Poverty Rate Drops to Single Digit, Inequality Declines

Indonesia's poor live mostly in the countryside, especially in Java . (JG Photo/Yudhi Sukma Wijaya)

By : Adinda Normala | on 1:14 PM July 17, 2018
Category : Business, Economy

Jakarta. Indonesia's poverty rate declined to a single digit  in March — for the first time in the country's history — thanks to the government's social assistance programs, the Central Statistics Agency, or BPS, reveled on Monday (16/07).

A decline in poverty has been recorded for two decades, since the 1997 monetary crisis, when the poverty rate reached 23.43 percent.

BPS data shows that 25.95 million people, or 9.82 percent of the population, live below the poverty line of less than Rp 401,220 ($29) a month — the minimum amount allowing a diet of 2,100 calories a day.

Last year, 27.72 million people (10.64 percent of the population) were under the poverty line.

"In March 2018, for the first time Indonesia achieved a single digit poverty rate … It is due to an increase in the rice distribution program [Rastra] and non-cash food assistance in the first quarter of 2018, which is right on schedule," BPS head Suhariyanto told reporters.

According to him, the implementation of the program was nearly 100 percent, with 99.65 percent in January, 99.66 percent in February and 99.62 percent in March.

The government's social assistance, which was 87.6 percent higher in the first quarter of 2018 than in last year's first quarter, also played a big role in reducing poverty. In the first quarter of 2017, social assistance grew only 3.39 percent.

Under its non-cash food assistance program, the Ministry of Social Affairs wants to distribute rice to 5.2 million families by the end of July. Out of 15.5 million families in need of food aid, 4.2 million have already received it.

The government this year increased the ministry's aid budget to Rp 34 trillion, from only Rp 17.3 trillion last year.

Indonesia's poor live mostly in the countryside — 15.81 million people — especially in Java (13.34 million people).

The highest poverty rate, however, is recorded in eastern Indonesia, particularly in Maluku and Papua (21.20 percent), followed by Bali and Nusa Tenggara (14.02 percent), Sulawesi (10.64 percent) and Sumatra (10.39 percent).

Infrastructure development in the region is expected to help reduce poverty, Suhariyanto said.

Inequality Also Declines

BPS data shows that the level of income inequality in Indonesia, measured by the Gini coefficient, fell slightly to 0.389 in March from 0.393 in the same period last year.

In urban areas the coefficient decreased to 0.401 from 0.404, while in rural areas it rose to 0.324 from 0.320.

The most equal income distribution is recorded in Bangka Belitung, North Kalimantan and North Sumatra, the least equal in Yogyakarta, Southeast Sulawesi and West Java.

According to the government's medium-term development plan, the poverty rate next year is expected to decrease to between 7 percent and to 8 percent, while the Gini coefficient to 0.36.

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