Growth must hit 7% to reduce poverty, says Dorodjatun

The Jakarta Post, Jakarta

Indonesia needs to increase economic growth by at least 7 percent in order to alleviate the state of poverty under which 38 million people live, the economic minister said on Friday.

Coordinating Minister for Economic Affairs Dorodjatun Kuntjoro-Jakti said economic growth should reach 7 percent annually to enable the country to absorb the new work force of 2.5 million each year.

However, he admitted that to increase the current rate of around 3 percent to 7 percent would not be feasible for several years, due to the size of the population and the economy, which has not yet recovered.

"This year, we are going to reach 4 percent. Next year, if the world economy improves, we will be able to reach 5 percent," he said.

Besides increasing the economic growth rate, poverty could also be reduced by creating new employment opportunities, focusing on socio-economic policies, and adapting poverty eradication policies to reflect the real conditions in the regions.

Dorodjatun, speaking at the "Free from Poverty" forum, did not say what concrete steps the government would take to alleviate poverty.

Data from the Central Statistics Agency (BPS) shows that the number of people living in poverty reached 37.1 million in 2001 and increased to 38.5 million last year.

According to the International Labor Organization (ILO), people living under the international poverty standard earn less than US$2 per day, which puts 110 million Indonesians under the poverty line.

Dorodjatun said once Indonesia managed to achieve the desired growth rate, the government and businesspeople should distribute growth fairly.

As for now, the banking industry should channel more loans to small enterprises, particularly those in villages, he said, while the stable macroeconomic condition should help businesses create jobs.

At the same forum, economist Revrisond Baswir from Yogyakarta- based Gadjah Mada University urged the government to seriously combat corruption and free up more funds for the poor. He also criticized the government for not taking serious measures against corruption.

Revrisond also lamented that the government had shifted the responsibility for reducing poverty to the market mechanism.

"The government should channel more money to the agriculture sector so as to improve the income of the poor," he said.

Trade union leaders shared similar views, saying the government should ease the process of providing loans to small enterprises and farmers.

Meanwhile, businessman Djimanto from the Indonesian Employers Association (Apindo) agreed that macroeconomic stability was a key factor to reducing poverty, as was improving the investment climate.

Friday's tripartite forum, sponsored by the ILO, was held to mark the International Day for the Eradication of Poverty and to discuss the Poverty Reduction Strategic Paper (PRSP).

The paper was drafted to meet requirements set by the World Bank and the International Monetary Fund on 80 indebted countries, including Indonesia, in order to obtain more loans from international financial institutions.

The PRSP, which is expected to be finished in June next year, will outline the spirit of the government's programs in reducing poverty.