poverty
What is Poverty?
Poverty is about not having enough money to meet basic needs including food, clothing and shelter. However, poverty is more, much more than just not having enough money.
The World Bank Organization describes poverty in this way:
“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time.
Poverty has many faces, changing from place to place and across time, and has been described in many ways. Most often, poverty is a situation people want to escape. So poverty is a call to action -- for the poor and the wealthy alike -- a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.”
In addition to a lack of money, poverty is about not being able to participate in recreational activities; not being able to send children on a day trip with their schoolmates or to a birthday party; not being able to pay for medications for an illness. These are all costs of being poor. Those people who are barely able to pay for food and shelter simply can’t consider these other expenses. When people are excluded within a society, when they are not well educated and when they have a higher incidence of illness, there are negative consequences for society. We all pay the price for poverty. The increased cost on the health system, the justice system and other systems that provide supports to those living in poverty has an impact on our economy."
Poverty in Indonesia
Out of a population of 234 million, more than 32 million Indonesians currently live below the poverty line and approximately half of all households remain clustered around the national poverty line set at 200,262 rupiahs per month ($22).
Approximately 70 per cent of the population lives in rural areas, where agriculture is the main source of income. Poverty is increasingly concentrated in these areas; 16.6 per cent of rural people are poor compared with 9.9 per cent of urban populations. Millions of small farmers, farm workers and fishers are materially and financially unable to tap into the opportunities offered by years of economic growth. They are often geographically isolated and lack access to agricultural extension services, markets and financial services.
Poverty is most severe in the remote eastern islands of Indonesia, where 95 per cent of people in rural communities are poor. In many of these eastern provinces farmers eke out a largely subsistence existence. These provinces are home to many adat, or indigenous communities, who have often been on the margins of development processes and programmes. The coastal areas are environmentally degraded, while upland villages are the most disadvantaged and require development programmes adapted to the many constraints they face, including isolation and difficulty of access. Migration to urban centres is often the only way to overcome unemployment and poverty caused by lack of access to land and other productive resources.
Women in Indonesia are particularly vulnerable to poverty; they have less access to education, they earn less than men, and are subject to discrimination and exclusion from decision-making processes within households and communities.
In areas that have experienced civil unrest, many people have been displaced from their land and lost farm tools and fishing equipment. Plantations have been destroyed. Many of the households headed by women – as a result of conflict –are among the poorest and most vulnerable.
Distribution of the Poor:
Relative Poverty in Indonesia:
Year 2005 2006 2007 2008 2009 2010 2011 2012
Population - poor (%) 16.0 17.8 16.6 15.4 14.2 13.3 12.5 11.7
Absolute Poverty (in millions) 35 39 37 35 33 31 30 29
Sources: World Bank and Statistics Indonesia
The table above shows a steady decline in national poverty, and this downward trend has been observed for the past few years. (However, the Indonesian government applies rather easy terms and conditions regarding the definition of the poverty line, resulting in a more positive picture than reality). It is assumed that this downward trend will continue at a slower pace.
2011's poverty line - monthly per capita income of 233,740 rupiah (equal to approx USD $25 and, thus, indicates a very low standard of living, even for Indonesian standards.)
However, of the World Bank's poverty threshold (which classifies the percentage of the Indonesian population living on less than USD $1.25 a day as poor) is applied, the percentages in the table above will rise by a few percentage points. Moreover, according to the World Bank, when taking into account the percentage of the Indonesian population that lives on less than USD $2 a day, the figure for 2009 rises to 50.6 percent of the population. This shows that a large proportion of the Indonesian population is in fact near poor. More recent reports in Indonesian media state that around a quarter of Indonesians (which translates to around 60 million people) are currently near poor.
Most of the Indonesians that rose out of poverty in recent years were those that lived just below the poverty line -> it took less effort to push them out of poverty.
*This group is slowly narrowing in number, it is now the bottom base of Indonesia's poverty that needs to be alleviated. This will be more complicated and thus results in slower rates of poverty reduction.
Indonesian Poverty and Geographical Distribution:
One remarkable characteristic of Indonesian poverty is that there is a major difference in terms of relative and absolute poverty in relation to geographical location. While in absolute terms over half of the total Indonesian poor population lives on the island of Java (located in the more populous western half of Indonesia), in relative terms the provinces of eastern Indonesia show far higher numbers of poverty. The table below shows the top five of Indonesian provinces regarding highest incidences of relative poverty. Each of these provinces - except for Aceh - is located in eastern Indonesia.
