Indonesia is the world’s largest archipelagic state, comprising of a vast territorial spread of more than 17,000 islands containing a population of 280 million people. The geographical and demographical properties of Indonesia provide a unique set of challenges to effective governance, societal equality and poverty reduction. Here is some information about poverty in Indonesia and efforts to reduce it.

Reducing Poverty in Indonesia 

In recent times, Indonesia has made positive strides in poverty reduction. In 2024, more than 3 million Indonesians were lifted out of poverty, as the poverty rate fell to 9%, the lowest in the country’s history. This figure is a significant achievement considering that just over two decades ago, poverty levels in some rural areas were documented as high as 76%.

The steady decline of poverty in Indonesia is present in both rural and urban areas. Recent records showed that urban poverty levels were 7.1%, and poverty in rural areas was at 11.8%.

Indonesia’s Economy 

The sustained progress and success in the alleviation of poverty in Indonesia is rooted in the strong economic growth of the country. Indonesia is the largest economy in Southeast Asia and has an abundance of natural resources such as nickel, palm oil and rubber. Additionally, Indonesia’s burgeoning tourism and manufacturing sectors contribute significantly to the country’s GDP and are vital in helping to attract foreign investment. Over the past three years, Indonesian manufactured exports of footwear have risen by 67%. 

Challenges to Poverty Alleviation 

The fight against poverty in Indonesia appears to be improving. However, upon closer inspection, the economic vulnerability and precarious circumstances that millions of Indonesians experience becomes apparent.

More than 40% of Indonesians remain economically insecure, while a further 25 million are classified as poor and survive on less than $36 each month. Moreover, critics have attributed the recent progression in the rates of poverty alleviation to social assistance, in the form of cash payments and staple food disbursements. Critics argue that this is a short-term solution that fails to address the underlying causes of poverty.

The dispersed nature of the Indonesian population makes the proliferation of equality and opportunity challenging. It is recognized that empowering rural communities is essential to further reduce poverty rates. Consequently, the government has introduced a series of economic investment packages to promote and incentivize additional business activities outside of agriculture.

Education 

An improvement in the accessibility and quality of education is central to reducing poverty in Indonesia. Education helps to break the perpetual cycle of poverty by removing the barriers to social mobility and improving economic opportunity. Through education, a person is more likely to gain formal employment and subsequently earn a higher wage.

Over the past two decades, the education system in Indonesia has been subject to several major reforms, including a constitutional mandate to allocate 20% of the national budget for education. Additionally, many practical solutions have been enacted, such as consulting with business leaders to help shape the school curriculum in accordance with the relevant demands of the job market.

Overall, the accessibility and quality of education in Indonesia has steadily increased, reached gender parity and created enhanced employment prospects. However, enrolment in secondary education remains limited in some rural areas.

Food Security 

Indonesia is ranked 77/125 in the Global Hunger Index and remains vulnerable to food insecurity. In 2023, the World Food Programme (WFP) declared the levels of malnutrition across Indonesia as concerning, as around 23 million people were unable to meet their dietary needs. Additionally, the geographical location of Indonesia increases its susceptibility to natural disasters, potentially further jeopardizing food security and leading to fluctuations in food prices.

In January 2025, a new food program launched across Indonesia. The government initiative aims to help combat widespread malnutrition by providing free nutritious meals to more than 80 million people by 2029. The program has found initial success and delivered around 500,000 meals on the first day.  Indonesian President Prabowo Subianto has backed the program, although critics have questioned its sustainability, due to logistical and financial constraints.

Looking to the Future 

For the 100th anniversary of Indonesia, former President Joko Widodo created the Golden Indonesia 2045 Vision. As part of this ambitious development plan and drive to become a leading global power, Indonesia has pledged to reduce poverty to almost zero.

Indonesia’s success in reducing poverty is encouraging. Its flourishing economy and improvements in education have provided millions with the opportunity to attain higher-paid employment and break free from the cycle of poverty. However, as Indonesia enters a critical transitionary period, it is pertinent that the millions still enduring poverty and inequality are not overlooked. Empowering the most vulnerable and marginalized sections of society remains vital in alleviating inequality and poverty in Indonesia in the future.

– Ollie Roberts

Ollie is based in the UK and focuses on Good News and Politics for The Borgen Project.

Photo: Flickr