Esther Samboh, Jakarta – The number of low-income people in the country continues to slide this year but the reduction is slowing in an irony contrary to Indonesia's globally lauded rapid economic growth.
The Central Statistics Agency (BPS) announced Friday that in a year to March, the number of low-income people fell by a million, lower than 1.51 million last year.
As of March this year, the number of low-income people reached 30.02 million, representing 12.49 percent of the 240 million population. That compares to 13.3 percent in March 2010, 14.15 percent in March 2009, 15.42 percent in March 2008, 16.58 percent in March 2007 and 17.75 percent in March 2006.
"It shows that economic growth does not affect poverty. The impact is very weak," Wijaya Adi, a senior economist at the Indonesian Institute of Science (LIPI), told reporters in a teleconference.
Indonesia's economy grew 6.1 percent, higher than the global average growth, with economists attributing the robust growth to surging investment – perceived to create jobs as new business means more new labor is needed.
When asked on the latest figure, Coordinating Economic Minister Hatta Rajasa illustrated a dilemma of high economic growth that increases people's purchasing power.
"There's been an increase in living costs, therefore the poverty line increased. The people's income and purchasing power increased," Hatta told reporters.
According to Rusman, Indonesia's poverty line – the minimum level of income deemed necessary to achieve an adequate standard of living in a country – increased 10.3 percent in the past year to Rp 233,740 per person per month from Rp 211,726 last year.
"Come to think of it. It means Rp 8,000 per capita per day. What could you spend Rp 8,000 on?" Rusman said. But poverty lines differ from one city to another, he added, with Jakarta's at Rp 360,000 per month or about Rp 12,000 per day.
LIPI's Wijaya coined a simple method for the government to effectively reduce poverty – allocating the state budget directly to low-income people such as through direct cash transfer. However, he added, the government's tens of trillions of budget to lift low-income people from the poverty line had been ineffective.
"Based on the poverty line, lifting 1.5 million low-income people from the poverty line will need about Rp 4.5 trillion budget. If I don't work, for instance, just give me Rp 250,000 per month or Rp 3 million per year, and then I am no longer poor," he said.
The poverty rate decline was predominantly seen in villages, with 935,000 people lifted from the poverty line, compared with 51,000 people in cities. "Although the number of low-income people in villages went down sharply, the largest amount of low-income people still came from there [18.97 million]," Rusman said.