Indonesian Provinces with Highest Relative Poverty¹
Papua 30.7%
West Papua 27.0%
Maluku 20.8%
East Nusa Tenggara 20.4%
Aceh 18.6%
¹ as percentage of total population per province in September 2012
Source: Statistics Indonesia
Indonesian Provinces with Highest Absolute Poverty:
The following eastern provinces, where farmers lead a largely subsistence existence, contain very high rates of rural poverty. Here, indigenous communities have lived on the margins of development processes and programs. Migration to urban areas is often the only way to find employment and thus escape poverty.
Contrary to relative poverty in eastern Indonesia, the table below shows that absolute poverty in Indonesia is clustered on the islands of Java and Sumatra.
Indonesian Provinces with Highest Absolute Poverty¹
East Java. 5.0
Central Java. 5.0
West Java. 4.5
North Sumatra 1.4
Lampung 1.2
¹ in millions in September 2012
Food price stability (rice in particular) is a vital matter for Indonesia as the country contains a population that spends a large proportion of their disposable incomes on rice. Therefore, inflationary pressure on the price of rice (for example due to bad harvests) can have serious consequences for those that are poor or near poor and significantly raise the percentage of poverty in the country.
Source: Statistics Indonesia
Rural and Urban Poverty in Indonesia:
Indonesia has experienced a process of rapid and continued increased urbanization. Since the mid-1990s the absolute number of Indonesia's rural population began to decline and today more than half of Indonesia's total population lives in urban environments (20 years ago approximately one-third of Indonesia's population lived in urban societies).
With the exception of a few provinces, the rural populations of Indonesia are relatively poorer than the urban ones. Indonesia's rural poverty rate (percentage of the rural population living below the national rural poverty line) dropped to around 20 percent in the mid-1990s but suffered at the hands of the Asian Financial Crisis that ravaged the country in 1997 and 1998, causing this number to rise again to 26 percent. After 2006 a significant decrease in rural poverty in Indonesia emerged as can be seen in the table below:
Year: 2005 2006 2007 2008 2009 2010 2011 2012
Rural Poverty: 20.0 21.8 20.4 18.9 17.4 16.6 15.7 14.7¹
(% living below rural poverty line)
¹ as of September 2012
Sources: World Bank and Statistics Indonesia
The urban poverty rate is the percentage of the urban population living below the national urban poverty line. The table below, that indicates urban poverty in Indonesia, shows a similar pattern as Indonesia's rural poverty rate: a continued decrease since 2006.
Year: 2005 2006 2007 2008 2009 2010 2011 2012
Urban poverty 11.7 13.5 12.5 11.6 10.7 9.9 9.2 8.6¹
(% living below urban poverty line)
¹ as of September 2012
Sources: World Bank and Statistics Indonesia
In the two tables above there is a significant increase in poverty visible between 2005 and 2006. This matter is mainly due to massive cuts in fuel subsidies by the Yudhoyono government in late 2005. Rising international oil prices had made the government decide to reduce fuel subsidies in order not to burden the budget deficit. This consequently led to a double-digit inflation rate of between 14 and 19 percent until October 2006.
Causes of poverty in Indonesia:
Unexpected income shocks due to exogenous shocks such as natural disaster, Unemployment, and possibly household compositions, this is normally termed as a direct effects of shocks on well being. Some other literatures choose to lay emphasis on the need of quality and availability of significant cushion to face the direct effect of shock, the fact that household is trap in poverty level forever may not solely attributed to income shocks. A smaller number of studies put larger weight on the interaction in the society and repeated bad choices made within the households. Households in developing country with increasing vulnerability and social insecurity tend to respond to unexpected shocks while neglecting future consequences.
Indonesia's centralised government also makes it difficult to control the channeling of funds, and ths, in turn, makes corruption increasingly imminent.
Corruption is another prominent reason for poverty. As money gets passed down the ranks, a huge amount is embezzled, causing the money to not be maximised and used for the
The lack of access to education is a vicious cycle. Due to the lack of education, the poor will never be able to escape from poverty's wrath. In addition to this, a few government policies suggest that the national average education of less than seven years of schooling, a prime cause of poverty, will rise soon.
Due to overpopulation, people suffer from a lack of opportunities with too few jobs available in the workforce. People will then earn only meagre wages, causing them to remain in poverty, unable to rise to any opportunity.
