Riyadi Suparno, Jakarta – The number of people living below the poverty line increased last year and will most likely increase again this year, but it is yet to be determined whether or not this will have an impact on the popularity of President Susilo Bambang Yudhoyono leading up to the 2009 election.

Despite the hardwork of the Yodhoyono government, poverty is likely to worsen this year in Indonesia due to a number of factors.

The 21 million poor families who received US$120 in cash assistance last year will not receive this assistance this year, affecting approximately 80 million people.

Rice prices have increased steeply in recent months. It is a historical fact that whenever rice prices increase sharply, many people fall below the poverty line. It seems this year will be no exception.

Worse, demands for labor, the main asset of the poor, are not improving. Investment has been slow, and even if there are new investment projects, they will not go to the labor-intensive sector. Consequently, the poor will remain poor, and those sitting slightly above the poverty line may easily slip below as a direct result of a lack of demand for labor.

Will the reality of an increasing number of poor people in the country affect Yudhoyono's popularity? A recent survey conducted by the Indonesian Survey Institute suggests this may be the case, with Yudhoyono's popularity falling to below 50 percent from over 70 percent just after he was elected in 2004.

But will this reality translate into anything in 2009 when the presidential election is going to be held?

Gustav F. Papanek, president of the Boston Institute for Developing Economies, has the answer. Papanek, who has conducted research in a number of countries on the relationship between increased poverty and the fate of leaders, said the answer depends on the people's perception of the government.

"Whether people feel hope or despair depends on whether the government is making a genuine effort to help the poor," said Papanek in a recent discussion in Jakarta. "If they feel the government is genuine, the people will vote for the leader."

Papanek has three suggestions for the existing government to not only to create a positive perception among the people, especially the poor, but also deliver results.

First, he said, the government should fully fund and strengthen the new National People's Empowerment Program (PNPM), a community-based program designed to ease poverty in urban and rural areas. The program is based on the World Bank's successful District Development Program and Urban Poverty Eradication Program.

Fully funding the program means that each of approximately 5,500 districts across the country will receive Rp 3 billion a year to finance projects that poor people have selected. This will cost the government $2 billion.

When it is fully operational, the program will create a demand for labor and provide additional employment for 60 days a year to between 20 million and 26 million people.

"Poor people are not unemployed. They are underemployed. Only educated people in the middle class could be unemployed. Poor people would take anything, even work paying Rp 4,000 a day, which educated people would not take," Papanek said.

Those 20 million to 26 million people would receive additional income of approximately Rp 14,000 a month. "But if the government does not pay, these positive things will not happen. Just like a car, it won't go unless you put gas in it," Papanek said.

Investing more in basic education and health care services may also make a difference. The ability of basic education and health care to lift people out of poverty is clear.

Former president Soeharto was successful in these areas. Through his Inpres (an acronym for presidential instruction) program, access to education and health care drastically improved. As a result, people were not forced to spend so much of their income on health care and education, helping many to overcome poverty and improve their social situation.

The export industry is another area that may help to alleviate poverty in the country. Indonesia's exports have been increasing from year to year, but recent increases have been predominantly from the rising prices of natural commodities.

In reality, Indonesia is losing out in the export of its manufacturing products. While overall exports have increased by double digits, exports of manufactured products have increased by less than 5 percent since 1996.

This could be because of worsening infrastructure, red tape, taxation or labor costs. But according to Papanek, the exchange rate is the strongest factor contributing to weak growth in the export of manufactured products.

Despite the competitiveness of your products, if your currency is strengthening against hard currencies such as the US dollar and the euro, you will lose out to countries such as China that keep their currencies relatively weak, he said.

In this regard, Papanek suggested that Indonesia follow the path of China in making its exports always competitive by keeping the local currency weak against major currencies.

If the government heeds the advice of Papanek and pursues these suggestions, Yudhoyono's popularity may improve, strengthening his chances to be reelected in 2009.