Report on the 2016 Pilot Implementation Noncash Disbursements of Social Assistance and Food Assistance

The instructions from the President of the Republic of Indonesia in several Limited Cabinet Meetings serve as the basis for implementing transformation of the Raskin/Rastra Program into the Noncash Food Assistance (Bantuan Pangan Nontunai/BPNT) in the form of food electronic voucher (e-voucher). The main objective of the BPNT Program is to improve the effectiveness and accuracy of the program targets, as well as to promote financial inclusion in order to effectively lift the burden of expenditures of poor and vulnerable families and eventually reduce poverty.

In the Limited Cabinet Meeting on 16 March 2016 regarding Poverty and Economic Disparity Reduction Program, the President of the Republic of Indonesia gave directives that the distribution of Raskin in 2017 should be conducted through a voucher mechanism enabling continuous monitoring, the poor people who received the voucher were able to purchase rice of the quality that they desired and combine this with the purchase of other food items (for example, eggs), and a pilot project was undertaken in 2016 and such disbursement was implemented in selected major municipalities in 2017.

Furthermore, in the Limited Cabinet Meeting on 26 April 2016 regarding Inclusive Financial, the President of the Republic of Indonesia requested that every social assistance and subsidy was disbursed in a noncash manner and through the banking system, in order to facilitate the government in controlling, checking, and minimizing the occurrence of deviations. The use of banking system is intended to support inclusive finance by way of improving the savings behaviour which in turn is expected to open credit access to encourage productive behaviour. The use of various cards in disbursing social assistance (bantuan sosial/bansos) funds should be integrated in a single card and disbursed in a noncash manner and for all assistances to be coordinated by the Coordinating Minister for Human and Cultural Development.

The President of the Republic of Indonesia reaffirmed his directives in the Limited Cabinet Meeting on 19 July 2016 regarding Raskin Program that the distribution of Raskin was transformed by using a voucher given directly to the targeted households. The voucher can be used to procure rice, eggs, and other basic necessities in markets, shops, stores at affordable prices. In addition, the people should also receive more balanced nutrition, not only carbohydrate, but also protein, such as from eggs. Markets, shops, and stores should be able to purchase rice from various sources selling rice at cheaper prices, thus putting in place a competitive mechanism. Application of such voucher should undergo pilot implementation first in several municipalities and carried out thoroughly, because the Government would not decide the use of such voucher directly in all municipalities and would only start implementing it in 2017.

Principles of the BPNT Program include the flexibility for Family Beneficiaries of the assistance, in the terms of choosing the type, quality, and price of the food items, as well as the time and place for purchase. Family Beneficiaries have the choice and control on when to use the benefit for purchasing the food items (rice and/or eggs). Family Beneficiaries are not directed towards a particular e-warong. E-warong is a bank agent, merchant and/or other parties that has established cooperation with a disbursing bank and is determined as a location for withdrawal/purchase of social assistance. The supply of food items for the e-warong comes from various sources. The bank is not the distributor of the food items dan the food items are not parcelled out. The last principle is that the Bank does not handle the food procurement/stocking.

As a follow-up to the directives of the President of the Republic of Indonesia, TNP2K Secretariat conducted a pilot, in collaboration with banking partners, a telecommunication company, and the local government of six municipalities and two districts spread in six provinces in the period of June-July 2016. In this pilot, test was carried out for each stage of the process, namely: data preparation; preparation of bank agents; dissemination and education; registration; disbursement; and utilization of the assistance. Particular tests were performed on the use of payment instrument technology; engagement of public figures and village/kelurahan apparatuses as part of parties implementing dissemination of pilot information; and recruitment of local stalls/shops at village/kelurahan and hamlet/ kampung levels as bank agents. Public education was conducted to promote the use of the noncash financial system as well as to increase their access to financial institutions and self-confidence in making transactions.

This document reports the pilot implementation in detail, based upon monitoring results and evaluation on all pilot stages, as well as provides recommendation on program implementation. We would like to express our utmost gratitude to the parties who have assisted in the implementation of these pilot activities, particularly to all of the Local Governments and their ranks as well as all banking partners (BRI, Mandiri, BNI, BTPN, and BPD Jawa Tengah) and Telkomsel. We would also like to express our appreciation to the Local Governments of Medan Municipality, East Jakarta Administrative Municipality, Central Jakarta Administrative Municipality, Bogor District, Surakarta Municipality, Malang Municipality, Sidoarjo District, and Makassar Municipality.

We hope that this book is beneficial for the implementation of noncash assistance in Indonesia and it can serve as input as well as supporting materials for various related parties in improving the future performance of the program.