[Kabar-indonesia] 2 of 2: Aceh Research Study: The Role of Remittances

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Aceh Research Study: The Role of Remittances in Crisis 
continues...

When viewed at the macro-level, these remittances can
be described as unreliable because households receive
different amounts at different frequencies throughout
the year. But according to Pos Indonesia, each year,
there is a guaranteed spike in the value of amounts
sent to all of Indonesia a few days prior to the Idul
Fitri celebrations. Remittances received in 2003 via
Pos Indonesia were $3.15 million. The amount received
was distributed uniformly throughout the year with the
exception of a 300% spike for Idul Fitri.7 Workers who
cannot return home, although it is a social obligation
to do so at Idul Fitri, will try to compensate by
sending more money during this period; more
remittances are needed during this time to pay for the
celebrations and more remittances are needed to cover
the Muslim obligation of zakat al-fitrah, or
charitable contributions to those who are less
fortunate.

Social benefits of remittances With reference to Table
2 and the interview responses, remittances are of the
greatest social benefit to elderly parents and widowed
mothers, followed by the worker's wife and children.
Remittances play a social protection role for these
groups in the absence of any formally state funded and
implemented welfare programme. However, parents tend
to receive remittances as subsidies while the wife and
family tend to be fully covered.

Elderly parents are always the first beneficiaries of
remittances. This is based on the values of filial
piety of the Acehnese. But they do not always receive
enough from their migrant worker child to cover all
their basic needs. This is because, if they have many
children, each child is expected to make a
contribution. Hence what the migrant worker child
sends is a cash subsidy to contribute to meeting total
basic needs. Children who remain with the parents
contribute in other ways if they do not have income,
including planting vegetables and cooking meals at
home. But this situation becomes precarious if the
parents have an only child who is a migrant worker.
Because there are limits to how much an
unskilled/low-skilled worker can earn, an only child
will find it extremely difficult to cover all his/her
parents' basic needs. As a consequence, the parents
will have to rely on the community for relief and care
assistance.

The next group of beneficiaries to receive remittances
are wives and school-going children. In the
maledominant society of Aceh, this is the obligation
of the husband and father who is the head and
breadwinner of the family. The man must cover all of
the household expenses. If the situation is 7 Kantor
Pos Purwokerto ; www.posindonesia.co.id 16 extremely
difficult, the wife will try to supplement their
income by selling vegetables in the market or sewing.
If there is such a situation, then the man's elderly
parents will receive a smaller portion of the
remittances so that the man can meet the obligation of
supporting his wife and children. Women do not have
this obligation. Furthermore, they tend not to be
married when working in Malaysia or Singapore.

This is because factory employers specifically require
their female workers to be single and not have any
commitments (see Appendix 2). As such, they tend to
focus their remittances on their parents.

If the migrant worker is single and making more than
enough to cover his/her parents' basic needs, he/she
is expected to contribute cash to his/her siblings.
However, in the aftermath of the tsunami several
respondents stopped receiving remittances from their
siblings after their parents died in the tsunami.
Without parental pressure, siblings are expected to be
independent and should not be receiving any social
benefit from remittances. As such, the group that
receives the least social benefit from remittances are
the siblings of migrant workers.

Beneficiaries are selected on the basis of their role
in the Acehnese family, their level of self-reliance
and their actual and future vulnerability. When asked
to measure the amount of remittances needed to reduce
this vulnerability, all respondents explained that
they could not think of this in terms of dollar value.
All of them equated vulnerability with the failure to
meet basic needs (kebutuhan hidup), specifically three
meals a day and clothing. But several added that,
since the tsunami, basic needs included medicine,
though they did not specify the type of medicine. The
need for medicine may be because of a perceived or
actual increase in vulnerability since the tsunami.
None of the respondents viewed their remittances as
going beyond fulfilling the basic needs of their
dependants, such as investments in housing expansion
or the purchase of a car. None of the recipients
viewed the remittances as a tool for discretionary
spending or long-term savings. This may be because
their families are extremely poor and are only
concerned with avoiding the maximum loss of daily
welfare (Siegel and Alwang, 1999).