Poverty classifies people who are socially and economically lacking as compared to others or a more dominant society, causing them to lose their voice and to be branded as negative. The worst that could happen is justification of the inequality that leads to the view that the underprivileged are deserving of their living conditions. Poverty restricts the opportunity of individuals. Because underprivileged people live in unstable conditions and lack capital (both social and economic), the character and knowledge in making decisions, transactions, interactions or any other activities are also lacking.
Source: http://www.economist.com/node/7925064
"Near-poverty" group: About half the population lives just above the national poverty line. These ‘near poor' households are vulnerable to shocks such as food price increases, environmental hazards, and ill health, which can easily drive them into poverty. Despite recent improvements in education and health sectors, public services and health standards still lag behind other middle-income countries. High rates of child malnutrition and maternal mortality, and inadequate access to education, safe water and sanitation are persistent problems among poor communities.
Rural areas having no access to services provided in urban areas: Approximately 70 per cent of the population lives in rural areas, where agriculture is the main source of income. Poverty is increasingly concentrated in these areas; 16.6 per cent of rural people are poor compared with 9.9 per cent of urban populations. Millions of small farmers, farm workers and fishers are materially and financially unable to tap into the opportunities offered by years of economic growth. They are often geographically isolated and lack access to agricultural extension services, markets and financial services.
What are the measures taken to alleviate poverty?
Raskin Rice Subsidy:
Due to the large increase in prices of rice in the 1990s, the poor was greatly affected. The economic crisis consequently led to a drop in rice intake and a decline in the children's health status. in order to cope with the increasing prices, children were taken out of school and sent to work, and education was compromised. To ensure adequate staple food consumption, the government introduced the subsidized rice programme in 1998, supplying 1.05 million tonnes of rice to households during that fiscal year. The programme targets household units as children are the major beneficiaries of this programme.
In 2012, the Government allocated a budget of IDR 15.7 trillion to subsidize 3.41 million tonnes of rice to be distributed to 17.5 million households (Indonesian Financial Note and Revised Budget, 2012).
Effectiveness: The programme managed to increase household consumption by 4.4 per cent and that recipient households are 3.83 per cent less likely to be poor. Several studies assessing Raskin pointed out that the programme faces major targeting and efficiency issues. Many problems were found in the distribution of the rice from the primary distribution point to the beneficiaries and that there is a lack of dissemination of information and transparency; The management of the programme does not come cheap, even though its monitoring and evaluation is ineffective.
Jamkesmas Health insurance program:
In 2004, Indonesia introduced the first phase of its plan to achieve universal health coverage through a mandatory public health insurance scheme, Askeskin, which in 2008 evolved into Jamkesmas, a "insurance" program run by the ministry of health which covers over 76.4 million poor Indonesians. Today, 76.4 million people are covered in scheme, and there are 926 public providers and 220 private providers involved.
The scheme is funded by the central government from general tax revenue. Beneficiaries are not responsible for premium payments nor are they charged a copayment at the time of visit.
Jamkesmas has enrolled more beneficiaries than any other Indonesian health insurance plan and it defines its target population using an annually administered national survey known as the SUSENAS according to daily household consumption estimates. It then distributes the cards and registers enrollees into the program.
This health package offers both inpatient and outpatient care, as well as maternal and preventive care. In terms of medication, enrollees are only entitled to coverage for drugs from specific formularies and must opt for generic drugs when filling prescriptions.
Effectiveness: The Indonesian government and many international organization are collaborating to address both policy and implementation challenges. Data from the government suggest that Jamkesmas has made a significant impact. Progress is good, and a large coverage has been achieved within less than 2 years, reaching 76 million poor and near poor enrollees. Total utilization of services has also increased by 50% for ambulatory care and about 106% for inpatient care and the rates of service use between the most affluent and the poorest have nearly equalized.
Conditional Cash Transfer program for the extremely poor, Program Keluarga Harapan (PKH):
Program Keluarga Harapan (PKH or Hopeful Family Program) was launched in order to improve lagging health and education outcomes among extremely poor households. The program delivers quarterly cash transfers to very poor households with children or lactating/pregnant women provided that they fulfill a range of health and education-related obligations. This offers Indonesia a new way to tackle poverty and prevent the transmission of poverty to future generations. The Government of Indonesia is currently considering expanding coverage to 3 million households by 2014.
