Poverty Alleviation in Indonesia: Government Programs and Challenges Ahead

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Poverty Alleviation in Indonesia:

Government Programs and Challenges Ahead

Raden Muhamad Purnagunawan

Department of Economics, Padjadjaran University

Secretariat of the National Team for the Acceleration of Poverty Reduction

27 October 2016

The 4

th

_{Annual Convention of}

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Poverty rate has declined significantly, but has been

slowing down in the last few years

70. 00 54. 20 47. 20 42. 30 40. 60 35. 00 30. 00 27.20 25. 90 34. 01 49. 50 47. 97 38. 74 37. 87 38. 39 37. 34 36. 15 35.10 39. 30 37. 17 34. 96 32. 53 31. 02 30. 02 29. 89 29. 13 28. 59 28. 07 28. 55 28. 28 27. 73 28. 59 28. 51 28. 01 60. 00 40. 10 33. 30 28. 60 26. 90 21. 60 17. 40 15.10 13. 70 17. 47 24. 20 23. 43 19. 14 18. 41 18. 20 17. 42 16. 66 15.97 17. 75 16. 58 15. 42 14. 15 13. 33 12. 49 12. 36 1 1. 96 1 1. 66 1 1. 37 1 1. 47 1 1. 25 10. 96 1 1. 22 1 1. 13 10. 86 -5 5 15 25 35 45 55 65 0 10 20 30 40 50 60 70 80 1970 1976 1978 1980 1981 1984 1987 1990 1993 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep -15 Mar-16

Jumlah Penduduk Miskin Presentase Penduduk Miskin

J um lah Penduduk M is k in ( J ut a Orang) Pres ent as e Penduduk M is k in (%)

Sumber: Badan Pusat Statistik, 2016 Keterangan: Sejak tahun 1996 menggunakan dasar perhitungan yang disempurnakan

Poverty rate and the number of poor people,

Indonesia 1970-2016

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Poverty rate varies across provinces

2 8 .4 0 2 5 .7 3 2 2 .5 8 1 9 .3 6 1 8 .1 6 1 7 .1 6 1 7 .1 1 1 6 .5 4 1 4 .0 7 1 3 .7 7 1 3 .7 4 1 3 .5 3 1 3 .3 2 1 3 .1 6 1 2 .2 8 1 1 .9 0 1 0 .7 9 1 0 .1 2 9 .5 7 9 .1 2 8 .9 8 8 .8 2 8 .4 4 6 .7 1 6 .3 2 6 .2 2 6 .1 0 5 .9 1 5 .7 8 5. 75 5 .2 5 4 .8 3 4 .7 2 3 .6 1 1 1 .1 3 0 5 10 15 20 25 30 P ap ua P ap ua B ar at N us a Ten gg ar a Ti mur M aluku G oront al o B en gk ulu Aceh N u sa T en g g ar a B ara t S ulaw es i Te ng ah S umat era S elat an Sul aw esi Tenggar a La mpun g Ja w a Ten ga h D I Y og ya ka rt a Ja w a Ti mur S ulaw es i B arat Sumat era U tara S ulaw es i S el atan Ja w a Ba rat Ja mbi S ulaw es i U tar a R iau K ali mant an B arat Sumat era B ar at K ali mant an U tara M aluku U tara K ali mant an Ti mur K ali mant an Te ng ah K ep ulaua n R iau B an ten _Bali K ep ulaua n B an gk a… K ali mant an S el atan DK I Ja ka rt a Ind on es ia

Sumber: Badan Pusat Statistik, 2016

Poverty Rate by Province (%)

September 2015

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2011

32 Poverty pockets can be found in every region categories

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Poor and vulnerable

communities make up

40%

of the population

11,25%

Popul

at

ion

Source: Susenas (2014)

200.000

400.000

600.000

800.000

1.000.000 |

5

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are vulnerable to shocks

4 of 10 people

Initial

Condition

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2011

28 … They are easy move out and in of Poverty

Sumber: SMERU, 2010

2008

53%

2009

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Who do you think is more eligible for the gov’t assistance?

