Indonesia, with a population of 200 million in 1997, has been struggling to reduce income inequalities and social disparities among its diverse ethnic groups inhabiting the country's 13,000 islands. Chronic poverty is the worst kind of social unrest and political instability are not to disturb national development.
The proportion of people living in poverty, 60% in 1970, had declined to 40% in 1976, and now 20 years later, is now down to only 11.4% or 22.6 million. During the period 1970-96, the Indonesian population increased 82 million from 116 million to 198 million or 3.1 million a year.
The decline of the number of the poor over 17 years (1976-93), was (-) 5.15% for the period 1976-87, down to only (-)2.35% during 1976-93. In the last 3 years (1993-96) the decline of the poor has been accelerated to (-)4.23%/year.
The acceleration of poverty reduction during the last 3 years has been the result of special policies and programs of poverty alleviation, the most important being the IDT Program, based on the Presidential Decree (Inpres) No. 5/1993 dated 27 December 1993.
The IDT Program was designed to alleviate poverty in 28,223 "left behind" villages, some 44% of all Indonesian villages (64,424). The program has 3 important objectives, namely first, to trigger and accelerate the national movement of poverty alleviation, second, to reduce social and economic disparities in the community, third, to reactivate the people's economy by empowering the poor.
The program contains three basic components, first, the government grant of Rp. 20 million (US$10,000) per year to each village for 3 years, second, the provision of facilitators to help the "self help" group of the poor to develop their micro enterprise, and third, the provision of rural physical infrastructure in the form of rural roads, bridges, jetties and drinking water, to the amount of Rp. 100 - 130 million (US$40,000 - 60,000) per village.
During the period of 3 budget years (1994/95 - 1996/97) the central government has allocated a total grant of Rp. 1,39 billion (US$600 million) plus Rp. 910 billion (US$396 million) for working capital and rural infrastructure. The government special grant for the building of rural infrastructure during the next 7 years until the end of Repelita VII (1999 - 2004) will reach around Rp. 850 billion (US$370 million). Starting in 1996/97, a new program was initiated in the IDT villages in the form of food supplement for all elementary students prepared and organized by women family welfare groups (PKK) in each villages.
The IDT program has become one of the most successful poverty alleviation and poverty reduction programs, and by 2005, the year set by Micro Credit Summit 97, to reduce the number of poor families by 100 million, Indonesia is optimistic that it will be able to contribute around 7 percent of this global target.
Bappenas, Republic of Indonesia - 1997.
[Bapenas (Badan Perancang Pembangunan Nasional) is the National Planning Board - JB]