Effectiveness: PKH’s high-level economic classifications indicate that social assistance benefits accounted for 86% of total program spending while administrative costs accounted for 14% of total spending in 2008 and 2009, down from 17% during the first year of implementation which required an ‘investment’ cost. These high-level budget classifications exclude civil servant salary costs, however, which are instead recorded under the overall budget in the Directorate General’s where the PKH program is located. This makes it difficult to quantify staff costs for an individual activity or intervention. PKH costs are comparable to CCT programs in other countries. An international survey of nine CCT programs found rseaaâwaesaqqwthat average administrative costs were around 8 percent, thus, considering that it is a pilot project, the administrative costs of PKH are reasonable.
Cash for Poor Students programme, Bantuan Siswa Miskin (BSM):
The Cash Transfer for the Poor Students Program is a social assistance program for poor families and covers all education levels from elementary school to university. The program’s objectives are to remove barriers for marginalized students to participate in education, and aid poor students in gaining appropriate access to education services, This lowers the school drop-out rate and helps in meeting the educational needs of at-risk children, as well as supports the Government of Indonesia’s Nine Years Compulsory Education program.
Effectiveness: Unlike other household-based transfers, the BSM initiatives have neither a central coordinating unit nor a unified budget. Within each institution, separate units independently manage and execute initiatives for students from each level of schooling and for vocational education. The Kemenag-run BSM initiatives for university scholars are further fragmented by religious affiliation (of partner universities). In total, there are 10 BSM initiatives, each with its own manual, fund flow structure, and implementing procedures. There is little coordination between initiatives.
These programmes are aimed at the urban poor, and covers basic needs. The effectiveness of these programs have yet to be further improved, as there are substantial issue pertaining to the program design and the efficiency and the quality of services being delivered.
Evolution of poverty reduction efforts:
In the 1970s, Indonesia adopted the needs-based approach to alleviate poverty, and five basic needs were established for people to survive and live in dignity. They included food, health, water and sanitation, education and shelter, and were advocated in order to establish a basic level of social services to sustain the livelihoods of the poor. (Effectiveness) However, this approach caused considerable issues as it tended to ignore the complexity of poverty, which was the result of poor human resources, lack of social infrastructure and problems in natural resource management.
Since developmentalists felt that success could only be attributed to the people’s own efforts and participation, the Guidelines of National Policy (GBHN) developed the empowerment approach in 1993. This approach advocates developing human resources simultaneously with the economy, and seeks to broaden human capabilities through universal basic education, healthcare and social protection. Since inequality prevents the poor from taking advantage of economic opportunities and limits societal benefit from growth, this program sought distribution of tangible assets such as land and access to capital.
A programme known as IDT (Inpres Desa Tertinggal) was launched in 1994 to encourage local people to initiate efforts to handle their own poverty problems.
Widening Income Inequality in Indonesia:
The GINI coefficient measures income distribution inequality. A coefficient of 0 indicates perfect equality, while a coefficient of 100 indicates perfect inequality. For Indonesia this indicator decreased from 39 in 2005 to 37 recently, thus indicating that Indonesian society is becoming more equal regarding income distribution. However, the methodology of this GINI coefficient can be questioned as it divides the population in five baskets, each containing 20 percent of the population: from the 20 percent richest to the 20 percent poorest. Subsequently, it measures the (in)equality between those baskets. The problem when using this coefficient for Indonesia, however, is that the country is characterized by extreme inequality within each basket, making the outcome of the GINI coefficient less in tune with reality. Hence, Indonesian media often reports that the gap between poor and rich in Indonesia is actually widening.
Sustained economic growth has helped more Indonesians escape poverty by creating more jobs and increasing public expenditures for health, education and infrastructure.
The gap between the poor and non-poor is widening. The Gini Coefficient, a measure of consumption inequality, has increased from 31.7% in 1999 to approximately 35% in 2009.
Regional disparities also persist; eastern Indonesia lags behind other parts of the country, notably Java. Furthermore,17.35 per cent of rural people are poor, compared to 10.7 percent of urban people, or looked at another way, 70% of the poor live in rural areas. The number of people falling into poverty in Jakarta has risen by almost twice as much as the statisticians state
Numerous academics echo their claims, partly because the government's definition of poverty—less money than is needed to afford a diet of 2,100 calories a day—is 152,847 rupiah ($16.80) a month. This measure is well below the more widely used benchmark of $1 a day. Using the $1-a-day measure, it is estimated that more than 80m Indonesians are in poverty.