Another aspect of benefit that these senders and
recipient groups identified was in terms of the peace
of mind derived from receiving reliable remittances.
As explained earlier, respondents felt reassured when
they received the same amount of funds (or more) at a
fixed frequency throughout the year. They did not want
to worry and make phone calls or send SMS messages to
each other to discuss remittances. Senders and
recipients did not want to worry about failing to meet
the recipients' basic needs. This was because they did
not have any alternative source for immediate cash
spending – many 17 were un-banked; could not qualify
for credit/loans let alone build a credit history; did
not have assets that could be easily converted to
cash; and did not have rich relatives.

18 Impact of the tsunami on migration and remittances
in Aceh Based on interviews, in the first month after
the tsunami, many migrant workers could not locate
their families. Family members either died or were
displaced. These workers took 14–30 days to locate
their families using mobile phones (calls and SMS) to
contact friends and relatives. After locating them,
more workers could not return to care for their
families in the emergency period than those who could.

This was for several reasons – the worker had just
started his/her first year of work in Malaysia and
Singapore and had to use all of his/her income to
repay the calo; the worker had entered the destination
country illegally and could not risk arrest by leaving
to return to Aceh; the worker did not receive
permission for a leave of absence; or most family
members had died including parents, and it was
pointless to return to care for a surviving sibling.

One respondent who managed to return located her
entire family in an IDP camp. She said that she
returned with a plane-load of other workers at the
beginning of February 2005. She was fortunate to
receive a leave of absence for a month. In addition,
her employer made a charitable contribution of
RM1,000, or approximately $266. She brought home
money, food, clothes and gifts to help her family,
especially her widowed mother, through the emergency
period. She stayed with her family in the camp for the
month she was in Aceh. She was very grateful for the
aid assistance that they had received in the camp. By
the time she left, her family had returned to
rehabilitate their damaged home.

Another respondent flew from Malaysia to Aceh two
weeks after the tsunami. She used to send remittances
to her family frequently, but since starting her own
family in Malaysia she had sent less money and tended
to focus on her mother's needs. In the aftermath of
the tsunami, she ensured that her mother was relocated
to a relative's house, and had sufficient funds, food,
medicine and clothes.

She did not provide any assistance to her brother. She
expected her brother, who lived in Banda Aceh, to be
self-sufficient.

In a third case, there is less concern for a sibling.
A young motorised rickshaw or becak driver reported
before the tsunami that his older brother sent
remittances to his parents and nine family members,
including himself. He received a share of the
remittances because of his parents' request. But after
the deaths of his parents and eight family members in
the tsunami, his older brother decided to stop 19
sending regular remittances even though this young
respondent was a survivor. He was expected to be
self-sufficient as his older brother struggled to get
by in Malaysia.

For migrant workers who wanted to return but could not
and had some savings, emergency remittances were sent
via friends and relatives. According to six
respondents who could not return immediately after the
tsunami, amounts remitted were the same as
pre-tsunami. In addition, according to a migrant
worker union organiser, the union had a fund-raising
campaign to supplement the remittances of workers.
These charitable contributions were pooled and
distributed by community based organisations (CBOs)
using their social networks and by humanitarian
actors. But the union organiser acknowledged that the
union could not individually supplement a worker's
private remittances. Other respondents confirmed that
there was a significant level of charitable
contributions. This implies that these contributions
either supplemented or substituted for remittances.

The impact of the tsunami on changes in the social
behaviour of migrant workers and remittances during
the emergency period is shown in Figure 1.

Figure 1: The effect of the tsunami on remittances The
distribution of goods and cash by humanitarian
agencies and CBOs to IDPs (through cash transfers,
grants and cash-for-work) were extremely important
during the emergency. This was especially the case in
isolated areas, where such distribution was an
alternative to regular channels.

Both the formal and informal remittance channels were
badly affected by the tsunami. Corresponding banks for
remittances and infrastructure were destroyed or
severely damaged. Only BNI and Bank 20 Syariah Mandiri
in Lhokseumawe on the east coast were operational by
the first week of January 2005 (Kompas, 31/12/2004).
BII was operational by 14 January (see Appendix 2).
Although Western Union was operational within 24 hours
of the tsunami, it had limited coverage because its
agents, including the above-mentioned banks, had
suspended operations (see Appendix 2). Money changers
were only operational 1–2 weeks after the tsunami.
However, Pos Indonesia managed to function by
redirecting its workload away from damaged areas in
Aceh to Jakarta and Medan. Correspondingly, according
to the Central Bank of Indonesia, total remittances
received by the country for January–February 2005 was
Rp.177,680 million, down by 7.34%. This figure did not
include remittances using informal channels.

