In his speech to the House of Representatives on Aug. 15, President Susilo
Bambang Yudhoyono claimed that his administration had successfully implemented
pro-poor policies and programs. He stressed the progress made in Indonesia’s
development, citing a number of macro-economic indicators, especially the
country’s resilience during the global economic crisis in 2008.
He reminded the House that Indonesia’s economic growth rate in 2009-13 was
higher than that of the United States, Europe and Japan during the same period,
and in the first semester of 2014, Indonesia’s economic growth remained the
highest after China among the members of the G-20. Also, Indonesia’s foreign
debt-to-GDP ratio is very low at 23 percent, 2014 saw the highest state revenues
in history, and per-capita income has more than tripled from Rp 10.5 million
($890) in 2004 to Rp 36.6 million ($3,100) in 2013. The president also pointed
to Indonesia’s membership of the G-20, giving it a voice in global
decision-making, as proof of its elevated status.
These are admirable achievements indeed. However, if we change our
perspective just a little bit, a different picture emerges. According to the
Global Hunger Index, for instance, even though Indonesia is now a member of the
G-20, our rating in 2013 was 10.1 (which signifies serious hunger), placing us
behind Vietnam, Thailand and Malaysia.
Many experts say Indonesia’s micro-economic indicators show that economic
growth is not even or sustainable, pointing to decreases in tradable sectors like
agriculture, mining, and manufacturing, and the low rate of absorption of the
labor force. Meanwhile, two indicators that are rising markedly are income
inequality and economic inefficiency.
We also need to consider the number of people living under the poverty line,
the budgets allocated to eradicate poverty, and look at income distribution
between the rich and the poor.
In evaluating Indonesia’s progress in achieving the Millennium Development
Goals, the Central Statistics Agency (BPS) has shown that in 2004, using a
poverty line of $1.50 (PPP), there were 36.15 million poor people — or 16.66
percent of the population. By March 2013, the number of poor Indonesians had
fallen to 28.07 million people — 11.37 percent of the population — so it looks
like we are making good progress.
But if we look at the World Bank’s data (their poverty line is set at $2 per
day), in 2013, 51.1 percent of Indonesians were living in poverty. To meet the
first MDG we need to reduce this number to 7.5 percent by 2015. This is not
going to happen.
Let’s also consider the budget allocations for poverty reduction. BPS data
shows that in the years 2004-13, the percentage of people living in poverty
decreased by 5.29 percent, or 0.58 percent per year. Meanwhile the budget of
the Coordinating Ministry for People’s Welfare for pro-poor programs was
increased by Rp 56.7 trillion in 2004-10, or about Rp 8.1 trillion per year. In
2010 alone the budget increased by Rp 27.8 trillion — about 42 percent. The
Indonesian Institute of Sciences (LIPI) calculated in 2011 that in the year
before, the government spent almost Rp 47 million per capita to lift
Indonesians out of poverty. Despite these enormous sums, we are not seeing any
correlating impact on the numbers of Indonesians living in poverty.
We can also measure the impact of our pro-poor policies by using the Gini
coefficient, which measures income distribution. According to the BPS,
Indonesia’s Gini coefficient steadily increased during the 17 years from 1996
to 2013 from 0,355 to 0,413, meaning we have moved into a range of high income
inequality.
Indonesia’s Gini index is still better than Malaysia’s (0.46) and that of
the Philippines (0.43), but it’s worse than Cambodia’s (0.38), Thailand’s
(0.40), Vietnam’s (0.35), or that of Laos (0.36). This means that our per
capita Gross National Income of $3,580 does not reflect the actual income of
most people. In 2010, the wealth of the 40 richest people in Indonesia was Rp
680 trillion — the equivalent of 10.3 percent of the national GDP. The total
wealth of those 40 equaled the wealth of 60 million of the country’s poorest
people, an NGO study found.
Yudhoyono’s administration has certainly overseen positive economic growth,
but this growth is not benefiting the majority of Indonesians, or generating
sufficient employment. Indonesia’s economic growth was relying on the market
mechanisms with little participation from people outside the major cities. To
share the wealth we need to create jobs and to do this we should rely on
labor-intensive industry rather than technology and capital. The unemployment
rate increased by 0.11 percent from 6.14 percent in August 2012 to 6.25 percent
in August 2013.
Even though the government has succeeded in reducing the number of
Indonesian living in poverty by about 5 percent in 2004-13, we cannot say that
the pro-poor policies are effectively reaching all the people who need them.
The incoming administration needs to consider this data and develop new
policies if it is serious about improving the lives of poor Indonesians across
the country.
Agung Wasono is researcher at The Partnership for Governance Reform
(Kemitraan) in Jakarta.
Source: http://www.thejakartaglobe.com/opinion/sby-overseen-real-growth-question-really-benefited/
Thursday, September 11, 2014
SBY Has Overseen Real Growth, but The Question Is: Who Really Benefited?
5:40 PM