Source: http://www.ruralpovertyportal.org/country/home/tags/Indonesia
Poverty is about not having enough money to meet basic needs including food, clothing and shelter. However, poverty is more, much more than just not having enough money.
The World Bank Organization describes poverty in this way:
“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time.
Poverty has many faces, changing from place to place and across time, and has been described in many ways. Most often, poverty is a situation people want to escape. So poverty is a call to action -- for the poor and the wealthy alike -- a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.”
In addition to a lack of money, poverty is about not being able to participate in recreational activities; not being able to send children on a day trip with their schoolmates or to a birthday party; not being able to pay for medications for an illness. These are all costs of being poor. Those people who are barely able to pay for food and shelter simply can’t consider these other expenses. When people are excluded within a society, when they are not well educated and when they have a higher incidence of illness, there are negative consequences for society. We all pay the price for poverty. The increased cost on the health system, the justice system and other systems that provide supports to those living in poverty has an impact on our economy."
Poverty in Indonesia
Out of a population of 234 million, more than 32 million Indonesians currently live below the poverty line and approximately half of all households remain clustered around the national poverty line set at 200,262 rupiahs per month ($22).
Approximately 70 per cent of the population lives in rural areas, where agriculture is the main source of income. Poverty is increasingly concentrated in these areas; 16.6 per cent of rural people are poor compared with 9.9 per cent of urban populations. Millions of small farmers, farm workers and fishers are materially and financially unable to tap into the opportunities offered by years of economic growth. They are often geographically isolated and lack access to agricultural extension services, markets and financial services.
Poverty is most severe in the remote eastern islands of Indonesia, where 95 per cent of people in rural communities are poor. In many of these eastern provinces farmers eke out a largely subsistence existence. These provinces are home to many adat, or indigenous communities, who have often been on the margins of development processes and programmes. The coastal areas are environmentally degraded, while upland villages are the most disadvantaged and require development programmes adapted to the many constraints they face, including isolation and difficulty of access. Migration to urban centres is often the only way to overcome unemployment and poverty caused by lack of access to land and other productive resources.
Women in Indonesia are particularly vulnerable to poverty; they have less access to education, they earn less than men, and are subject to discrimination and exclusion from decision-making processes within households and communities.
In areas that have experienced civil unrest, many people have been displaced from their land and lost farm tools and fishing equipment. Plantations have been destroyed. Many of the households headed by women – as a result of conflict –are among the poorest and most vulnerable.
Distribution of the Poor:
Relative Poverty in Indonesia:
Year 2005 2006 2007 2008 2009 2010 2011 2012
Population - poor (%) 16.0 17.8 16.6 15.4 14.2 13.3 12.5 11.7
Absolute Poverty (in millions) 35 39 37 35 33 31 30 29
Sources: World Bank and Statistics Indonesia
The table above shows a steady decline in national poverty, and this downward trend has been observed for the past few years. (However, the Indonesian government applies rather easy terms and conditions regarding the definition of the poverty line, resulting in a more positive picture than reality). It is assumed that this downward trend will continue at a slower pace.
2011's poverty line - monthly per capita income of 233,740 rupiah (equal to approx USD $25 and, thus, indicates a very low standard of living, even for Indonesian standards.)
However, of the World Bank's poverty threshold (which classifies the percentage of the Indonesian population living on less than USD $1.25 a day as poor) is applied, the percentages in the table above will rise by a few percentage points. Moreover, according to the World Bank, when taking into account the percentage of the Indonesian population that lives on less than USD $2 a day, the figure for 2009 rises to 50.6 percent of the population. This shows that a large proportion of the Indonesian population is in fact near poor. More recent reports in Indonesian media state that around a quarter of Indonesians (which translates to around 60 million people) are currently near poor.
Most of the Indonesians that rose out of poverty in recent years were those that lived just below the poverty line -> it took less effort to push them out of poverty.
*This group is slowly narrowing in number, it is now the bottom base of Indonesia's poverty that needs to be alleviated. This will be more complicated and thus results in slower rates of poverty reduction.
Indonesian Poverty and Geographical Distribution:
One remarkable characteristic of Indonesian poverty is that there is a major difference in terms of relative and absolute poverty in relation to geographical location. While in absolute terms over half of the total Indonesian poor population lives on the island of Java (located in the more populous western half of Indonesia), in relative terms the provinces of eastern Indonesia show far higher numbers of poverty. The table below shows the top five of Indonesian provinces regarding highest incidences of relative poverty. Each of these provinces - except for Aceh - is located in eastern Indonesia.
