Poverty, Inequality Decline in Indonesia

More than 26 million Indonesians live below the poverty line. (Antara Photo/Syifa Yulinnas)

By : Dion Bisara | on 4:02 PM January 02, 2018
Category : Business, Economy, Featured

Jakarta. Poverty and inequality levels in Indonesia dropped in September from a year earlier, with tame inflation and the government's rice subsidies program, the Central Statistics Agency, or BPS, said on Tuesday (02/01).

The reading give a much needed boost to President Joko "Jokowi" Widodo, who in the past weeks has been facing criticism from political opponents saying that his administration's pursuit of infrastructure development is at the expense of people's welfare.

BPS data indicate that 26.58 million Indonesians, or 10 percent of the population, live below the poverty line, compared to 27.76 million, or 10.7 percent, in September last year.

The September figure was also lower than in March, when it stood at 27.77 million, or 10.64 percent. The country's poverty level has been declining since 1999, when almost a quarter of the population was categorized as poor.

Indonesia measures poverty every March and September, to reflect the condition in the harvest and non-harvest season.

"According to Susenas [the National Socioeconomic Survey ] from September 2017, between May and August, rice was delivered to about 30 percent of all households," the agency said in a statement.

Spending on rice, the staple food of most Indonesians, equals to about one fifth of the poor's monthly spending. The government defines a person as poor if his or spending is less than Rp 361,990 ($25) a month.

The agency also observed that a price increase in rice, poultry and beef was insignificant between March and September, while the prices of sugar and chili peppers dropped, making basic food products affordable for the urban and rural poor.

The government also kept the prices of fuel and electricity stable for most of 2017, and plans to extend the policy for the first three months of 2018.

More than 16.3 million of Indonesia's poor live in the countryside, while 10.27 million are in cities.

While East Java had the highest number of poor people — 4.4 million — Papua was relatively the poorest, with 27 percent of its population living under the poverty line, BPS data showed.

Indonesia's Gini ratio, which measures income inequality, dropped slightly to 0.391 in September, from 0.394 in the same month a year earlier. The lower Gini ratio reflects lower inequality.

Inequality was still higher in the metropolitan areas, although the urban Gini ratio fell to 0.404 from 0.409 a year earlier. The rural Gini ratio rose to 0.320 from 0.316.

Nationally, the least earning 40 percent of the population account for only 17 percent of the country's total spending.

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