As such, it could be strongly inferred that the
reduction was even more significant during the
emergency period.

The main problem that many migrant workers faced was
that they could not provide an address for their
relocated families. A mailing address is needed by WU,
Pos Indonesia and money changers for contact to be
made with the recipient. The use of a mailing address
to identify a recipient is an institutionalised
practice in both formal and informal channels because
many recipients from poor rural households do not have
ID. Other households use indigenous practices in land
titling – their head of village or kepala desa and
their neighbours vouch for the identity and even
ancestral roots of the individuals in a given house;
this is in lieu of a formal land title registered with
the municipal government. The post office adapts to
this indigenous practice without having to assign a
number to the house. To illustrate, during fieldwork
respondents in isolated areas were located by
providing the name and the hamlet of residence. A
neighbour would then walk the researcher to the
specific location. In other words, the mailing address
becomes a substitute for the identity and
location/area of origin of the poor and marginalised.
This situation was exacerbated by the tsunami when
those who did have IDs lost them in the disaster, and
their identity could not be verified by neighbours
because of massive displacement.

Formal remittance-sending companies sought to promote
transfers during the emergency period.

Singapore Post (Sing Post) announced a commission
waiver on remittances to tsunami-hit areas from 14
January–31 January 2005. On behalf of Western Union,
Sing Post also announced that a reduced and flat rate
of $12 would be charged for remittances to any of the
tsunami-affected countries. Transfer amounts could not
exceed S$1,000 (US$131). This was valid from 14
January 2005–10 February 2005.

It was expected that price-sensitive migrant workers
would respond positively to this. However, Sing Post
reported that the remittance trend remain unchanged
during this period. This is probably because 21 the
problem of identifying and locating/tracing recipients
was more significant than savings on the commission
fee.

Using the only accessible January–February 2005
official figures from the Central Bank of Indonesia
and Sing Post, it can be strongly inferred that many
IDPs had their remittances disrupted and had to rely
on NGOs and CBOs for emergency relief. But by
February–March 2005, remittances started to recover.
This may have been mainly because money changers put
in place an emergency communications system using the
flexsi local mobile phone network. Using this system,
they could help migrant workers contact their
families. The locations of IDP camps could then be
provided to the money changers, who would make
arrangements to either deliver the funds to
functioning bank accounts, or sometimes even make
deliveries to the camps.

By mid-2005, respondents observed that more migrant
workers were returning to Aceh bearing money and
gifts. By the end of 2005, remittance systems, both
formal and informal, were operating at a higher
capacity for Idul Fitri celebrations in November. This
suggests that, by mid-2005, as Aceh entered the relief
and rehabilitation phase, families were using aid
assistance and remittances in a complementary manner.

In comparing the remittance trend before and after the
tsunami, it appears that there was a severe reduction
in the flow of funds during the emergency phase. But
by mid-2005, remittance levels had increased and may
have returned to normal levels. According to Pos
Indonesia, the number of remittance transactions for
all of Indonesia doubled leading up to the first Idul
Fitri after the tsunami (Tempo, 31/10/05). However,
respondents reported that they spent less on
celebrations, such as reducing the amount of food
served to guests and buying less expensive,
lower-quality seasonal treats such as cookies and
cakes. Also, respondents reported that they had to
divert some of the remittances to purchase new
furnishings to replace items destroyed in the tsunami.
But no one reported redirecting remittances for
housing construction. This may be because, after
covering their basic needs, the remaining funds were
insufficient for private construction, or people had
adapted to temporary solutions such as living in IDP
camps or with host families.

One woman interviewed in Tanjung Daya, Aceh Besar,
reported that she was looking forward to moving into
her new house (constructed by CARDI-NRC) and
celebrating Idul Fitri. When asked why some of her
neighbours still had not moved into their homes, she
said that the women could not afford to furnish 22
their homes and refused to move into an empty home for
the celebrations; they preferred to continue living
with relatives temporarily. This is based on the
cultural belief that, for Idul Fitri, the home must be
well decorated; this is not unlike home decorating for
Christmas. When asked how she could afford to furnish
her home, and at increased prices because of the
festive season, she said that it was because she had
received money from relatives. This implies that, even
though there is pressure for aid agencies to quickly
build homes for IDPs, it may be that remittances give
families the extra financial nudge they need to move
into those newly built homes.

