Mayor Handed Budget Management to Slums
City of Chumpae, Kon Kaen Province

An old swarthy lady once made a call to Somkiat Na Chumpae one late afternoon; she said she was in a dire emergency situation.

Somkiat, the Mayor of the city of Chumpae, is a young man who has no kids and plenty of time on his hands. He'd studied law before he became the Mayor, and - like all good lawyers - he promised his clients that they could call him anytime when they needed him.

"I arrived immediately at the scene and sat for 20 minutes in the waiting room of a muggy police station," says Somkiat. "Then it turned out that the old lady had just been issued a $10 speeding ticket by the highway cop."

"An emergency?" says the Mayor in a furious tone. "Yes, you have my mandate, my sword, my promise, but please use it sparingly and on emergency situation only! You should use my sword against giants - the Mafiosi - who come to evict you. But hell, don't blunt its edge on lizards and leeches," recalls the Mayor as he shakes his head.

The folks in Chumpea love him. In the last city election, he won a landslide victory. This is not only because he is an approachable person - who takes care of your speeding tickets - but because he's a man who is genuinely concerned about people.

When there were huge gambling spree in the city, Somkiat ordered his cops to dress like gamblers, go gamble in smoke-filled rooms throughout the city, and arrest all the offenders. Then he released them all, with these warning words: "next time it will be jail."

The gamblers are too clever for him, however. After many incidents of arrests, the gamblers came up with a new strategy; now they gambled right out in the open - on porches and park benches. When the police came, they would disperse in all directions. Since there are no walls in the open field, the police would have no way to restrain the men - they disperse, gather, and disperse like black flies over red meat. Somkiat was caught off guard by the innovative gamblers, but they still love him.

As the Mayor, Somkiat allows the community to manage a chunk of his own budget. Of the annual 200 million baht budget, Somkiat sets aside 15 million baht to be managed directly by the community. About 60-70% of the 200 million baht is still required to run the operating costs of various departments in his municipality.

"I have completely eliminated the sanitation department," says the Somkiat. "Then I allocated the entire sanitation budget directly to the communities. There are 29 of them in total; each community now receives 30,000 baht per month to be used for street cleaning and garbage collection."

It turned out to be a wise decision. The streets are now much cleaner. "You don't throw a beer bottle over the pavement when you see that your very own aunt is sweeping it," says the mayor. The folks in the community do their own enforcements, and most often it is peer pressure.

Sometimes the people in the community initiated their own programs and they came to Somkiat for support. "Once a group of women came; they wanted to started a bottle water company, so I gave them a budget to kick start the program. Immediately, they used the money to buy machinery, equipments for the factory. It was a highly successful business."

Somkiat says he also set aside a budget for general welfare such as health care and housing repairs within the community. There is 4 million baht total for all 29 communities. Each community manages a net welfare budget of 30,000 baht per month.

Allowing people to manage their own budget is quite new in Thailand. The national auditing office came and asked Somkiat to appear for a verdict 5 times in one year. They were not accustomed to Mayors giving a big chunk of his budget directly to the managerial talent of the villagers. They were afraid of vote-buying schemes.

After the auditing staffs had learned that the Somkiat's hands were clean - and there's nothing dirty about hands that dispense money - the critics were dumbfounded. "You shouldn't do this again. What if other cities start imitating you?" said his critics. "What if they give away their entire budget to the community?"

"Why, that would be wonderful!" said Somkiat defiantly.

"I heard that you are setting up a municipal saving group?" I ask.

"Yes, we're working on getting people to join the municipal saving group," he says. "The fund would cover educational needs, housing repairs, and vocational training. It would be managed by a committee consisting of members from the communities and the city government."

"Ms. Nong, the lady from the Rom Yen settlement, said that some people in her communities saving group failed to pay back the loan they borrowed from the group," I observe.

"So having the municipality involved in the saving group would reassure her and many other small saving groups that they have our full support," says Somkiat.

