1. The Improvement of Village Infrastructure to Reduce Poverty in Rural Areas Indonesia Experience

2. Introduction Poor population in Indonesia increases due to oil price, the number achieves 17,7% (35 millions population), 45 % of the villages as poor villages. Challenge of poverty reduction is not only to reduce the number of poor, but also to improve public services quality within undeveloped regions. To avoid sharp increase of poor population due to oil price hike, government launched new program: rural infrastructure improvement

3. Objectives of the program Immediate objective is to make the villagers get additional income from rural construction project Long-term objective is to enlarge public service in rural area, so the people have a better access to transportation, economy facility and other public services The method using participatory approach will improve the capacity of villagers to manage rural facility.

4. Selected Villages An eligible village for the program if it has – most of the population are poor – lack of public service infrastructure – lack of fund on the district government Each village will receive 250 millions rupiahs (US$ 30,000) The number of villages on the program are 12,834 villages, in the year 2005.

5. Project Approved Each village may propose more than one project, based on their own agreement, as long as the amount is less than Rp 250 millions The numbers of submitted proposal are –10.756 projects on transportation infrastructure –2.987 projects on clean water facility, –1.163 projects on simple irrigation, –110 projects on rural electricity, and –256 projects on others

6. Benefit of the program The total funding directly went to people in the village about 93,5 % To spend as wage about 43,7 % The number of worker is 807,373 people The working days is 58.424.324 mandays

7. Perception of the beneficiaries More than 90 % agreed, the program had increase accessibility to public services, reduce their production cost, and increase their income The program failed to perform ‘good governance”, almost half of villagers was unsatisfied with the committee work Encountered some problems such as too short preparation time, limited infrastructure choices, lack of skill worker, and bad financial management

8. Lesson learned The program is very effective to avoid sharply increase of poor population due to increasing oil price weaknesses of the program such as bad planning, lack of administration skill and limited choice of infrastructure menu should be addressed properly Participatory approach will be decided as national program for poverty reduction, but local government role to provide technical assistance will be better.