The World Bank found that more than 40% of Indonesians were economically insecure – half of the people classified as not poor, according to its 2019 data. — Jakarta Post
JAKARTA: The World Bank has called on Indonesia to expand its poverty eradication efforts to protect millions of citizens it says are in danger of falling back into poverty, despite the country’s achievements in improving a lot for its people over the past decades.
Less than 1.5% of Indonesians were living below the World Bank’s extreme poverty line of US$1.9 (RM8.5) per day as of 2022, according to the development lender’s data. That is far below the 19% recorded two decades ago.
The eradication of extreme poverty has been a priority for President Joko “Jokowi” Widodo. He hopes to end it completely by 2024.
However, 16% of Indonesians remained below the World Bank’s standard poverty line of US$3.2 (RM14) per day as of 2022.
The lender found that more than 40% of Indonesians were economically insecure – half of the people classified as not poor, according to its 2019 data.
This insecurity meant members of the group could fall into poverty when exposed to shocks, such as a pandemic, natural disasters or an economic downturn.
World Bank Indonesia country director Satu Kahkonen said at the Indonesia Poverty Assessment report launch on Tuesday that despite the current situation, economic security could become a reality in Indonesia, but it would require a concerted effort.
The lender also made recommendations to achieve it. The first was the creation of sustainable livelihoods through more and better jobs, which Kahkonen noted was the ultimate solution to escaping poverty.
However, Kahkonen said that jobs in Indonesia were often insufficient to lift people out of poverty.
She suggested the government enact policies that enabled the private sector to create more productive employment.
Speaking at the same event, Finance Minister Sri Mulyani Indrawati said that the Job Creation Law would serve such a purpose by cutting down on bureaucracy and making it easier to do business in the country, thereby attracting investment that provided employment.
“President Jokowi has been pushing the Cabinet to change the investment environment because you cannot create jobs by deploying a social safety net,” she said.
The Job Creation Law has been opposed by a number of groups, including labour unions and civil society organisations, but the minister defended it, saying it was ultimately intended to bring jobs to Indonesia.
The second recommendation from the World Bank was to protect households against economic, health and climactic shocks.
“Indonesia is prone to shocks, especially from weather-related incidents,” said Kahkonen. “As usual, the poor and economically insecure carry a disproportionate burden when a disaster strikes.”
Between 1990 and 2021, Indonesia experienced more than 300 natural disasters, affecting more than 11 million people, and 70% were climate-related, according to the World Bank.
The other recommendation was to finance “pro-poor investment”, which covered scaling up social protection that included social assistance and insurance.
This embraced increasing financial inclusion as well as improving health care and education.
Kahkonen acknowledged that these measures would have to be funded by state revenue, likely tax receipts, and reducing spending on energy and agricultural subsidies, which she called “less effective and often regressive”.
Sri Mulyani said the government had addressed the issue through the Tax Harmonisation Law but that the problem was likely to persist because it lay in governance.
Sri Mulyani added that subsidies often end up in the wrong hands. In addition, three years of the pandemic and the current geopolitical situation were holding back poverty eradication efforts. — The Jakarta Post/ANN
