity with bases its activities on the principle of SMEs movement as well as the people’s economy is based on the principle of kinship. Thus, the SMEs is a collection of people rather than a collection of capital, see also “Understanding  SME”, downloaded from http://emperordeva.wordpress.com/about/makalah-pengertian-koperasi

[19] Ahdiana Yuni Lestari & Endang Heriyani, Fundamentals of Contract and Creation Aqad, Yogyakarta (2009):54

[20] Marine and Fisheries Department of Daerah Istimewa Yogyakarta, Indonesia (2003)

[21] Indonesian Fisheries SMEs Association (2005)

[22] Rokhmin Dahuri, the Revitalization of Fisheries  SME, Infokop No. 26 of XX, (2005):11

[23] Anderson, CW, The Place of Principles in Policy Analysis, American Political Science Reviev, Vol.74 No.3.December 1979 see also Dye, Thomas.R, .1978. Understanding Public Policy, Prentice Hall, Inc., Englewood Cliffs, New Jersey that public policy is “whatever Governments choose to do or not to do”. See also Dunn W.N. 1999, Introduction to Public Policy Analysis, Translator: Samodra Wibawa, Diah Asitadani, Agus Heruanto Hadna, Erwan Agus Purwanto. Editor: Muhadjir Darwin. Second Edition, Gadjah Mada University Press, Yogyakarta, that public policy is: “A complex pattern of interdependent collective choice, Including decisions not to act, made by governmental bodies and Officials (1979):251

[24] Soetomo, Community Development Strategies, Yogyakarta, Pustaka Students provide an explanation of community development as quoted from the UN as follows: “It is a process which is the business community itself is integrated with government authorities in order to improve the socio-economic conditions and cultural community, integrating communities into national life and promote a more optimal community contribution for the progress of the nation. Meanwhile, Christenson and Robinson define:” Community development as a process whereby the people living in certain locations to develop initiatives to implement a social action (with or without intervention) to change the economic situation, social, cultural and their environment (2006):67

[25]Victor P.H. Nikijuluw, Population and Social Economy of Coastal Communities and Empowerment Strategies in the Context of Those in Integrated Coastal Resources Management, Paper on Integrated Coastal Management Training, Project Coast, the Center for Coastal and Marine Resources Studies, Bogor Agricultural Institutes, Hotel Permata (October 29, 2001):49

[26] Elizabeth Chambliss, “When Do Facts Persuade? Some Thoughts On The Market For Empirical Legal Studies” Law and Contemporary Problems,17 (Spring 2008) : 25, Sosio Legal Research is used to observe the empiric evidence, the effect of law implementation toward social behavior or related with social behavior which influences law formation

[27] Soerjono Soekanto, Introduction to Legal Research, Jakarta, Indonesia University Publishers (1986):89

[28] Harkristuti Harkrisnowo, Lecture Handouts Legal Research Methods, Graduate Doctoral Program, University of Indonesia ( 2004):44

[29] Anslem Strauss and Juliet Corbin, Basics of Qualitative Research, translations of Mohammed Shodiq, Yogyakarta, Pustaka Pelajar (2003):36

[30] Lexy J Moleong, Qualitative Research Methodology, Bandung Rosdakarya (1996):71

[31] Islamy, Fisherman Design for Community Empowerment in Poverty Reduction in Indonesia, Jakarta, P3KS Ministry of Social Affairs of Indonesia (2005)

[32] Ibid.

[33] Regulation of the Minister of SME and Small and Medium Number 14/Per/M.KUM/XII/II/2009.

[34] Ibid.

[35] Program Pemberdayaan Ekonomi Masyarakat Pesisir/PEMP) program targets are micro-scale coastal communities that were divided into 2 stages of the target, namely: (1) SMEs LEPP M3/Koperasi Fisheries /  SME others as targets of, and (2) target by the end of the coastal communities of micro-oriented on marine and fishery sectors such as fishing activities, aquaculture, commercial fisheries, fish processing, fisheries and management service business of maritime tourism, which is located in the area around the coastal and small islands.

[36] Funds used to finance the program PEMP is a form of elaboration of Poverty Impact of Subsidy Reduction Program of Energy (PPD-PSE) from the Ministry of Maritime Affairs and Fisheries.

