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| Poverty |
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Overview
Until the Asian Financial Crisis in 1997-1998, Indonesia made substantial gains in reducing poverty and improving conditions in the fields of infant mortality, secondary schooling, and life expectancy between 1975 and1995. However, the financial crisis forced many people back to levels of destitution and many previous gains slipped away. The government instituted programs to help the poor cope with the crisis. These Social Security Net (SSN) measures include food for work, food subsidies, energy subsidies, a supplementary feeding program, employment generation, employment retraining programs, a health assistance package, and an education subsidy program. With the resurgence of widespread poverty came a reassessment of the causes of, and mechanisms for, alleviating poverty in Indonesia.
After the Asian Financial Crisis
A World Bank Report from October 2001 stated that previous strategies for alleviating poverty all over the world focused too much on numerical indicators and this was especially true in Indonesia. The report states that, "numerical targets, combined with the country's top-down development approach, left many important, but difficult to measure dimensions of poverty and well-being unaddressed." A broader approach towards assessing the continuum of poverty and the interconnectivity of factors is part of the recent strategy of the World Bank and other international organizations.
Quantitative measurements are only one aspect of assessing poverty and human needs. Other dimensions of human well being, such as reduced vulnerability to external shocks; access to education; health care, and basic infrastructure, and the opportunity to participate in social and political life, should also be included in long-term strategy.
The Role of Government
The impressive development of infrastructure in the 1970's, 80's, and 90's was the result of government planning and implementation. " The government excelled at achieving objectives that were clearly defined and primarily logistical (e.g. infrasructure). The model of hierarchical governance and accountability to the top is undergoing a major shift. Decentralization and increased participation by local organizations and citizens mandates a change in the process of creation and the execution of policy, particularly relating to poverty and development.
Structural conditions such as labor repression, gender discrimination, educational access, and lack of political participation are also closely related to the perpetuation of poverty through generations.
Food Security
Prior to 1997, Indonesia was considered to be a food-secure country. The United Nations World Food Program (WFP) closed its office in the country in 1996. However, the economic downturn, combined with the severe drought in 1997 meant that problems of food security emerged once again in the public and the political agenda.
The main issue was not food availability but the fact that many families could not afford to buy food amid skyrocketing inflation. Food prices increased by more than 118% in 1998, compared with an average inflation rate of 78%. Although prices and inflation have stabilized, the government has also come under mounting pressure to deal with rice farmers' complaints of low prices, particularly during harvests, which they blame on the abundance of rice imports and in April 2002, the government decided to curb imports through higher tariffs. Playing close attention to how international trade agreements and national pricing policies affect agricultural workers is an important part of understanding the effects of poverty.
Internally Displaced Persons
Communal fighting and natural disasters have forced over one million Indonesians to leave their homes in the past three years. According to a United Nations survey released in April 2002, this group suffers higher than normal rates of poverty, unemployment and poor health. The average unemployment rate is 54 per cent for the IDP population surveyed and 55 per cent of the households surveyed were living below the poverty line.
Education
Socio-economic background is very strongly correlated to school attendance. The enrolment rate for those of junior high school age in the richest quintile is 93% compared with 66% in the poorest quintile. For senior high school aged children the disparity widens and the two enrolment rates are 75% and 29% respectively. Long term strategies for improving access and quality of education for all sectors of the population are necessary for breaking cycles of poverty.
The economic crisis also disrupted the educational sector, both quantitatively and qualitatively. With decreasing income, parents could not afford to pay for their children's education. Riots, looting and violent protests from students and former students have been common in Indonesia.
For more information please see the Education Brief.
Health
The relationship between health concerns and poverty has been well documented. Reduced wages and sharp rises in food prices had a deep impact on health conditions among the poor in Indonesia. Anemia and vitamin deficiencies, for instance, greatly increased among children under five since the financial crisis. Poor women lack access to family planning and counseling and throughout Indonesia women are die during childbirth from lack of access to trained birth attendants and lack of reproductive health care. Tuberculosis (TB) is one of the leading causes of mortality. Indonesia ranks third among countries with the highest burden of TB worldwide. TB threatens the most vulnerable in society, often affecting heads of households responsible for wage earning.
For more information please see the Health Brief
International Assistance
Many international organizations are involved with poverty alleviation projects in Indonesia including the Heifer Project, several UN programs, Oxfam, Helen Keller International, and International Relief and Development. International financial institutions such as the IMF, World Bank, and Asian Development Bank and government donor organizations greatly influence the course of government poverty programs and development strategy. For example, President Megawati's policies of reducing fuel and electricity subsidies were consistent with certain donor organization recommendations.
The donor community has acknowledged the pressure stemming from such recommendations and the burdens of economic reconstruction and in April 2002, the Paris Club of donor nations decided to reprocess US $5.4 billion of Indonesia's national debt giving "the battered economy breathing space and time for consolidation for medium term economic policies in the run-up to the 2004 election" (Asia Times).
In 2002, Indonesia aims at further significant fiscal consolidation and lower inflation, while continuing to pursue structural reforms to promote bank and corporate restructuring, and encouraging investment. The negative impact of decentralization on poverty could potentially be very large. In particular, the effectiveness of the Social Security Net (SSN) measures aimed at protecting the poor from shocks to the economy depend is at stake. Tax greed and corruption are creating additional burdens for the country's poor.
For more information on poverty in Indonesia please see the following:
Indonesians displaced by communal strife forming an under-class
Poverty Reduction in Indonesia: Constructing a New Strategy
Socio-Economic differences in Health, Nutrition, and Population in Indonesia
Safety Nets and Safety Ropes: Who Benefited from Two Indonesian Crisis Programs
Updated May 2002
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