Poverty remains a problem

Alex Arifianto, The SMERU Research Institute, Jakarta, Indonesia

The Millennium Development Goals (MDG) is a global development framework established in 2000. It sets specific targets to halve the global poverty rate, end hunger, lower infant and maternal mortality, promote gender equality, eliminate illiteracy, limit the prevalence of AIDS, and slow global environmental degradation by the year 2015.

Today on Oct. 17, the United Nations commemorates the International Day for the Eradication of Poverty. Indonesia, one of the signatories of the MDG agreement, had a renowned track record for instance in poverty reduction and education, yet we are still failing short in meeting other important targets.

In 2001, about 55.4 percent of Indonesians were still living with a per capita income of less than US$2 per day. Indonesia has higher infant and maternal mortality rates compared to other Southeast Asian countries. Indonesia also has lower public expenditure in the health and education sectors compared to others in the region, spending only 0.6 percent and 1.4 percent of gross domestic product respectively in these sectors in 2000.

Given these shortcomings Indonesia has renewed its commitment to poverty reduction. The government plans to reduce the amount of people living in poverty by half and lower infant and child mortality. It established a nine-year compulsory basic education program for school aged children, and increased to 20 percent the budget allocated to education.

The government is working on a draft of the National Poverty Reduction Strategy Paper, in consultation with local governments, donor agencies, the private sector and civil society organizations.

According to official statistics the national poverty rate in 2002 was 18.2 percent. Although a significant improvement compared to the poverty rate during the 1997/98 economic crisis, this figure was only slightly lower than the 2001 poverty rate of 18.4 percent. This indicates that current strategies to reduce poverty might have become less effective.

SMERU analysis has found several troubling trends regarding poverty. While poverty has significantly decreased from its peak in November 1998, the most recent numbers were still fluctuating quite rapidly. In addition to the poor population, between 10 to 30 percent of Indonesians are vulnerable from falling into poverty.

Efforts to reduce poverty here are further complicated by the great lack of new job opportunities, leading to a surge in unemployment and an increase in the proportion of people working in the informal sector, which now constitutes about two-thirds of the labor force.

Decentralization since 2001 has also made efforts to reduce poverty more complex. Unfortunately, most local governments have no significant experience in running poverty alleviation programs. This could result in policies that may be counterproductive towards the poor.

Many local governments are increasing their user fees for the provision of many public services as well as introducing new ones, including fees for health and education services. Funding for important programs such as immunization, medical supplies, and students' textbooks have been significantly cut. Such actions could deprive many poor citizens of the quality public services they need.

Also, many local governments have reissued local taxes and user charges imposed on traders and businesses within their regions -- while the poor must bear the burden of these fees, both from lower job opportunities and higher prices at retail level. These fees could further increase poverty.

If districts continue to implement the above policies, the poverty rate in many districts will further increase.

There must be strong coordination between the central and local governments to form a partnership to implement MDG targets in Indonesia. A minimum standard on the amount of local governments' budget should be allocated for public services to the poor and one that would ensure that revenue-raising measures of local governments would not impose direct and indirect burden on the poor.

The amount of development spending for regions needs to be linked more closely with the outcomes. This could be done by tying the disbursement of government grants to the regions with the improvement of their MDG indicators.

Better cooperation with non-governmental stakeholders and the poor is also necessary. Policymaking made exclusively by bureaucrats is no longer appropriate in planning and implementing crucial decisions such as poverty reduction strategy.

The government, along with the private sector, civil society groups and representatives of poor citizens should form a continuing partnership to accomplish this goal.

Finally, successful poverty reduction requires the implementation of good governance practices and improvement in making the government more accountable to its constituents. These aims need to be promoted both at national and regional level.

Such measures would hopefully lead the government to be more responsive towards the concerns of the poor; a lasting reduction in poverty in this country might therefore be achieved.

The writer is a researcher with the SMERU Research Institute, a Jakarta-based public policy institute. The views expressed here are solely those of the author.