More eligible to receive government assistance because the spouse is not working, have more

dependent families

Looks like they are more eligible

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9 30% 40% 50% 60% 70% 80% 90% 100%

Characteristic of Working Age in Poor Household

Employed Unemployed Not in labor force

30% 40% 50% 60% 70% 80% 90% 100%

Employed Unemployed Not in labor force

Urban Rural

WORKING POOR

Most of poor people have job, but it does

not make them get out of poverty.

Decreasing trend until to 2006, sudden

increase in 2007

Urban vs Rural

- Less proportion of working poor, but

higher unemployment in Urban



Better job opportunity but high

competition

30% 40% 50% 60% 70% 80% 90% 100% 19 93 1 9 9 6 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 2 0 0 9 20 10 20 11 20 12

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... Working poor is also a problem in other countries

Share of employed, unemployed and economically in total population aged 15+

living below the US$1.25 poverty line, selected countries

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Ketimpangan Utamanya Dijelaskan Oleh Pertumbuhan Kelompok Atas

yang Jauh Lebih Tinggi Dibandingkan dengan Kelompok Miskin……

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Increase income

Reduce Burden

Targeted Social Assistance Program:

• Healthcare

• Education Assistance

• Conditional Cash Transfer

• Rice for the Poor

Poverty & Inequality Reduction Strategy

1

2

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Initial

Condition

30%

Only

Of poor people

receive

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Less

than

of poor people

receive BSM

10%

Household Expenditure (Consumption) per Decile

Percent of 6-18-year-olds that receive BSM

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TARGETING OPTIONS

MEANS TESTING:

this requires high-quality data that

was not available in Indonesia and may be expensive to

put in place.

GEOGRAPHICAL TARGETING: transfers are provided to

those living in areas with a high incidence of poverty.

COMMUNITY-BASED TARGETING:

uses community

structures to identify the poorest members in a community

or those eligible, according to agreed criteria.

PROVIDING BENEFITS

to those recognized as belonging

to a specific vulnerable category of the population.

SELF-TARGETING:

for example, in work programs that

offer a below-market wage, based on the logic that

individuals choose to opt into the program.

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Indonesian Unified Database

for Social Protection Programs

|

16 of the population with the

lowest socioeconomic

status

40 %

24.7 million households

96.7 million individuals

Census

for the poor and vulnerable

Managed by Independent & High Hierarchy Government

Institution

Integrated MIS

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Percentage of Population With

Almost Identical Social Economic Characteristics

Poverty Line (Sep 2014)

Covers 5,5 million HH or 27,73 million people below PL

Unified Data Base (BDT - BASIS DATA TERPADU)

Coverage 24,7 milion households (HH) or or 96,7 million people PENERIMA KPS/KKS Including15,5 million HH or 65,6 million people

10,96%

40%

60%

25%

Poo

r

Inclusion Error Exclusion Error

PENERIMA BANTUAN IURAN (PBI) JKN Covering 21,8 million HH or 86,4 million people

35%

Nea

r

Po

o

r

/

V

u

ln

era

b

le

PROGRAM KELUARGA HARAPAN (PKH) covers 3 million HH

8%

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Cakupan Program Bantuan Sosial Saat Ini

Program Jumlah Pelaksana

Keluarga Jiwa Kelompok

Kartu Perlindungan Sosial (KPS)

15,5 Juta 65,6 Juta 25%

terbawah Kementerian Sosial

Kartu Keluarga Sejahtera (KKS)