Based on the triangulation of data concerning
remittances post-tsunami, remittance flows were
severely affected in the first three months of the
emergency. Alternative distribution channels were
needed to help families cope. Emergency assistance was
needed. But by April, private arrangements for
remittances had resumed. There was less need for
external intervention.

There were also changes to migration trends. Two young
men who worked as casual labourers were interviewed in
an IDP camp in Lancung Paru, Pidie. They were
permanent returnees from Malaysia. Both had returned
after the tsunami – one had returned in August and the
other in November, to celebrate Idul Fitri. They did
not return sooner to their village of origin because
transport links had been badly damaged by the tsunami.
They returned because they could not find stable
employment in Malaysia, and could no longer face the
risk of arrest and deportation. They moved in with
their families in the camps, who were registered as
aid beneficiaries, and wanted to take advantage of the
recovery process. As they were unregistered in the
camp, technically they were living with a host family
that was itself displaced. But their families did not
report the increased occupancy to the humanitarian
agencies providing assistance. This is because the
families counted their sons as being part of the
household.

A young female domestic worker was interviewed in her
home in Meulaboh. She had returned immediately after
the tsunami to look for survivors. When she felt that
her family no longer needed her assistance, and if she
could not start up her own baking business with a
grant from an aid agency, she would return to Malaysia
to continue working as a domestic worker for the same
employer.

In Selayang, a respondent who had left Aceh after the
tsunami for fear of being pursued by the TNI said that
he was also planning to return to Aceh. But his reason
for returning was to support political reform as part
of the peace agreement.

23 In the aftermath of the tsunami, many migrant
workers could not immediately return to Aceh to locate
their families. Some managed to return temporarily
after February before resuming work in Malaysia and
Singapore. But it appears that more unskilled and
economically vulnerable migrant workers fitting the
profile of 'irregular movers' as defined by UNHCR,8 as
well as urban refugees, are returning to Aceh to
assess economic opportunities in the recovery and
peace building process. This suggests that there is
reverse migration, but not for the purpose of
providing care and relief to the tsunami survivors,
but to seek livelihood opportunities.

Our sample group included four IDPs, who were all
assessing the costs and benefits of returning to Aceh
temporarily or permanently. They reported that many
workers had returned from Malaysia in November to
celebrate Idul Fitri, and after the holidays would
decide whether to stay on. These IDPs had short-term
work contracts in Malaysia. They explained that, in
general, migrant workers who returned indefinitely
after the tsunami were undocumented workers in
Malaysia. Given the presence of foreign aid in Aceh,
they felt that they may be able to find jobs without
suffering the risks faced in Malaysia. These
respondents chose to be located in tsunami-affected
areas, where the reconstruction process had begun.
They explained that they were hoping to find any type
of job, such as construction, driving or managing a
small grocery kiosk. If they could find a stable job
and live with their families, they would stay in Aceh
permanently, instead of looking for a higher-paying
job in Malaysia. This implies that their remittance
contributions were minimal as they preferred to return
to Aceh to look for mutual support. They also
explained that one of the motivations for permanent
resettlement in Aceh was patriotism. Community leaders
in Malaysia confirmed that many families wanted to
return to their homeland now that peace had been
achieved, but they were still uncertain whether the
national government would permit Aceh autonomy.

8 www.unhcr.org Refer to the working definition from a
regional workshop on Irregular Movers, Kuala Lumpur
1995 and Community Services for Urban Refugees, 1994
pp5 24 

Implications for emergency assistance 

Initial programming 

The findings of this study have three
implications for initial emergency relief programming:

• families who previously relied on remittances are
initially likely to be as in need of assistance as
others; 

• assistance to restore livelihoods should
include consideration of ways to assist the
restoration of remittance flows; and 

• the impact of
an emergency on migration and remittances may involve
reverse migration and the use of alternative emergency
remittance channels that should also be considered.

Following the tsunami, people who normally relied on
remittances for their livelihoods were affected in a
similar way to non-receivers; their main source of
livelihood was disrupted and their daily needs could
not be met. For at least two to three months after the
tsunami, these families were in need of assistance in
the form of cash and in-kind support to cover their
basic needs whilst remittance systems were being
restored. The implication of this finding is that
targeting of assistance does not immediately need to
be considered in terms of differentiating between
remittance-receiving households and nonremittance-
receiving households.

