Half Of Indonesians Living On Less Than $2 A Day

Ruzan Haruriunyan's picture

"More than 100 million Indonesians are surviving on less than $2 a day," the World Bank said Thursday, warning that widespread poverty in the world's fourth largest country is preventing children from getting an education.

Around 40 percent of parents cannot afford to send their children to secondary school, a problem that is 'perpetuating poverty from one generation to the next,' the organization said in its latest evaluation of the nation's economy, [a report entitled, 'Making the New Indonesia Work for the Poor' ]. "¦ While the country is enjoying a period of strong economic expansion and relatively low inflation, unemployment remains high at more than 10 percent. Its vast geography -- roughly 17,000 islands spanning 6 percent of the equator -- is contributing to economic 'disparities in income and poverty levels and these are becoming particularly stark,' the World Bank said. "¦" [The Associated Press/Factiva]

""¦ 'One of the most important features of poverty (in Indonesia) is the vulnerability of those who are just above the poverty line,' Andrew Steer, World Bank Indonesia Country Director, told reporters after unveiling the report. "¦ 'The secret to reducing poverty is to help these people participate in Indonesia's rising growth,' Steer said. 'At present the poor have less access to the assets that enable them to participate.' "¦ A tiny number of Indonesians are among the richest people in Asia while millions live in dire poverty in urban slums or shanty towns in the countryside. "¦" [Reuters/Factiva]

""¦ The report shows that '"¦[n]ot only did poverty increase in the 13 months to March 2006 from 16 percent to 17.75 percent but also government efforts to reduce the number in poverty or vulnerable to it are making little headway. "¦ World Bank statistics highlight the problems. About 65 percent of farmers and 83 percent of Indonesians are net rice consumers but rice prices soared 33 percent in the year to March - more than three times other staples. Yet the government refuses to import rice to bring down prices. Indonesia's maternal mortality rate, 307 per 100,000 live births, is one of the worst in the region while the fact that about 52 percent of poor households do not have access to sanitation or safe water is 'quite frankly a disaster,' according to Jehan Arulpragasam, who led the team that wrote the report.

Five years ago the government implemented a policy of decentralization but the vast majority of regional administrations do not have the knowledge or experience to implement development programs, so are not spending their budgets. An earlier World Bank report estimated that $10.25 billion of sub-national government funds had not been spent in the past few years and 30 percent of this year's development budgets would remain unused. 'It's a very different operating environment now,' Arulpragasam said. 'To make programs much better for the poor there are a whole lot of issues related to service delivery that need to be addressed. The government, particularly local government, is not on the right road for poverty reduction.' "¦" [The Financial Times (UK)]

""¦ The Bank outlined three priorities to help the poor take advantage of economic growth, including improving infrastructure to revitalize agriculture; creating a network of rural roads to give the poor access to markets; and providing microfinance. "¦ The report's findings were discussed Thursday at a workshop on poverty alleviation attended by Indonesian ministers and poverty experts. "¦" [Agence France Presse/Factiva]

In an interview with The Jakarta Post, Arulpragasam notes that one of the proposals in the report recommends Indonesia invest in education so that it benefits the poor by considering conditional cash transfers. ""¦ Such transfers do two things. One you give cash, income support to poor households to cope with shocks, and also, the cash is conditional on households accomplishing certain behavioral criteria such as sending children to school, getting kids vaccinated. The good thing with this program is you actually can design it to the specific needs of Indonesia. For example, the problem here is not getting kids to primary school. Most poor households send their kids to primary school, but the problem is that they don't send them to secondary school, so you can make conditional cash transfers to send more poor children to secondary school. "¦" [The Jakarta Post/Factiva]

Arulpragasam further told Dow Jones in an interview that the Indonesian government should lift its ban on rice imports because it's worsening poverty in the country. ""¦ 'The poor in Indonesia spend almost 25 percent of their budget on rice,' Arulpragasam said. '(So) any sharp increase...will generate higher poverty.' "¦ 'It is estimated that the 33 percent increase in the rice price between February 2005 - March 2006 alone put around an additional 3.1 million people into poverty,' the report said. "¦

The World Bank's criticism of the Indonesian rice import ban will put renewed pressure on the government to lift the prohibition in order to allow domestic rice prices to fall, writes Dow Jones. Elimination of the ban would be a boon to Vietnam and Thailand, which would be the most convenient sources of rice imports. "¦" [Dow Jones/Factiva]

By World Bank

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