Indonesian Provinces with Highest Relative Poverty¹
Papua 30.7%
West Papua 27.0%
Maluku 20.8%
East Nusa Tenggara 20.4%
Aceh 18.6%
¹ as percentage of total population per province in September 2012
Source: Statistics Indonesia
Indonesian Provinces with Highest Absolute Poverty:
The following eastern provinces, where farmers lead a largely subsistence existence, contain very high rates of rural poverty. Here, indigenous communities have lived on the margins of development processes and programs. Migration to urban areas is often the only way to find employment and thus escape poverty.
Contrary to relative poverty in eastern Indonesia, the table below shows that absolute poverty in Indonesia is clustered on the islands of Java and Sumatra.
Indonesian Provinces with Highest Absolute Poverty¹
East Java. 5.0
Central Java. 5.0
West Java. 4.5
North Sumatra 1.4
Lampung 1.2
¹ in millions in September 2012
Food price stability (rice in particular) is a vital matter for Indonesia as the country contains a population that spends a large proportion of their disposable incomes on rice. Therefore, inflationary pressure on the price of rice (for example due to bad harvests) can have serious consequences for those that are poor or near poor and significantly raise the percentage of poverty in the country.
Source: Statistics Indonesia
Rural and Urban Poverty in Indonesia:
Indonesia has experienced a process of rapid and continued increased urbanization. Since the mid-1990s the absolute number of Indonesia's rural population began to decline and today more than half of Indonesia's total population lives in urban environments (20 years ago approximately one-third of Indonesia's population lived in urban societies).
With the exception of a few provinces, the rural populations of Indonesia are relatively poorer than the urban ones. Indonesia's rural poverty rate (percentage of the rural population living below the national rural poverty line) dropped to around 20 percent in the mid-1990s but suffered at the hands of the Asian Financial Crisis that ravaged the country in 1997 and 1998, causing this number to rise again to 26 percent. After 2006 a significant decrease in rural poverty in Indonesia emerged as can be seen in the table below:
Year: 2005 2006 2007 2008 2009 2010 2011 2012
Rural Poverty: 20.0 21.8 20.4 18.9 17.4 16.6 15.7 14.7¹
(% living below rural poverty line)
¹ as of September 2012
Sources: World Bank and Statistics Indonesia
The urban poverty rate is the percentage of the urban population living below the national urban poverty line. The table below, that indicates urban poverty in Indonesia, shows a similar pattern as Indonesia's rural poverty rate: a continued decrease since 2006.
Year: 2005 2006 2007 2008 2009 2010 2011 2012
Urban poverty 11.7 13.5 12.5 11.6 10.7 9.9 9.2 8.6¹
(% living below urban poverty line)
¹ as of September 2012
Sources: World Bank and Statistics Indonesia
In the two tables above there is a significant increase in poverty visible between 2005 and 2006. This matter is mainly due to massive cuts in fuel subsidies by the Yudhoyono government in late 2005. Rising international oil prices had made the government decide to reduce fuel subsidies in order not to burden the budget deficit. This consequently led to a double-digit inflation rate of between 14 and 19 percent until October 2006.
Causes of poverty in Indonesia:
Unexpected income shocks due to exogenous shocks such as natural disaster, Unemployment, and possibly household compositions, this is normally termed as a direct effects of shocks on well being. Some other literatures choose to lay emphasis on the need of quality and availability of significant cushion to face the direct effect of shock, the fact that household is trap in poverty level forever may not solely attributed to income shocks. A smaller number of studies put larger weight on the interaction in the society and repeated bad choices made within the households. Households in developing country with increasing vulnerability and social insecurity tend to respond to unexpected shocks while neglecting future consequences.
Indonesia's centralised government also makes it difficult to control the channeling of funds, and ths, in turn, makes corruption increasingly imminent.
Corruption is another prominent reason for poverty. As money gets passed down the ranks, a huge amount is embezzled, causing the money to not be maximised and used for the
The lack of access to education is a vicious cycle. Due to the lack of education, the poor will never be able to escape from poverty's wrath. In addition to this, a few government policies suggest that the national average education of less than seven years of schooling, a prime cause of poverty, will rise soon.
Due to overpopulation, people suffer from a lack of opportunities with too few jobs available in the workforce. People will then earn only meagre wages, causing them to remain in poverty, unable to rise to any opportunity.
