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interview with Mechai Viravaidya

IndonesiaCIA The World Factbook

YI: Sustainability of development program is often a major problem in developing countries. How do you address this?

Mechai Viravaidya: I think before you say how you're going to solve it, you have to say what we are doing, that we are trying to help the poor, those living in poverty, under $ 2 a day. Before you help them you have to ask them what they do each day. Some raise chickens, some plant vegetables others cook food and sell noodles. In any case they're in business. Just like everyone else trying to make a profit in every Asian country. All the big companies, the hotels, airlines trying to make a profit. That's what they're trying to do.

They are business people. But they are bad at business, because they lack business skills and they lack credit. So, you've got to know the illness before you can provide the cure. So, it is very clear to me after 20 years of close observation of working with them that these people continue to be poor because they lack business skill and they lack credit at a normal rate. That's very clear. So if you want to get them out of poverty, you have to tackle these two things.

Make sure they have business skills and enable them to get credit. And my observation is that all governments, maybe with the exception of Norway and Singapore, where governments can do just about everything, except perhaps give a few extra smiles, but basically one must accept the fact that there are many people in each country that are not being served by government services. It's just not there, it doesn't reach them. At the same time, these people are too poor to buy the alternatives provided by the business sector. So they fall through the cracks. What's the government's approach to helping the poor? Very simple, they use the welfare approach and they use government officials. I'm not saying officials are bad, I've been one myself. But governments are good at infrastructure, building roads, electricity, telephones, railways. They can do that fairly well. But it is not the cure, the forte of government officials to have business skills. Governments don't know how to make money. They excel in taking money, the tax department. So, they use the welfare approach and it doesn't work. Why? Because welfare does not teach you anything new. Two, it does not empower you in any way and thirdly, it makes you more dependent on handouts. So it's not sustainable. So you've got to take the sustainable approach and that is, who can provide business skills? Business people.

Secondly, can they also provide some assistance, financial and educational? Yes, they are very good at it. It's part of their corporate social responsibility (CSR), which we've been trying to start for 21 years before the word came around. We said that companies ought to do something too. You can't expect to eat chicken meat when everyone else is eating chicken bones and chicken feet. Surely, that doesn't make you feel good. So we've been doing that all along, we call that social responsibility and basically that's what companies are doing that. But prior to that, we had foundations and associations doing that. We have come up with what we call the Village Development Partnership where we ask companies to partner a village. And both work.

The villages provide the labor, they are rich in labor. But nobody buys them. And the companies are rich with cash. So two rich groups come together. They plant trees and the transfer of money takes place. No money can be transferred without planting trees. Every tree is a $1.50. And all that money goes into a micro-credit fund we call the Village Development Bank, operated and owned by the villagers who have been trained.

We also teach - because we have MBA schools in the world, including in my country, who only help the rich. And I'm sure in your country they only help the rich too. This doesn't help the poor. So we must realign a lot of our tertiary education. If anyone needs help with the MBAs, it's the poor. The rich can do without it. But that's not being done. So we came up with our own barefoot MBAs to teach village people basic business skills at a level they can understand and then they can borrow the money and pay interest on it, 12 percent interest. And it's owned by the people. So this is the sustainability, in that we don't need assistance from the company more than six years. Again the cost is very low, $100 per head. That's it. Most of it stays as a revolving loan fund. But the key element, why it works, is community empowerment.

We help to empower the community, the village development committee. It's not registered, it's just a group of people who are interested - in fact all the villagers - in their village's development committee, which is divided into the bank, the village youth government, elderly support, health care and education and the environment. So those are the five things they work and help to do. And they help to look over the money. The money is only loaned to those at the bottom end of the economy. If you have a pick-up truck don't expect to get this loan. Every loan is made public and every monthly repayment must be made public. So everyone knows and what's important, the villagers feel it's their money because they planted the trees. They gave their labor, they didn't charge for it. So it shows that the poor can contribute. But we have to give a value to whatever assets they have. And one of the things that we have started, and I hope that the rest of the world will follow, is that when we talk about getting people out of poverty, you must include people living with HIV. Or you will leave out one-third of the poorest. So that's number one.

The second is that poor people have no asset. They have no land, no earrings, no motorcycle. What can they use as collateral? Banks don't lend them, yet in economics labor is a factor of production but banks just don't recognize this. It's quite illegal really. So, we have said in our program that we will offer all the people who are poor, access to credit as a human right. So that should be number 31 for the UN Declaration of Human Rights. Access to credit for those living in poverty must be a human right. But we ask them to use labor as a collateral. We lend you at first up to 60 days, at every day's worth a minimum wage, $5, $ 10, you multiply that first loan we give for 60 days. You multiply 60 by $10. And it gets better next round, it will be 90 days. Three months, and that's 120 days. And that's enough. And you have to be trained by the barefoot MBAs and you need to have a successful business and be able to repay.

In the long term, we can pass them on to the regular government banks because they have such a good track record already. This is the approach and I talked to the secretary-general of the ASEAN and I suggested that we call this program The New ASEAN Endeavor to End Poverty. And we can get all companies - maybe we can start with Singapore - they've got companies everywhere, every Singaporean company in every country should adopt a village. Big companies like Temasek can do with more than one. And then you've got oil companies in every country, Thailand, Indonesia, the Philippines. If every company takes on a village, some take on more, before long we wipe out poverty. It's that simple. But we don't think out of the box. The UN can do it, the government can do it. The government can help with infrastructure, but the government doesn't know how to make money that's why they're privatizing everything. That's why I call this the privatization of poverty eradication.

YI: Is it working?

Mechai Viravaidya: It's working.

YI: How many companies and how many villages are in this partnership?

Mechai Viravaidya: We have about 700 to 800 villages and we've had over 400 companies. Some companies take one, some take more but the five things the villages do are: income, community empowerment, health, education, environment, human rights, gender equality, democracy, all the things to have for good economic and social conditions if you have bad democratic conditions. You need all these together. And we have gender equality. In everything we do, women must be in charge of half of it. They ask me why, so I said because my mother is a woman. If you have problems with women it's because you're not letting women in your country do more. All these men having problems with their mothers, wake up! Let the women do something.

YI: Are these programs in the poorest part of Thailand?

Mechai Viravaidya: Yes, they are in the poorest part of the country, in the northeast mostly but some in the north, and some of them are sponsored by power companies.

YI: Power as in electricity?

Mechai Viravaidya: Electricity companies because they're working in some areas where they would like to help the villagers. It's to help them, sometimes to minimize possible criticism also, but generally they're just ordinary companies and we now have a bride and a groom - an Australian banker and a Thai banker who got married - and they sent with their invitations, the project proposal to their friends. "Hey when you come to our wedding help this village..."

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