Indonesian Government Should Turn Attention to Poverty, World Bank Says Irvan Tisnabudi | September 28, 2010
A homeless woman sleeping in South Jakarta. Experts say the key to improving the country's economic growth lies in reducing the poverty rate, which is currently around 13 percent. (JG Photo/Maria Goretti)A homeless woman sleeping in South Jakarta. Experts say the key to improving the country's economic growth lies in reducing the poverty rate, which is currently around 13 percent. (JG Photo/Maria Goretti) Jakarta. Having successfully negotiated the global financial crisis and subsequent recession, the Indonesian government should now set its sights on reducing poverty levels in the country, the World Bank said on Tuesday. "Indonesia, with its solid domestic consumption and strong capital inflows, for example, has secured the short-term requirements for it to achieve its targeted growth in the next several years," Enrique Blanco Armas, the World Bank's senior economist for Indonesia, said during a discussion. "So now would be a good time to focus on its more longer-term requirements, such as reducing the poverty rate." Wijayanto, deputy rector of Paramadina University in Jakarta, said Indonesia was capable of achieving the president's goal of 7 percent annual growth by 2014, but that the 8 percent barrier could only be broken if poverty rates were lower. "Indonesia would have to reduce its poverty rate to below 10 percent, maybe around 5 percent, if it wished to break the 8 percent growth rate," said Wijayanto, who also spoke at the discussion. A July report from the Central Statistics Agency (BPS) pegged Indonesia's poverty rate at 13.3 percent. "The most effective way to reduce poverty rates is to provide poor people jobs that will support the development of the nation - infrastructure development, for example," Wijayanto said. In 2009, Indonesia allocated about 3 percent of its GDP to infrastructure development. Wijayanto said that figure should ideally be 10 percent, which he said would be high enough to fund opportunities for the poor to participate. Shubham Chaudhuri, the World Bank's lead economist for Indonesia, said that beyond providing jobs for the poor, improved infrastructure would also enhance connectivity, which would improve efficiency in urban areas and benefit the economy. Earlier this month, President Susilo Bambang Yudhoyono said that reducing the poverty rate was one his administration's four key economic policies. The others were boosting economic growth, creating jobs and protecting the environment. The House of Representatives is also working on a poverty eradication bill, which if passed would bring all of the government's anti-poverty programs under one roof and also replace cash-aid schemes with employment-training programs. Despite enduring high poverty rates, Indonesia is still expecting ample growth. Analysts say growth could exceed 6 percent this year, up from 4.55 percent last year.
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