Indonesia’s Poverty Line – To Make A Million People Unpoor

CAN people live on $1 a day and not be considered poor? The Indonesian government thinks so.
Recent data from the country’s Central Statistics Agency says there are about 1m fewer poor Indonesians this year than last–based on the government’s official poverty line of 233,740 rupiah per capita per month, which is less than $28 dollars.
The statistics agency data, released on July 1st, says that only 12.5% of Indonesia’s population, or just over 30m, can be classified as poor, down from 31m in 2010. Officials note that the figure decreased despite the government’s raising the poverty line by about $2.60 for this year.
That should hardly be considered a result worth celebrating however, given Indonesia’s booming economy, which could grow by as much as 7% this year, and its status as a darling of international investors. The government led by President Susilo Bambang Yudhoyono should be equally concerned by a number of developmental indicators that put Indonesia, a proud member of the G20, on par with sub-Saharan Africa.
Indonesia’s poverty line is determined by a complex function taking in what the poor spend on different kinds of food to reach 2,100 calories per day, as well as costs associated with dozens of non-food goods, including housing, clothing, education and health care. The poverty line is established as an average, allowing for the fact that prices vary widely from urban to rural areas, and from more prosperous Indonesian regions, such as Jakarta, to poorer, remote ones, like the islands of Nusa Tengarra. There’s another figure that gets bandied about without the government’s endorsement.
Though it’s unofficial it makes it into the press frequently: there are about 100m Indonesians scraping by on $2 a day or less–more than triple the official count of “the poor”. That figure is based on a simpler measure of purchasing power, unlike the official poverty line. And there are other figures that can’t be overlooked: less than half of rural poor have access to clean water and only 55% of poor Indonesian children complete junior high school.
The latest official statistics showed that 950,000 of the 1m Indonesians who are no longer classified as poor live in rural areas, which Mr Yudhoyono’s government can rightly claim as a victory of sorts. The president has implemented three primary social programmes targeting poor households. One of them,a conditional cash transfer that is supposed to help compensate for reduced fuel subsidies, was the largest programme of its kind in the world.
And he has declared poverty alleviation to be his government’s highest development priority. According to the World Bank Indonesia’s poverty rate fell from 16.7% in 2004 to 14.2% in 2009. Which is also to say that it fell short: the government’s target had been 8.2%.
The relatively slow pace of change should be worrying to politicians. Against this backdrop of persistent poverty, Indonesia’s income per capita is now around $3,000. Hypermarkets and shopping malls continue to expand to cater to the millions of new entrants into the ranks of the country’s middle class. Ballooning domestic consumption, exports of raw materials including coal, tin, copper and palm oil, increasing rates of foreign investment and sound macroeconomic policy have Indonesia’s economy on its best footing since the heady days of the early 1990s.
But another kind of history might repeat itself too, brought on by a new generation of poor Indonesians who see themselves left out of the party.
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