October/2013 no. 42 research brief The International Policy Centre for Inclusive Growth is jointly supported by the United Nations Development Programme and the Government of Brazil. Program Keluarga Harapan (PKH): Indonesian Conditional Cash Transfer Programme By Suahasil Nazara and Sri Kusumastuti Rahayu I. Introduction In 2007 the Government of Indonesia launched the Program Keluarga Harapan (PKH), the first conditional cash transfer programme in Indonesia. The programme seeks to improve the quality of human capital by providing cash transfers conditional on households accessing specified health and education services. The PKH helps to reduce the burden of household/family expenditure for very poor households (the immediate consumption effect), while investing in future generations through improved health and education (the human capital development effect). This combination of short- and long-term assistance is the government’s strategy to sustainably lift PKH recipients out of poverty. PKH is administered by the Ministry of Social Affairs (MoSA), with close supervision from the National Planning Agency (Bappenas). It began operating in 2007 as a pilot programme, with a research component inherently built into the programme. On the policy front, the implementation of a pilot project results in slow progress of the programme, which can be seen in its limited coverage (both in terms of the number of household and the areas covered). Since 2010 the Secretariat of the National Team for the Acceleration of Poverty Reduction (TNP2K), at the Office of the Vice-President, has been promoting the expansion of PKH to widen its coverage, make the programme administration more efficient, and increase its impacts on poor populations. II. Programme Coverage, Targeting and Impacts When PKH was launched in 2007, the programme beneficiaries were designated extremely poor—those who were approximately below 80 per cent of the official poverty line at that time. The programme was intended as a pilot; therefore, it started with very low coverage (see Table 1). Up to 2012, the programme only covered 1.5 million households, compared to the total of 60 million households in Indonesia, and approximately 6.5 million households below the poverty line. It is expected that PKH will cover 3.2 million households by the end of 2014. Only in 2012 did PKH operate in all Indonesian provinces, and still it did not cover all of the districts in every province. PKH’s expansion is a challenge for the programme if it is to have significant impacts on Indonesia’s poor people. Table 1 PKH Coverage, 2007–2012 2007 2008 2009 2010 2011 2012 No. of households (millions) 0.388 0.621 0.726 0.774 1.052 1.454 Budget (million USD PPP) 79.244 113.065 126.688 146.049 210.181 228.287 Provinces (of 33 total) 7 13 13 20 25 33 Districts (of 497 total in 2010) 48 70 70 88 119 169 Sub‐Districts 337 637 781 946 1387 2001 Villages 4311 7654 9295 10,998 16,154 25,032 Source: Ministry of Social Affairs, PKH Profile, 2013. The targeting for PKH was conducted by the Indonesian Statistics Agency (Badan Pusat Statistik — BPS). For the first time, with the 2005 registry at hand (by names and addresses), BPS conducted a basic health and education survey (Survei Pendidikan dan Survei Pelayanan Dasar Kesehatan dan Pendidikan — SPDKP) to identify extremely poor households as well as education and