High Dependency on Commodities Deepens Poverty

KOMPAS/PRIYOMBODO

Residents, who live next to the railway tracks in Petamburan, Tanah Abang, Central Jakarta, go about their daily lives on Tuesday. Data released by Statistics Indonesia (BPS) shows that the number of poor people in September 2018 was 25.67 million, a decrease of 0.28 million from March 2018 and 0.91 million from September 2017.

JAKARTA, KOMPAS -- Statistical data show that the number of poor in some Indonesian provinces was higher in September 2018 than in March. Decreasing prices and low exports of commodities are believed to be among the causes. The government must anticipate such conditions by strengthening social protection and empowerment programs to help locals create products of higher value.

After a joint meeting with House of Representatives Commission XI in Jakarta on Wednesday (16/1/2019), National Development Planning Minister Bambang PS Brodjonegoro said that dependency on raw commodities was one of the reasons for the increasing number of poor people in some regions. Mitigation efforts include improved basic services and social protection.

The government is implementing five poverty eradication strategies this year, namely improving the Family Hope Program (PKH) for its 10 million beneficiary families, providing noncash food assistance for 15.6 million families, providing education grants for 20.1 million students, expanding health insurance assistance for 96.8 million people and integrating population data to ensure energy subsidies reach the right beneficiaries.

Statistics Indonesia (BPS) data shows that Indonesia’s poverty rate decreased from 10.12 percent in September 2017 to 9.66 percent in September 2018. Within that time frame, the number of poor people in Indonesia decreased by 910,000.

The poverty reduction was driven by increased wages for farmworkers, increased farmer exchange value (NTP) and persistently low general inflation at 0.94 percent. In a number of provinces, however, the number of poor people increased, including in South Sumatra, Bengkulu, Banten, East Kalimantan, South Kalimantan, West Sulawesi and North Maluku.

Bank Indonesia Governor Perry Warjiyo said regions outside Java, especially Sumatra and eastern Indonesia, were highly dependent on commodity exports. Therefore, decreasing demand and commodity prices had be a cause of concern. Low economic growth may affect poverty and unemployment rates.

Poor villages

Finance Minister Sri Mulyani Indrawati said that, starting from 2019, the village fund distribution formula would be changed to ensure more effective poverty eradication. Of the Rp 70 trillion (US$4.95 billion) allocated for the village fund, around 25 percent will be distributed to villages with a high poverty rate, up from last year’s portion of 20 percent reserved for this purpose.

Social protection funds have also increased since 2015. In the 2019 state budget, Rp 385.2 trillion were allocated for social protection, including for the PKH, expanding the scope of health insurance beneficiaries, noncash food assistance and subsidies for housing as well as small and medium enterprise (SME) loans.

Social Affairs Minister Agus Gumiwang Kartasasmita said the PKH had significantly reduced the national poverty rate. Social Affairs Ministry Social Security and Protection Director General Harry Hikmat said that aid was given in line with each family’s needs. (KRN/SON/DIM)