Poverty in Indonesia

Name Of Group : • Asrul Sidiq ST 113961 • Vely Kukinul Siswanto ST114732 • Ajeng Nugrahaning Dewanti ST114733

POVERTY, INEQUALITY AND VULNERABILITY IN INDONESIA

RURAL AND REGIONAL DEVELOPMENT PLANNING

ED 77.01 Rural and Regional Development

Regional and Rural Development Planning (RRDP)School of Environment, Resources and Development (SERD)Asian Institute of TechnologyBangkok, ThailandNovember 2012

INDONESIA PROFILEKEY STATISTICS

Administrative Area 33 provinces, 497 districts

Population 2011 (millions) 242,3

Population Growth Rate 2000-2010 (%) 1,49

Economic Growth 2011 (%) 6,5

GDP per capita 2011 (US$) 3495

GDP per capita 2011 (PPP US$) 4668

Unemployment Rate Feb 2011 (%) 6,80

Poverty Rate March 2011 (%) 12,49

Income Inequality (Gini Ratio) 2011 0,41

HDI (new method) 2011 0,617 (ranked 124)

1. IS POVERTY REDUCTION IN YOUR COUNTRY DISTINCTIVE?

Poverty in Indonesia

Sources: Susenas, World Bank, 2012

The national poverty line is around Rp. 233.700 (~$PPP 1.20 per person a day) per person per month in 2011. In measuring this poverty line, Indonesia uses The Cost of Basic Needs Method (CBN).


2008 2009 2010 2011

6 5.3 4.6 4.3

15.4 14.1 13.3 12.5

27.8 25.6 24.4 23.8

43.1 42.639.4 38.4

56.9 56.551.3 49.9

64.3 63.958 56.5

77.2 76.870.6 68.5

Poverty Rate (%)

0.8 x PL (~$PPP 0.95) National PL (~$PPP 1.20) 1.2 x PL (~$PPP 1.42) 1.5 x PL (~$PPP 1.78)1.8 x PL (~$PPP 2.13) 2.0 x PL (~$PPP 2.37) 2.5 x PL (~$PPP 2.96)

Sources: Susenas, World Bank, 2012

Three salient features of poverty in Indonesia :

• First, many households who were around the national poverty line, which is equivalent to $PPP 1.20-a-day, so many people who although not classified as poor but are vulnerable to poverty.

• Second, the measure of poverty based on income that is not a portrait of the real poverty threshold. Many people who is not classified as income poor as poor can be categorized on the basis of lack of access to basic services and poor development indicators of human development.

• Third, given the very broad and diverse area of Indonesia, regional disparities is a fundamental characteristic of poverty in Indonesia.


The Concept of Poverty Alleviation Program by the Government of Indonesia

Cluster I

Integrated Social Assistance Based On Household

Cluster I

Integrated Social Assistance Based On Household

Cluster II

Poverty Control Based On Community Empowerment

Cluster II

Poverty Control Based On Community Empowerment

Cluster III

Poverty Control Based On Micro Enterprises

Empowerment

Cluster III

Poverty Control Based On Micro Enterprises

Empowerment

Aim:

Decreasing the household cost with improving access in health, education, fresh water and sanitation services

Aim:

Decreasing the household cost with improving access in health, education, fresh water and sanitation services

Aim:

Improving potency and support the poor community capacity to involved in development

Aim:

Improving potency and support the poor community capacity to involved in development

Aim:

Give the access and economic strengthen for micro business

Aim:

Give the access and economic strengthen for micro business

Programs:

1. Household Expectation Program

2. Operational Aid for Education

3. Poor Students Aid Program4. Health Guarantee Public

Program 5. Rice for Poor Household

Program

Programs:

1. Household Expectation Program

2. Operational Aid for Education

3. Poor Students Aid Program4. Health Guarantee Public

Program 5. Rice for Poor Household

Program

Programs:

1. National Community Empowerment Program (PNPM)

2. Expansion and Developing Job Opportunity

Programs:

1. National Community Empowerment Program (PNPM)

2. Expansion and Developing Job Opportunity

Programs:

1. Public Business Credit (KUR)

2. Common Business Credit (KUBE)

Programs:

1. Public Business Credit (KUR)

2. Common Business Credit (KUBE)

Source : TKPK, 2009

2. WHAT HAS HAPPENED IN TERMS OF SOCIAL DEVELOPMENT: REDUCED EXTREME POVERTY? OR INCREASED, WHY, INCREASED INEQUALITY OR NOT WHY?

Human Development Index

HDI is a composite index that measures the average achievements in a country in three basic dimensions of human development:

Economic, Health and Education

2004 2005 2006 2007 2008 2009 201066

67

68

69

70

71

72

73

68.7

69.670.1

70.671.2

71.872.3

HDI

Year

HD

I

Source : National Socio Economic Survey (Susenas)

Human Development Index


Human Development IndexLife expectancy In 2009

Life Expectancy (Year)


Condition of Inequality and Poverty In Indonesia Gini Ratio

• Extreme poverty as living on less than US$1.25 a day and means living on the edge of subsistence, Indonesia used it to measure poverty level. In other hand, extreme poverty defined as living on less US$1 and US$2. (World Bank, 2005)

• There are three dimensions to Concern’s understanding of Extreme Poverty:– Lack of and/or Low Return to Basic Assets (unique to extreme poverty)– Inequality (causes, maintainers and obstacles)– Risk and Vulnerability (causes, maintainers and obstacles)

• Inequality refers to relative living standard of the entire society. • Inequality between the different regions is caused by different of early gift factor

(endowment factor). This differences make the level of development in each regions is always causing inequality welfare (Kuncoro, 2002).



