Poverty remains a problem

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.