However, continued assistance to restore livelihoods
may very usefully be directed at restoring remittance
flows and should focus particularly on communications
and family tracing, and systems for proof of identity.
A crisis such as the tsunami increases the costs of
remittances, both financially and in terms of time.
Households in isolated areas experience great
difficulty in receiving remittances from financial
institutions. While delivery is easy near the urban
location of the institution, delivery becomes
increasingly difficult in isolated rural areas that do
not have numbered streets. Humanitarian actors can
make an important contribution to addressing this
problem, through collaboration with banks and money
changers to identify and locate intended recipients,
and possibly to provide an alternative distribution
channel.

By the time of Idul Fitri, at the end of 2005,
remittances flows had returned to normal, and for some
families whose livelihoods were completely based on
remittances this could mean that they had largely 25
restored their previous incomes. However, it is
difficult to generalise in this way as the tsunami not
only disrupted remittance flows, but also affected
migration patterns and killed a significant number of
people, causing more profound changes for many
families than simply disrupting remittance flows.

These profound changes are related to new and
different dependencies between surviving family
members. Continued needs assessment and analysis that
considers changes in family structure, migration and
remittances is essential to guide emergency assistance
beyond the initial relief response.

Further needs assessments 

The demographic and social
profile of migrant workers is vital to understanding
the effects of the tsunami on people receiving
remittances. Better-educated female migrant workers
with formal contracts and originating from the
districts of Pidie and Bireun and Lhoseumawe town
provided the most predictable remittance flows, and
were best able to deal with the effects of the tsunami
(with respect to remitting), meaning that the families
they supported would be able to recover more rapidly
than others. Less educated, conflict-affected male
workers who worked abroad illegally were most
vulnerable primarily due to their migration status,
and together with their families were likely to need
assistance until such time as they found a new and
sustainable livelihood.

The relationship between the sender and the recipient
within the household is another important factor for
consideration, as remittances are often intended
primarily to support parents, wives and children. If a
parent, wife or child died in the tsunami, for whom
the remittances were intended, the migrant worker may
no longer have the motivation to send remittances. As
a consequence the younger sibling(s) of the worker may
suddenly have been left without the support that they
had been getting from remittances to the household. If
such a younger sibling is of school going age, he/she
may be more likely to drop out of school to look for
livelihood opportunities, and may consequently be more
vulnerable and in greater need of assistance.

Assessment methodologies commonly used by relief
agencies are not sensitive to such detailed issues and
relationships. Registration of aid beneficiaries
should include studying the profile of senior
citizens, who may have a migrant worker child, and the
profile of wives and children, who may have migrant
worker fathers. In the short term, these households
are arguably more in shock than other households where
the head of the family/breadwinner is present during
the emergency. In needs assessments, migrant worker
families need to be distinctly identified. While they
should receive the 26 same amount of humanitarian
assistance, they are more likely to recover to
pre-crisis cash income levels faster, assuming that
remittances resume quickly. Hence if they have been
targeted for cashbased assistance, this relief should
be redirected when they start to receive remittances
again.

To support such needs assessments, humanitarian actors
should refer to the banks and money changers for
guidance. As humanitarian actors have better records
of IDP camps, they can collaborate with the remittance
services to locate recipients. This is crucial for
beneficiaries who are without bank accounts, or who
are located in isolated areas. In addition, such
collaboration may be able to guide humanitarian actors
in determining how large their cash-based responses
should be, what they should be used for and for how
long those responses should run before they become
irrelevant. As additional support, humanitarian actors
should seek guidance on economic analysis at the
household level. This will help them to better
understand household consumption priorities, and how
remittances play a role in financing consumption.

Because of the peace agreement, there was evidence of
some reverse migration of 'irregular movers' and urban
refugees, but the extent of this is unknown.
Continuously updated assessments should capture this
fluid situation and identify returnees who may be
depending on aid beneficiaries for assistance, and
putting added pressure on the intended beneficiaries.
If this is the case, there may be a need for further
assistance to support returnees. This potentially new
need should be factored into programming and
assessments.

Bibliography

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Joyo note: To view two charts not included herein, go to: 
http://www.odi.org.uk/hpg/remittances.html

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