In the State Address on 16 August, President Yudhoyono mentioned, that: “We have succeeded to reduce the level of poverty from 23.4 percent in 1999 to 16 percent in 2005”.  

This statement was harshly criticized by a number of Indonesia’s leading economists, who accused the government of providing misinformation to the public.  Some of them calculated that after the government’s doubling of fuel prices at the pump towards the end of 2005, Indonesia’s poverty level must have soared back to the former crisis level of 1999, nearing 23%. 

Later, Minister for National Planning, Paskah Suzetta, explained that the figures mentioned by the President were as per February 2005, since the Statistics Bureau, BPS, would announce results of the 2006 social-economic survey in September only. 

But when the results were finally announced by BPS last Friday, 1 September, economists were taken aback. For, although there was an increase, the increase was not as high as they had predicted. Granted, that actual figures are nonetheless, still enormous. 

BPS chief Rusman Heriawan said that Indonesia’s poor population as per March 2006, had increased by 3.95 million people to 39.05 million, or 17.75 % of the country’s total 222 million population. This number was up from 35.1 million (15.97 %) out of the 220 million population in February 2005. However, when not including the government’s direct subsidies to the poor (BLT) to compensate for fuel price hikes, Indonesia’s total poor would have totaled 50.8 million, reported Kompas daily. The poor are those earning less than the equivalent of US$17 a month. 

The number of rural poor increased by 2.06 million people during the 13-month period, which included last year's months of March and October when the government hiked fuel prices, while urban poor rose 1.89 million, added the Jakarta Post. 

"By percentage, the poor are still mostly found in villages, at 63.41%, with the remainder being in the cities," Rusman told a media briefing. 

Other poverty data revealed that 30.29% of those categorized in the "near poor" people, 11.82 percent of "almost not poor" people and 2.29 % of "not poor" people in February 2005, had by March 2006 plunged into further destitution. Only 6.45% of poor people emerged better off to rise to the not poor category over the same period. 

The latest poverty figures were derived from the BPS' routine survey of households, combining an annual survey sampling 265,000 households throughout the country, a survey held once every three years on the consumption, education and health expenses trend of 68,000 households and another annual but more detailed consumption survey of 10,000 households, said the Jakarta Post. 

Households are classified as "poor", "near poor", "almost not poor", and "not poor" according to an expenditure-based "basic poverty line" deduced from the surveys. The "poverty line" was set at Rp 152,847 (US$16.8) per capita per month for March's data, and Rp 129,108 for February 2005. 

The BPS acknowledged that the rise in Indonesia’s poor population was due to last year's fuel price hike, as well as the recent rise in the prices of staple foods, particularly rice. 

This verifies estimates from analysts and economists that the fuel price hike policy -- which had pushed up inflation and interest rates, had weakened the public's purchasing power, and slowed economic growth, and increased the country's number of poor as well. Whereas, the government was criticized for not having done enough to prevent adverse social and economic impacts. 

Rusman said Friday's that latest poverty figures had been calculated and derived accountably  through the same survey methods as used since 1998. 

Government Accelerates Poverty Alleviation Measures 

In direct response to public criticism, the Coordinating Minister for the Economy, Boediono, announced the government’s program to accelerate poverty alleviation through significant increases in budgets, reported Indonesia’s Trade and Industry News published by the Coordinating Ministry for the Economy.  In 2005, for example, budget allocated towards poverty alleviation was Rp. 23 trillion, while in 2006 this amount was increased by 80% to Rp. 42 trillion. This will again be raised to Rp. 51 trillion in 2007.  

One main program will be to change the BLT program to Conditional BLT linked to education, health and nutrition. In 2007, pilot projects are to be started in 6 provinces involving 1.7 million households, requiring a budget of Rp. 4 trillion.  This program will form a bridge to longer-term programs to improve the production capacity of poor families, while at the same time aims to protect the poor and gain access to basic education and health, that include transportation costs.  

The government further plans to press on with rice distribution program for a total of 15.8 million poor families, where each family will receive a ration of 12.5 kg at Rp. 1,000/kg. 

Furthermore, the government will guarantee free medical treatment for the poor at Public Clinics and at Third Class Wards in Hospitals. 

Basic education subsidies will be given free for the first 9 years, as well as subsidies for secondary education for children of lower income groups. Additionally, basic facilities for sanitation and access to clean water and low cost housing will be continued. The government will also continue to maintain price stability of basic food commodities, especially the price of rice, where each poor family is estimated to spend between 20%-25% of their income to buy rice as their staple food. In order to do this, the government will maintain sufficient national buffer stock of rice.  

Additionally, the government will continue to provide fuel and power subsidies aimed at keeping stability of such expenses in households. Also, other sources for household energy are being expanded to include, LPG, biofuel and others, to become more accessible to the poor. Such measures are to be taken starting 2007. 

Other programs aimed at empowering financial capacities of the poor starting 2006 and 2007 are firstly, activities that will create employment opportunities, to be allocated in the National Budget, which will be managed transparently and competitively. One of these projects will be the implementation of biofuel for energy program. Secondly, the government will continue to build infrastructures for rural areas to be financed through national and regional programs.   The construction of such infrastructures will not only provide employment for the short term, but are expected to create a better business climate in rural areas. Whilst, in order to reduce disparities among regions, regional budget allocations will be increased from Rp. 11.6 trillion  in Budget 2006 to Rp. 14.4 trillion in 2007, or an increase of 24%. 

And, to monitor the effectiveness of these programs, the government will constantly improve its database on poverty to be more accurate and more operational, reported Indonesia’s Trade and Industry News. 

(Sources: Jakarta Post, Kompas, ’s Trade and Industry News)   (Tuti Sunario)