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.