Jakarta, IO – Poverty reduction has always become not only the main target of various programs to improve people’s welfare, but also a political and economic issue, at the national and international levels. On the one hand, the Indonesian government is obliged to raise the welfare of the people, as mandated by the 1945 Constitution, but on the other, there are political interests to render poor people as mere “objects” of economic development, with the politicians as the policy makers.
In general, the percentage of those defined as “poor” in Indonesia has declined steadily, shrinking from 11.13 percent in 2015 to 9.54 percent in 2022, despite a spike in 2020 attributable to the Covid-induced recession (see FIGURE 1).
There is wide poverty disparity between regions (see FIGURE 2). The provinces of Papua, West Papua and East Nusa Tenggara (NTT) are those with the highest poverty rates in 2022 – at 26 percent, 21 percent and 20 percent, respectively. This means that 1 out of 4 people in Papua is classified as “poor”, while the ratios for both West Papua and NTT are 1 out of 5.
President Joko “Jokowi” Widodo has vowed to eliminate extreme poverty by 2024. In what way is a person considered extremely poor? The United Nations (UN) defines extreme poverty as “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.” The UN Sustainable Development Goals (SDG) target 1.1 aims to eradicate extreme poverty entirely by 2030. This means that the government’s timeline is even more ambitious.
Domestically, the poverty rate is determined by the “poverty line” set by Statistics Indonesia (BPS) based on a National Socioeconomic Survey (Susenas). According to BPS data in 2021, people are poor if their purchasing power parity (PPP) – calculated using measures of absolute poverty that are consistent over time and across countries – is below the poverty line of Rp15,750 per day or Rp472,525 per month. They fall into a category of “extreme poverty” if their PPP is below US$1.90 (Rp10,739) per day, equivalent to Rp322,170 per month. For a family of four (parents with two children), this will amount to Rp1,288,680 per month.
The government has issued Presidential Instruction 4/2022 on Extreme Poverty Eradication Acceleration (PPKE), to improve the welfare of the Indonesian people, in accordance with the national goals enshrined in the Preamble to the 1945 Constitution.
The question is, can the government hit the target by 2024? This will largely depend on the indicators of the poverty line set by the Indonesian government.
Globally, the extreme poverty line is agreed upon by UN member states. The measurement is carried out by the World Bank. The international extreme poverty line in 2018 was US$1.90 per person per day, based on the 2017 PPP. However, in 2022 the World Bank revised this up to US$2.15 per person per day, based on a 2020 PPP. This means that anyone living on less than US$2.15 a day is in a state of extreme poverty. And according to its assessment, about 648 million people globally were stuck in this situation in 2019.