Not Just Lipstick

KOMPAS/TOTOK WIJAYANTO

Direktur Institute for Development of Economics and Finance (Indef) Enny Sri Hartati

According to the latest data issued by Statistics Indonesia (BPS), the poverty rate in Indonesia fell to 9.66 percent in September 2018 from 10.12 percent in September 2017. It means that, in a year, the number of people living below the poverty line decreased by 910,000, from 26.58 million to 25.67 million people. The figure is based on a poverty line of Rp 410,670 per capita per month.

The drop in the rate must be appreciated. A single-digit poverty target has been consistently maintained since March 2018. Nevertheless, a number of important notes should also be considered to minimize urgency for poverty alleviation programs.

First, the composition of the poverty line is increasingly dominated by food. As of September 2018, the percentage of food commodities for those on the poverty line reached 73.54, up from 73.35 percent in September 2017. In other words, expenditures of poor people for non-food declined to only 26.46 percent. This reality certainly cannot be seen as simple. The impact of the figures in socioeconomic terms has profound and deep implications. At least, in plain view, the quality of life of the poor is declining. The income of the poor is far from enough to meet the needs beyond basic needs.

It is even more saddening that food needs are still dominated by rice. In fact, in rural areas, the percentage of rice for those on the poverty line reached 25.51, while in urban areas it was 19.54 percent. It rose from the figures in the same month last year during which the poverty line was 24.52 percent in rural areas and 18.8 percent in urban areas.

In addition, the data indicates that although the inflation is low, the people\'s purchasing power is relatively stagnant. As most of the income of poor people was spent to fulfill food needs, the demand for non-food declined.

Second, poverty disparity in rural and urban areas remains high. As of September 2018, the poverty rate in urban areas was relatively low at 6.89 percent as compared to 13.1 percent in rural areas. In addition, inequality as shown by the Gini ratio in rural areas reached 0.391, higher than 0.319 percent in urban areas.

It shows that the problems that plague rural areas have become more complex. If this is the case, the village will undoubtedly become less attractive to the younger generation. With urbanization, even if villages have great potential, they are no longer appealing to young people.

Third, in four resource-rich provinces, poverty has increased. There are four provinces that experienced an increase in the population of poor people, namely Banten (0.01 percent), South Sumatra (0.02 percent), East Kalimantan (0.04 percent), and South Kalimantan (0.11 percent).

In fact, Banten should have benefited from its available infrastructure to attract investment. However, industrial activities in the province have decreased dramatically and it is more engaged in the property sector. The other three provinces are rich in resources, but limited only to certain commodities. As a result, their fates depend only on the prices of export commodities.

Fourth, there are still 16 provinces that have double-digit poverty rates. In some regions in eastern Indonesia, the poverty rate is still very high, especially in Papua at 27.43 percent, West Papua at 22.66 percent, East Nusa Tenggara (NTT) at 21.03 percent, Maluku at 17.85 percent, and Gorontalo at 15.83 percent. In fact, all provinces in Java, except West Java, have double-digit poverty rates, namely the Yogyakarta Special Region (DIY) at 11.81 percent, Central Java at 11.19 percent, and East Java at 10.85 percent.

The government has five main programs to alleviate poverty, namely (1) the Family Hope Program (PKH), which provides cash assistance for 10 million families, (2) non-cash food assistance for 15.6 million families, (3) education assistance for 20.1 million schoolchildren, (4) health insurance assistance for 96.8 million people, and (5) data integration so that energy subsidies reach the targeted recipients. At least 15.6 million families could benefit from the assistance if the budget is properly managed.

Also contributing to poverty alleviation is the subsidized “ultramikro” credit, or people\'s micro credits (KUR). KUR distribution in January-October 2018 reached Rp 15.28 trillion. KUR credits for productive activities totaled Rp 7.49 trillion or 49 percent of the total KUR, while the agricultural sector accounted for 37 percent, production services 54 percent, fisheries 0.5 percent, and manufacturing and industry 8.5 percent. In addition, Rp 70 trillion was allocated for village funds, with around 25 percent given to villages with high numbers of poor people.

(ENNY SRI HARTATI, Executive Director of the Institute for Development on Economics and Finance)