Olivia Rondonuwu, Jakarta – Kusniwati travelled more than 300 kilometers to visit one of the gleaming malls in Indonesia's capital. But she's not shopping, she sits outside and begs.
On a good day she can earn up to $3.50. That's the cost of a Starbucks cappuccino for shoppers but enough for the single mother to buy condensed milk for her two-year-old son and their food for the day.
"Ramadan and Idul Fitri is the best season because people are more generous," Kusniwati said, referring to the Islamic holy month that just ended, when it is a duty for Muslims to give away food or money.
Thousands of people like Kusniwati poured into the capital during Ramadan in August, with beggars lining up on roads outside malls, offices and at traffic lights, hoping a growing middle class would share some wealth.
Southeast Asia's largest economy may be steaming along at more than 6 percent growth, creating millionaires faster than any other Asian country according to Julius Baer, but at least 30 million people are still classed as poor – more than 12 percent of the people in the world's fourth most populous country.
Such poverty levels present a policy problem for a government aiming to make the G20 country a world top 10 economy by 2025. To meet that goal, it will need to divert spending to subsidise rice and energy towards better infrastructure and skills training.
Even though the government says inflation is under control, rising prices, in particular increases in prices of food, from rice to chillies, is a real problem for poor people such as Kusniwati.
Core inflation picked up to a two-year high of 5.2 percent last month, driven by higher food, transport and record global gold prices, data showed this week.
A bigger spike in inflation above central bank targets has been avoided this year by the government's surprise moves to twice import bumper volumes of rice, to give away handouts of the staple. It is likely to do so again next year if it needs to, despite a goal to be self-sufficient in the grain.
The government has tripled spending on poverty alleviation in the past decade, but poverty levels in the archipelago have only dipped by about six percent in that period, according to Latif Adam, an economist at the government-funded think-tank Indonesia's Institute of Sciences.
"The pace of the decline is not parallel with the allocation of the budget to alleviate poverty," Adam said.
Subsidy risk
The government's efforts to narrow or maintain the gap between the poorest and the average may become more difficult as incomes rise for the middle class and the wealthiest, and as it tries to wean the country off subsidies.
The country's Gini Coefficient, a measure of inequality, increased to 0.37 percent in 2009, putting it alongside Vietnam and Armenia, and up from 0.33 in the 1990s. The figure would be zero if wealth were perfectly shared out.
"It has gone up in recent years in Indonesia," said Vivi Alatas, an economist at the World Bank in Jakarta, adding two-thirds of the poor work in farming and actual inequality could be much higher because of new urban wealth not being recorded.
Rural plantation workers have not benefited from higher palm oil prices that have led to rapid expansion and industry profits in the world's largest producer of the versatile oil, said Khoirul Anam, the head of an Indonesian forestry union.
Still, the government will aim to slash spending on subsidies to 15 percent of the budget next year, from 18 percent this year, when higher spending on fuel subsidies because of a rise in global oil prices looks set to widen the budget deficit.
But it is likely to keep subsidies on motor fuel in 2012, despite being urged by economists and rating agencies to wean the country off them because of the risk a sudden spike in fuel import costs could blow its budget and hit the rupiah.
The government will not have forgotten the sharp fuel price rises in 1998 that led to protests that helped topple autocratic leader Suharto.
It is instead planning to cut subsidies on power. As well as energy, the government also subsidizes food, cooking oil, seeds and fertilizer, showing a focus on rural populations left behind by a consumer boom in the cities.
Signs of unhappiness about the lack of distribution of wealth at a time of rising prices have emerged in recent months, with strikes by miners and supermarket staff, and attacks by communities on a remote oil field and gold mine camp. Risks to stability are likely to increase along with poverty.
"Poverty is a problem, inequality is a problem, but if you have the infrastructure in place, if you have strong governance, you can take away subsidies and it won't rock the boat that much," said an Indonesian security analyst, who declined to be identified.
"But with Indonesia, where those things are still weak, you take one element out and it will crash," he said.