A widening gap
A widening gap
To many people the recently published findings of the Central
Bureau of Statistics (BPS) are hardly surprising. Many Indonesian
observers of the economy have, although not always correctly,
long since complained about the widening gap which they hold
exists between the rich and the poor despite three decades of
planned development.
To recap: In a recent hearing at the House of Representatives,
the chairman of the Central Bureau of Statistics, Sugito Suwito,
told legislators that the gap between the lowest and the highest
income brackets has been growing in the past five years. This
finding is based on surveys of incomes earned by Indonesians
since the mid-1970s.
While the distribution of incomes seemed to promise a gradual
closing of the gap in the decade from 1975 to 1985, the study
showed that a disparity appeared to have grown again between 1985
and 1993. In 1975 for example the ratio between the lowest and
the highest income brackets was 1:6.5. In 1980 it had declined to
1:5.3 and to 1:3.8 in 1985. In 1990, however, the ratio had grown
again to 1:4.3 and in 1993 back to 1:6.2 -- almost the same as in
1975.
"We can see from the data that the gap had been narrowing in
the period between 1975 and 1985, while in the period between
1990 and 1993 it widened again," Sugito told the House budgetary
commission.
It is beyond the scope of this column to discuss the method by
which the BPS findings have been calculated. Of greater immediate
interest are the questions of how and why the disparity between
rich and poor incomes have widened again. No one, after all, can
speak with greater authority about trends and patterns in this
country than the Central Bureau of Statistics.
Critics of government economic policies often claim that the
broad pattern of development adopted by our policy makers has, by
and large, favored the strong over the weak, usually
unintentionally, and in spite of government efforts to promote
the interests of the economically powerless. Although such
arguments often lack the necessary objective data to support
them, the matter certainly seems worth pondering in the light of
the BPS findings.
As Indonesia is steadily moving in the direction of becoming a
true free-market society, those who are economically weak must of
necessity vie with the strong and economically powerful. And in
this contest it is usually the weak who lose out. Despite the
fact that measures have been taken to make it easier for small
businesses to obtain bank credits, for instance, in the
atmosphere of free competition, banks understandably prefer the
relatively safer and more lucrative option of lending to the
rich.
In many cases monopolistic practices further add to the burden
which the weak and poor must bear. In many areas farmers are
losing their land, and thereby their livelihood, to real estate
operators and big industrialists. In some cases there have even
been reports of coercion, often through collusion between local
administrators and businessmen.
In the light of all this we believe it is time that to start
thinking seriously about finding ways to empower the weak and the
poor so that they, too, will be able to savor the fruits of our
development efforts. A good step in that direction would be to
spread opportunities more equitably among the population, bring
an end to unhealthy monopolistic practices and pass a law on fair
business practices.
It is not difficult to see that a continuing increase in the
disparity between rich and poor, between the weak and the
powerful, is bound to add to potential sources of social tension
and unrest. Surely, it is in all of our interests to prevent such
a development.