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Is the wealth trickling down to Indonesia’s poor?

During August this year, thousands of Indonesia’s poor travelled to large cities, such as the capital Jakarta, to beg during Ramadan. In this holy month, it is a duty for Muslims to give away food or money.

The poorest therefore came for a small part of the wealth now enjoyed by Indonesia’s prospering middle class. Growing at more than 6 per cent a year, Indonesia’s economy is the largest in south-east Asia. But while the number of millionaires in the country climbs ever higher, 12.5 per cent of the population (according to the country’s Central Statistics Agency) still live below the poverty line of less than 28 dollars per month or 1 dollar per day.

The Indonesian government has tripled spending on poverty alleviation over the past ten years, reducing poverty levels by around 6 per cent in that time. Data released in July this year also showed a drop of 1 million in the country’s poor (from 31 million in 2010 to just over 30 million in 2011). But these figures do not reflect the fact that many millions more live on just 2 dollars per day.

The poverty calculations are based around income and with an average poverty line. And it could be said that prices vary widely in urban and rural areas. Many Indonesians living in rural communities are not ‘poor’ in some senses – they have proper houses and healthy food. For example, rural communities are often self-sufficient for staple foods and have catches of fish for their protein. However, if a multi-dimensional poverty index were used (taking into account factors such as access to healthcare, education, sanitation and water), many communities would not fare so well. Less than half of the country’s rural poor have access to clean water and only 55 per cent of poor children complete junior high school.

Rising living costs are also a continuing worry. The poorest currently benefit from subsidies on energy, food, cooking oil, seeds and fertiliser. However, these subsidies will be cut back in the future. The government plans to reduce this spending from 18 per cent of its budget this year to 15 per cent next year.

Therefore, despite Indonesia’s booming economy, the gap between the ‘haves’ and ‘have-nots’ looks set to widen. This is the current trend according to the country’s Gini Coefficient (the measurement of income inequality). In 2009, it was 0.37 (zero represents perfect income equality), having risen from 0.33 in the 1990s. With signs of growing unrest as various workers strike over pay, it is little wonder that some of Indonesia’s poorest now expect to receive a share in the country’s growing wealth, even if they have to beg to get it.

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