The idea of creating saving groups collectively as some sort of a parallel government came from his involvement with CODI on its collective housing projects. As always, CODI required that the community forms a saving group as an eligibility requirement prior to getting the usual 20,000 baht per household grant.

The entire CODI housing budget for all 29 communities in Chumpae is 70 million baht; "That money is now directly managed by the good hands of the community collectives," says Somkiat.

"After working with CODI's collective housing program, I was so curious by the experience that I did my master degree thesis on CODI's housing program," Somkiat laughs.

CODI projects most often allow the residents to participate in building their own houses; laying their own bricks, doing their own plumbing work, and installing their own windows and doors. It's a way to reduce labor cost, but more important, it's a way for the community to cooperate and learn to work together when problems arise. Some members became so skilled from building houses in their community that they started their own construction business. They became professional contractors.

On any construction project, Somkiat always tries to hire local contractors - even residents - within the city of Chumpae.

"Why not?" he says. "This way the money stays in Chumpae!"

His old critics at the auditing office would have none of it, however. They came to see him again. "Why don't you open the bid it to everyone?" said the auditors.

Somkiat argued that if he had opened the bid to non-local contractors it would only go to the largest 2 contracting companies in Thailand. "And you know who they are!" says Somkiat.

Since the law required that all auditing officials must change faces every year - for fear of getting too cozy with their clients - Somkiat could only look forward to explaining his intentions to a new set of auditing officials again next year.

"So in the end we bid it in small increments; little by little so that the big companies in Bangkok don't go after our projects here," explains Somkiat.

"There's no such motto as 'hire local' in Thailand?" I ask.
"No, not in Thailand; only the big guys get the project here," says Somkiat as he shakes his head.

What's more interesting in the so-called global recession is that the informal sector is still doing very well financially. It's just not showing up on the national GDP scoreboard. Community saving groups are based on this informal sector; they operate on cash-only policies and their members have quite a bit of cash stashed under their beds. Some has 1 million baht in saving; some has a few 10 million baht, some has 200 million baht; and the money all came from the folks in the communities.

The amount of money flowing in the informal sector is huge (more than 50% of the economy); and they don't need to be made formal by the government nor other private entities; they just need to be channeled into community-based saving groups so that folks will start to have their own financial muscle to initiate activities within their communities.

Having 10 loose networks of 5-person saving group, for example, can fix a leaking toilet, fix a leaking roof, pave a local walkway, or setup a child care center faster than any form of state government. Formalizing the informal sector only creates more bureaucracies - and most often, the money will not go back to the people who generated it.

"I've heard that some community saving group here don't want to be formally registered as a cooperative. Why is that?" I ask.

"It doesn't need to be formally registered as one to function collectively," says Somkiat. "We have some problem with the co-op model in the past. After registering the various saving groups with the Ministry of Agriculture and Cooperative, we unintentionally created a new class of co-op leaders with official connections who welded all the power. It's a very vertical organizational structure which could easily fall prey to abuses and corruptions."

"I think we should have a separate Cooperative Ministry rather than having it swimming in the Ministry of Agriculture and Cooperative," I suggest. "The reason for combining the two together is no longer valid now; it only creates more red tapes and bureaucracy."

Somkiat nods approvingly as he sips his glass of water. He continues:" It's true; in Third World countries, you often find the cooperative department stashed under the Ministry of Agriculture."

Somkiat says that it is crucial today to allow the communities the flexibility in managing their own finance and budget. The co-op, he stresses, is a good model but it's still a top down approach; and because it is so centralized, there is a lot of bureaucracies involved.

In Thailand, every co-op is annually monitored and audited by the central government. So if a community changes any of its plans in mid course, it would have to make a report to the co-op department. This tends to stifle new initiatives within the community. Some people in the community can't even sign their name, not to mention writing a report.

"You must be bold!" he says. "You must have the courage to allow the communities to take their own initiatives and manage their own budget. You must have trust in them."

The phone starts ringing in the staff office next door. Somkiat pauses for a moment to reflect; the phone continues to ring and, for all we know, it could be the National Auditing Office on the other line.