JAKARTA, Indonesia — The Central Statistics Agency (BPS) concluded that Indonesia’s national poverty rate dropped 1.75 percent since September 2015. Although the national poverty rate has decreased, Jakarta and many rural provinces of Indonesia have seen an increase in the number of people below the poverty line.
In calculating the poverty line in Indonesia, the dominant factor is food prices. Food price stability, particularly rice, is a vital matter because much of the population spends a large quantity of their income on food. Therefore, if the price of rice throughout the country increases, there will be an increase in the percentage of people living in poverty.
There are disparities between the amount of people living in poverty in rural areas and urban areas. In urban areas, there has been a declining poverty rate due to a rise in migration and employment.
Although this is true for many urban areas throughout Indonesia, Jakarta, the capital most populated city in Indonesia, is seeing an increase in people below the poverty line. In the capital, there has been a rise in prices and growing inflation of basic commodities.
Jakarta has historically been considered a province with a very low poverty rate, yet it has gone in the opposite direction as Indonesia’s national poverty rate. The number of poor residents in has increased over the past year, as 368,670 poor residents were accounted for in September 2015 and 384,300 poor residents were accounted for in March 2016.
In Jakarta, when the prices of rice and cigarettes rise, which are considered basic commodities, there is an increase in the poverty rate. The increasing prices of other necessities, such as chicken meat, housing, electricity and gasoline have also shown to have a substantial effect on the poverty rate.
One reason why the poverty rate is increasing in a city like Jakarta is due to the stagnant salaries of the city population as the prices of commodities have grown. People are not able to afford their lifestyles and rising prices have increased inflation.
Although the national poverty rate has decreased, the BPS head Suryamin stated that there has been an increase in the severity of poverty within rural areas. The rural population throughout Indonesia is relatively poorer than populations in urban areas.
The percentage of people living below the rural poverty line in 2014 was 13.8 percent while the percentage living below the urban poverty line in 2014 was 8.2 percent.
A decreasing national poverty rate can be attributed to several different factors. A nationally low inflation rate of 1.71 percent between September 2015 and March 2016 has contributed to a drop in poverty. In addition, the average wage of farmers in March 2016 was higher by 1.75 percent and the average wage of construction workers rose 1.23 percent. The unemployment rate in February 2016 was down to 5.5 percent from 6.18 percent in August 2015.
Although there has been a steady downward trend in the national poverty rate, it is predicted that these decreases will begin to slow in pace. Many living just below the poverty line were able to rise above it with little effort. On the other hand, the country needs to focus on those living at the bottom base of Indonesia’s poverty, as getting them above the poverty line will be more complicated and take time.
The poverty headcount ratio at $1.90 U.S. dollars per day has dropped from 21.3 percent of the population in 2008 to 15.9 percent in 2010 and 11.3 percent in 2014. This therefore shows that overall, Indonesia’s national poverty rate has dropped in recent years.
– Kimber Kraus
Photo: Flickr