Ridho Syukra – The government's temporary direct cash assistance program to offset higher fuel prices could increase the poverty rate if recipients do not use it properly, the country's statistics agency has warned.

Wynandin Imawan, the deputy chairman of the Central Statistics Agency (BPS), said a similar cash handout program launched eight years ago to compensate for a fuel price hike increased the poverty rate instead of reducing it.

"It happened in 2005 where the BLT [cash handout] was just Rp 100,000 [$10] per month per household. But it turned out the poor people didn't use it properly. Most of them [used it to] pay off debts at food stalls," Wynandin said at a press conference at the BPS office in Jakarta on Monday.

But Wynandin said the latest temporary direct cash assistance program, or BLSM, could also help ease poverty if the money was used properly.

"We cannot predict the figure yet. If the BLSM is used properly, there's a chance the poverty rate can come down. But if it's used just to pay debts, then there's also a chance of an increase in the poverty rate," he said.

The BPS also announced the number of poor people in the country in March 2013 was at 28.07 million or 11.37 percent of the total population, above the government's target of 10.5 percent in the 2013 revised state budget.

BPS chairman Suryamin said the number of poor fell by 520,000 in March this year compared to last September, when the total was 28.59 million or 11.66 percent of the total population.

Suryamin said the number of poor in urban areas had dropped by 180,000 last year to 10.33 million in March, while the number of suburban poor was down 350,000 to 17.74 million.

Suryamin attributed the poverty reduction to six factors: a relatively low inflation rate of 3.2 percent; a nominal daily wage increase for farmers and construction workers of 2.08 percent and 9.96 percent respectively; a relatively stable rice price of around Rp 10,000 per kilogram between September last year and March this year; economic growth of 1.41 percent between the fourth quarter of last year and the first quarter of this year; a lower unemployment rate of 5.92 percent in February compared to 6.14 percent in August last year; and lower staple food prices between September last year and March this year. Cooking oil was 5.10 percent cheaper, while sugar and flour prices dropped by 0.60 and 0.20 percent respectively.

The BPS said the highest percentage of poor was found in Maluku and Papua, where the rate stood at 23.97 percent, followed by Bali and Nusa Tenggara at 14.51 percent, Sumatra (11.51 percent), Java (10.92 percent), Sulawesi (11.22 percent) and Kalimantan (6.37 percent).

"Despite the declining poverty rate, there are several provinces that saw an increase, both in urban and suburban areas, compared to September 2012," Suryamin said, citing West Sumatra (0.14 percent), South Sumatra (0.76 percent), Banten (0.03 percent), Bali (0.02 percent), West Kalimantan (0.38 percent), North Sulawesi 0.24 percent, Gorontalo (0.29 percent) and Papua (0.47 percent).