[37] Guidelines for Economic Coastal Communities Empowerment Programme, Department of Fisheries and Marine Republic of Indonesia 2001. Based on the chart, then the flow of fund filing starting from KMP to make proposals that accompanied the use of funds by the TPD to the LEPP M3 according to the priority of the proposed types of activities and the amount of funds that have been agreed in consultation village partners. The proposal that has been signed to the LEPP M3 discussed and verified, then submitted to the Project Leader. Project Manager requesting funds to KPKN with accompanied LK, RAB and SPP-LS to be channeled into account LEPP M3 (Account PEMP). Furthermore, the board chairman or M3 LEPP disburse those funds and distribute to each group according to the needs of the proposed activity.

 

[38] According to the Provincial Government of DIY success of this program must be supported by a community of economic activities based on the potential of local resources by prioritizing the participation of local communities and the scale and level of economic feasibility. Institutional development and socio-economic organization of society based on local culture needs to be done to support the social and economic activities that will be developed. This is important especially to help anticipate and resolve social conflicts that occur in coastal and marine resource use.

[39] Guidelines for Economic Coastal Communities Empowerment Programme, Department of Fisheries and Marine Republic of Indonesia 2001.

[40] If analyzed from the theory of legal effectiveness, Antonny Allot (1981) explains that the law (in this case the policy of the government program) should be explained to the public based on two things, namely: (1) Textual and, (2) Contextual. The text of the policy that is poured into a letter or written rules can be easily and clearly understood. Furthermore, contextual issues related to situations and people that governed or policy targeted.

[41] Emile Durkheim MDA Freeman dan Lord Lloyd, Introduction to Jurisprudence , Seven Edition, Sweet & Maxwell LTD London 2001 :  714

 

[42] In the period of institutionalization in PEMP entry program that is no effort pointnya assistance, access to banking facilities and the establishment of legal entities

[43] Institutional strengthening of SMEs efforts includes Swamitra Mina LEPP M3, Unit Savings and Loans (USP), Coastal and Baitul RB Qiradl. Mina Swamitra fostering conducted by Bank; USP fostering by BRI, Bank of Papua, Maluku and the Bank; RB Coastal fostering conducted by the National Capital PT Mandiri, while fostering the Baitul Qiradl Bank

[44] Further funding status issued by banks on loans managed by the MFI Swamitra Mina or the like, which is one business unit owned SMEs fishery M3/koperasi LEPP

51 Sulistyo, Analysis of Financial Performance and Strategy Development of Fisheries SMEss Business Mina (Mina A Case Study of Fisheries SMEs Enterprises Jetis Village, District Nusawungu, Kabuapten Cilacap, Central Java Province), Thesis, Graduate Program Extension Agribusiness Management, Faculty of Agriculture, Bogor Agricultural University (2010):19

52Interview: according to some board member of SMEs that not all of the  SMEs fishermen  do the activity.

[46] Source: Financial Statements LEPP M3 Kulon Progo District in 2008, the current asset LEPP-M3 almost all from DEP PEMP. LEPP-M3 wealth that comes from donations or DEP PEMP and government assistance (funding for institutional Reinforcement from the Ministry of Maritime Affairs and Fisheries in 2003 and Capital Reinforcement of Diskanla DIY (2003):9

[47] Interview with Head of the Department of Marine Fisheries and Peterbakan (DKPP) expained that LEPP-M3 was not a legal entity at that time, so it need local wisdom to manage the DEP. In 2004, the amount of DEP disbursed to 10 KMP is Rp. 752 322 000, – (seven hundred fifty two million three hundred twenty two thousand rupiah). DEP in 2005 of Rp. 535 725 000, – (five hundred thirty-five million seven hundred twenty five thousand rupiah). DEP in 2008 was direct assistance to communities, not through Swamitra Mina.

[48] Interview with Mr. Zainuri. Goup leader, the Red Sea fish traders, Kulon Progo District in November 15, 2009.

 

57Interview with Sulistyo Wahyu Wibowo, Manager Mina LLKM Swamitra Gunung Kidul District

[50] These data are the results of interviews with some respondents in 3 districts

[51] This data was obtained from interviews with respondent in 3 districts

[52] Porter in Sulistyo, 2010, Analysis of Financial Performance and Development  Strategy of SMEs Fisheries Mina Usaha (A Case Study of SMEs Fisheries Mina Usaha in Jetis Village, sub-District Nusawungu, Cilacap District, Central Java Province), Thesis, Extension Under graduate Program in Agribusiness Management, Faculty of Agriculture, Agricultural Institute of Bogor … Analysis of the industry environment influenced by 5 factors: (1) The opportunity and the threat of newcomers (2) trust of suppliers to the SMEs in the process of product offerings (3) bargaining power of buyers (4) power of substitution and (5) rivalry among existing firms in industry.

[53] Ibid.