Poverty classifies people who are socially and economically lacking as compared to others or a more dominant society, causing them to lose their voice and to be branded as negative. The worst that could happen is justification of the inequality that leads to the view that the underprivileged are deserving of their living conditions. Poverty restricts the opportunity of individuals. Because underprivileged people live in unstable conditions and lack capital (both social and economic), the character and knowledge in making decisions, transactions, interactions or any other activities are also lacking.
Source: http://www.economist.com/node/7925064
"Near-poverty" group: About half the population lives just above the national poverty line. These ‘near poor' households are vulnerable to shocks such as food price increases, environmental hazards, and ill health, which can easily drive them into poverty. Despite recent improvements in education and health sectors, public services and health standards still lag behind other middle-income countries. High rates of child malnutrition and maternal mortality, and inadequate access to education, safe water and sanitation are persistent problems among poor communities.
Rural areas having no access to services provided in urban areas: Approximately 70 per cent of the population lives in rural areas, where agriculture is the main source of income. Poverty is increasingly concentrated in these areas; 16.6 per cent of rural people are poor compared with 9.9 per cent of urban populations. Millions of small farmers, farm workers and fishers are materially and financially unable to tap into the opportunities offered by years of economic growth. They are often geographically isolated and lack access to agricultural extension services, markets and financial services.
What are the measures taken to alleviate poverty?
Raskin Rice Subsidy:
Due to the large increase in prices of rice in the 1990s, the poor was greatly affected. The economic crisis consequently led to a drop in rice intake and a decline in the children's health status. in order to cope with the increasing prices, children were taken out of school and sent to work, and education was compromised. To ensure adequate staple food consumption, the government introduced the subsidized rice programme in 1998, supplying 1.05 million tonnes of rice to households during that fiscal year. The programme targets household units as children are the major beneficiaries of this programme.
In 2012, the Government allocated a budget of IDR 15.7 trillion to subsidize 3.41 million tonnes of rice to be distributed to 17.5 million households (Indonesian Financial Note and Revised Budget, 2012).
Effectiveness: The programme managed to increase household consumption by 4.4 per cent and that recipient households are 3.83 per cent less likely to be poor. Several studies assessing Raskin pointed out that the programme faces major targeting and efficiency issues. Many problems were found in the distribution of the rice from the primary distribution point to the beneficiaries and that there is a lack of dissemination of information and transparency; The management of the programme does not come cheap, even though its monitoring and evaluation is ineffective.
Jamkesmas Health insurance program:
In 2004, Indonesia introduced the first phase of its plan to achieve universal health coverage through a mandatory public health insurance scheme, Askeskin, which in 2008 evolved into Jamkesmas, a "insurance" program run by the ministry of health which covers over 76.4 million poor Indonesians. Today, 76.4 million people are covered in scheme, and there are 926 public providers and 220 private providers involved.
The scheme is funded by the central government from general tax revenue. Beneficiaries are not responsible for premium payments nor are they charged a copayment at the time of visit.
Jamkesmas has enrolled more beneficiaries than any other Indonesian health insurance plan and it defines its target population using an annually administered national survey known as the SUSENAS according to daily household consumption estimates. It then distributes the cards and registers enrollees into the program.
This health package offers both inpatient and outpatient care, as well as maternal and preventive care. In terms of medication, enrollees are only entitled to coverage for drugs from specific formularies and must opt for generic drugs when filling prescriptions.
Effectiveness: The Indonesian government and many international organization are collaborating to address both policy and implementation challenges. Data from the government suggest that Jamkesmas has made a significant impact. Progress is good, and a large coverage has been achieved within less than 2 years, reaching 76 million poor and near poor enrollees. Total utilization of services has also increased by 50% for ambulatory care and about 106% for inpatient care and the rates of service use between the most affluent and the poorest have nearly equalized.
Conditional Cash Transfer program for the extremely poor, Program Keluarga Harapan (PKH):
Program Keluarga Harapan (PKH or Hopeful Family Program) was launched in order to improve lagging health and education outcomes among extremely poor households. The program delivers quarterly cash transfers to very poor households with children or lactating/pregnant women provided that they fulfill a range of health and education-related obligations. This offers Indonesia a new way to tackle poverty and prevent the transmission of poverty to future generations. The Government of Indonesia is currently considering expanding coverage to 3 million households by 2014.