Simpanan Keluarga Sejahtera (SKS) 15,5 Juta 65,6 Juta 25%

Raskin 15,5 Juta 65,6 Juta 25%

Program Keluarga Harapan 2,8 Juta 11,2 Juta 8%

Bantuan Siswa Miskin (BSM)/Kartu

Indonesia Pintar 15,5 Juta

11,1 juta Siswa

25% terbawah

Kementerian Pendidikan dan Kebudayaan & Kementerian

Agama

Penerima Bantuan Iuran (PBI) Jaminan Kesehatan Nasional/Kartu Indonesia

Sehat (KIS) 21,8 Juta 86,4 Juta 35% terbawah Kementerian Kesehatan melalui BPJS Kesehatan Program Daerah

Terdapat 42 permintaan dari 26 Provinsi dan 288 permintaan dari 247 Kabupaten/Kota untuk menggunakan BDT dalam pelaksaan Program Perlindungan Sosial yang dibiayai oleh APBD di daerah masing-masing

Program Kementerian/Lembaga lainnya

Terdapat 22 permintaan dari 15 Kementerian/Lembaga untuk

menggunanakan BDT dalam pelaksanaan Program Perlindungan Sosial lainnya (Termasuk KUR, KUBE, Rutilahu, dan program lainnya)

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19 19 10.86 5.02 0.397 0.340 0.350 0.360 0.370 0.380 0.390 0.400 0.410 0.420 0 5 10 15 20 2009 2010 2011 2012 2013 2014 2015 2016

Tingkat Kemiskinan (Skala Kiri)

Rasio Gini (Skala

Kanan)

Pertumbuhan Ekonomi (Skala Kiri)

Penurunan Ketimpangan dan Kemiskinan Terjadi dalam Dua Tahun Terakhir….

Perlu Upaya Untuk Melanjutkan Tren Penurunan Tersebut

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Promoting Financial Inclusion

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POPULATION’S ACCESS

TO FINANCIAL SERVICES

49 3 31 17 0% 20% 40% 60% 80% 100%

Access to Financial Services in Indonesia

(All sample)

Bank Formal Other Informal & Semi-formal Underserved

Using Formal - 52 %

Financially Served - 83 %

Underserved

19 2 40 39

0% 20% 40% 60% 80% 100%

Access to Financial Services in Indonesia

(Poor Households)

Bank Formal Other Informal & Semi-formal Underserved

Using Formal - 21 %

Financially Served - 61 %

Underserved

Approximately 80 per cent of Indonesia's poor have no access to formal financial

services

Source: World Bank 2012

Figure 1. Access to Financial Services in Indonesia (all and poor

households)

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Approximately a third of the population

do not have savings of any type

0% 20% 40% 60% 80% 100%

Banks Other Formal Only Informally Don't save

68% Financially Included

32% Financially Excluded

POPULATION’S ACCESS

TO SAVINGS AND CREDIT

0% 20% 40% 60% 80% 100%

Banks Semi-Formal Informally Voluntarily Excluded Can't Borrow

60% Financially Included

40% Financially Excluded

Bank credit only covers 17 per cent of

the population, while the micro finance

institutions account for only 10 per

cent

The Use of Savings

Level of Credit Usage

22

Source: World Bank 2012

Figure 2. Access to Savings

Figure 3. Access to Credit

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• Macro-economic:



More rapid economic growth (Zuang 2009)

• Micro-economic:



Links to poverty reduction, especially savings (Grameen Foundation

2010)

• Social:



Financial inclusion = financial citizenship; gives financial identity

and unique address

• In social transfer programs:



Financial inclusion is critical to impact of schemes on growth at

micro-level through alleviating liquidity constraints on investment (Barrientos

2008)

THE BENEFIT OF A FINANCIALLY INCLUSIVE

SYSTEM

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National Strategy for Financial Inclusion

• Just recently signed by President in form of Presidential

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Challenges Ahead

• Global Economic Slowdown

• Global rising in Inequality

• Digital Divide

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What can WE do

• Be a Connector…. or even a SUPER CONNECTOR

(Alatas, 2016)

• Control and supervise the Government

• Report

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