Jakarta – A group of economists has criticized the government for failing to implement an effective and pro-poor economic policy despite improving the country's macro economic situation.
"The government, under the leadership of Susilo Bambang Yudhoyono and Jusuf Kalla, has failed to fulfill its promises to revitalize the agriculture, aquaculture and forestry sectors, as well as small and medium enterprises," Hendri Saparini of the Indonesia Bangkit economic think tank told reporters Wednesday.
Although the country's economic fundamentals improved during 2007, the government failed to reduce the number of people living in poverty because the economic fields that can absorb a significant number of jobs such as agriculture and small and medium-scale enterprises were left unattended, she said.
The World Bank recently said the number of people living in poverty, that is, on less than US$2 a day, was about 105.3 million out of the country's total population of 236.4 million.
The group said that although the government had increased the budget to eradicate poverty during the year, poverty alleviation programs had not been much help in improving the welfare of the poor, because at the same time it also reduced the subsidies especially allocated to the poor, such as those on the sales of kerosene and fertilizers as well as for health and education.
"Poor people are suffering because of the cuts to subsidies. They're also suffering because of the rising prices of staple foodstuffs in 2007. They have to spend most of their earnings on food," said Hendri.
During 2007, the inflation rate of staple foodstuffs was checked at 8.57 percent, far higher than the average 5.43 percent recorded during the previous period.
The group said the government's failure to focus on the revitalization and development of agriculture left farmers unable to reap windfall profits from high prices of agricultural products.
Ichsanudin Noorsy, also of Indonesia Bangkit, said that the government should have focused on the development of SMEs, especially those involved in the agriculture, aquaculture and forestry sectors, because they absorb more than 50 percent of the workforce.
He added that the government should also concentrate on developing labor-intensive industries besides improving the country's investment climate.
The country's economic fundamentals have improved significantly during the past several months, with GDP growth reaching the government's target of 6.3 percent during the first nine months of this year.
Other macro economic indicators, such as inflation, exports, balance of payments and foreign exchange reserves, have also met the targets set out in the 2007 state budget.