Percentage of PovertyPopulation0-55,01 – 1010,01 – 1515,01-2025,01-30>30

Percentage of Poverty in 2010


Graph. Gini Ratio and Percentage of Poverty in Indonesia


Analysis Correlation Between Human Development Index, Poverty and Inequality

Source : Author (2012)


Negative Correlation Increasing HDI Decreasing Poverty

Education

Health

Income

• Operational Aid for Education (BOS)

• Poor Students Aid Program (BSM)

• Health Guarantee Public Program (Jamkesmas)

• Household Expectation Program (PKH)

• Rice for Poor Household Program (Raskin)

Source : Author (2012)

Reduction Poverty

Indicator in social development consist of income, health and education quality. • Income is some indicator to approaching the

ability of fulfillment the base goods. If government or poor people can increased the total income, the quality of life will be directly increased.

• And they also can increasing the health insurance with using they income.

• After they fulfillment the basic goods, increased of income will be utilized for fulfillment basic education. Education is one of the indicator that can cut off the poverty circle.

• After that, many people could fulfillment all the basic goods and create the quality of human resources increase and automatically increasing the Human Development Index (HDI) and after that will automatically decreasing the poverty.

Positive CorrelationIncreasing HDI Increasing Inequality

Indeed there is economic growth, but the growth was not distributed well. Distribution of economic assets is concentrated on a small group of people who belong to high income.


3. WHAT ARE THE PUBLIC POLICIES AND POLITICS: LESS IMPORTANT THAN ECONOMICS?

"Accelerating Economic Growth Equitable Powered by Synergy Strengthening Governance and Regional Centers."

• Establish the product

• Ensuring infrastructure

• Development centers

• Planning Special Economic Zones

• Development of the National Innovation System (SINAS)

1. Economic Growth

• Prioritizing the sectors

• Labor-intensive industries

• Creative industries

• Increase employment skill

2. Unemployment • Government

assistance and empowerment

• And Health Education Assistance

• Micro Finance Development

• Community Social Responsibility

3. Poverty

• Pro-people programs

• Poverty Expenditure

• Sustainable business

• Community Social Responsibility

4. Income per capita

• Basic Materials Prices "Stable" and Affordable

• Reduce inflation by improving logistics staple

• Control Regional Inflation

5. Economic stability

Indonesia's development agenda contained in the National Middle Term Development Plan (RPJMN) 2010-2014 are further described in the

Government Work Plan yearly (RKP). RKP 2011 theme is

"Accelerating Economic Growth Equitable Powered by Synergy Strengthening Governance and Regional Centers."

• Efficiency of tax collection

• Allocation for subsidies

• utilization of domestic financing sources

6. Domestic financing

• Improvement Watershed

• Reforestation• Improvement

of water supply

• Build ponds of budget

7. Food and water security • Priority

needs in the country

• Economic growth rates between regions

8. Energy endurance

• Infrastructure development

• Build new growth centers

• Government building infrastructures

9. Rising national economy • Low Carbon

Development, Climate Change Mitigation

10.Green Economy

4. WHAT HAS HAPPENED TO THE POLITICALLY VULNERABLE WELFARE REGIMES?


• The current range of Social Assistance programs provides partial and non-guaranteed protection to the poor and vulnerable from some, but not all, of the risks faced. In other words, Indonesia will not be able to create a social safety net via reforms to existing programs alone. However, Indonesia benefits from a strong macroeconomic and fiscal position and an administration committed to poverty reduction and social protection, which makes the development of a comprehensive social safety net feasible.

• The current range of SA programs does not go far enough in protecting income and promoting healthy behaviors in chronically poor households.


• Vulnerable households are likely to turn to negative coping mechanisms – sending more members to work and pulling more members out of school, switching consumption to less nutritious but cheaper foods, and foregoing health care – precisely when their incomes are threatened. Indonesia needs income support initiatives that reliably address both difficulties.

• The majority of vulnerable households does not face income risk every month, but are likely to enter poverty if they are not appropriately protected. When unemployment, illness, bad harvest, or other idiosyncratic shocks interrupt regular earnings or productive activities, expenditures are also often disrupted.

Suggestions and Recommendations

• Indonesia's future dreams will come true when there are available policies on the national economy and social welfare. It prevents social disparities and inequalities.

• Social safety nets should target all chronically poor households with greater assistance and be able to provide basic protection to the 40 percent of all households that are most at risk of becoming poor in any given year.

• Economic growth must address the problem of inequality. Distribution of economic growth should be distributed well

• Commitment from the government to make equal and justice development

Poverty in Indonesia

Documents

synergy strengthening

human development

poor household

chronically

human development

gini ratio

basic goods

extreme poverty