Effectiveness: PKH’s high-level economic classifications indicate that social assistance benefits accounted for 86% of total program spending while administrative costs accounted for 14% of total spending in 2008 and 2009, down from 17% during the first year of implementation which required an ‘investment’ cost. These high-level budget classifications exclude civil servant salary costs, however, which are instead recorded under the overall budget in the Directorate General’s where the PKH program is located. This makes it difficult to quantify staff costs for an individual activity or intervention. PKH costs are comparable to CCT programs in other countries. An international survey of nine CCT programs found rseaaâwaesaqqwthat average administrative costs were around 8 percent, thus, considering that it is a pilot project, the administrative costs of PKH are reasonable.
Cash for Poor Students programme, Bantuan Siswa Miskin (BSM):
The Cash Transfer for the Poor Students Program is a social assistance program for poor families and covers all education levels from elementary school to university. The program’s objectives are to remove barriers for marginalized students to participate in education, and aid poor students in gaining appropriate access to education services, This lowers the school drop-out rate and helps in meeting the educational needs of at-risk children, as well as supports the Government of Indonesia’s Nine Years Compulsory Education program.
Effectiveness: Unlike other household-based transfers, the BSM initiatives have neither a central coordinating unit nor a unified budget. Within each institution, separate units independently manage and execute initiatives for students from each level of schooling and for vocational education. The Kemenag-run BSM initiatives for university scholars are further fragmented by religious affiliation (of partner universities). In total, there are 10 BSM initiatives, each with its own manual, fund flow structure, and implementing procedures. There is little coordination between initiatives.
These programmes are aimed at the urban poor, and covers basic needs. The effectiveness of these programs have yet to be further improved, as there are substantial issue pertaining to the program design and the efficiency and the quality of services being delivered.
Evolution of poverty reduction efforts:
In the 1970s, Indonesia adopted the needs-based approach to alleviate poverty, and five basic needs were established for people to survive and live in dignity. They included food, health, water and sanitation, education and shelter, and were advocated in order to establish a basic level of social services to sustain the livelihoods of the poor. (Effectiveness) However, this approach caused considerable issues as it tended to ignore the complexity of poverty, which was the result of poor human resources, lack of social infrastructure and problems in natural resource management.
Since developmentalists felt that success could only be attributed to the people’s own efforts and participation, the Guidelines of National Policy (GBHN) developed the empowerment approach in 1993. This approach advocates developing human resources simultaneously with the economy, and seeks to broaden human capabilities through universal basic education, healthcare and social protection. Since inequality prevents the poor from taking advantage of economic opportunities and limits societal benefit from growth, this program sought distribution of tangible assets such as land and access to capital.
A programme known as IDT (Inpres Desa Tertinggal) was launched in 1994 to encourage local people to initiate efforts to handle their own poverty problems.
Widening Income Inequality in Indonesia:
The GINI coefficient measures income distribution inequality. A coefficient of 0 indicates perfect equality, while a coefficient of 100 indicates perfect inequality. For Indonesia this indicator decreased from 39 in 2005 to 37 recently, thus indicating that Indonesian society is becoming more equal regarding income distribution. However, the methodology of this GINI coefficient can be questioned as it divides the population in five baskets, each containing 20 percent of the population: from the 20 percent richest to the 20 percent poorest. Subsequently, it measures the (in)equality between those baskets. The problem when using this coefficient for Indonesia, however, is that the country is characterized by extreme inequality within each basket, making the outcome of the GINI coefficient less in tune with reality. Hence, Indonesian media often reports that the gap between poor and rich in Indonesia is actually widening.
Sustained economic growth has helped more Indonesians escape poverty by creating more jobs and increasing public expenditures for health, education and infrastructure.
The gap between the poor and non-poor is widening. The Gini Coefficient, a measure of consumption inequality, has increased from 31.7% in 1999 to approximately 35% in 2009.
Regional disparities also persist; eastern Indonesia lags behind other parts of the country, notably Java. Furthermore,17.35 per cent of rural people are poor, compared to 10.7 percent of urban people, or looked at another way, 70% of the poor live in rural areas. The number of people falling into poverty in Jakarta has risen by almost twice as much as the statisticians state
Numerous academics echo their claims, partly because the government's definition of poverty—less money than is needed to afford a diet of 2,100 calories a day—is 152,847 rupiah ($16.80) a month. This measure is well below the more widely used benchmark of $1 a day. Using the $1-a-day measure, it is estimated that more than 80m Indonesians are in poverty.
Source: http://www.ruralpovertyportal.org/country/home/tags/Indonesia