Indonesia’s Informal Economy 
Indonesia’s informal economy has been a significant contributor to its economic growth and is also an important source of employment for many of its poorest citizens. It is estimated that around 57% of the Indonesian workforce works in the informal sector and that it accounts for roughly one-quarter of the country’s GDP. However, low wages, poor working conditions and a lack of social protections often characterize the informal economy, making it difficult for workers to escape poverty.

Microfinance in Indonesia

One of the key challenges facing Indonesia’s informal economy is a lack of access to finance and other forms of support. Many of the country’s informal businesses are unable to access traditional sources of finance (such as bank loans) due to a lack of collateral or credit history. This inhibits these businesses’ growth and makes it harder for their workers to escape poverty. Furthermore, “only around 22% of Indonesian citizens are connected to formal financial institutions,” according to the Financial Services Authority (OJK).

To address this, the Indonesian government has implemented several initiatives aimed at supporting informal businesses and workers. For example, the government has established Microfinance Institutions (MFIs) that provide access to finance for informal businesses. These MFIs play a crucial role in promoting economic development, providing small loans, savings accounts and other financial services to low-income individuals and small businesses that may not have access to traditional banking services.

MFIs bridge the financial inclusion gap by providing access to credit and other financial tools that can help individuals and businesses to grow and thrive. By supporting entrepreneurship and economic activity, MFIs help to create jobs and stimulate local economies, which can in turn reduce poverty and increase prosperity. In Indonesia, the OJK regulates MFIs and requires them to adhere to strict standards to protect clients’ interests.

Upgrading Skills

The government has also implemented various schemes to upgrade the knowledge and skills of workers to improve their employability and competitiveness in the job market.

One such initiative is the Manpower Competence Development program, which provides funding for workers to participate in training and education programs. The program targets workers in the informal sector, as well as those in small and medium-sized enterprises (SMEs), aiming to help them improve their productivity and performance.

The government also supports the development of vocational training centers and polytechnics, which provide practical, hands-on education in a variety of technical and professional fields. By investing in the education and training of its workforce, Indonesia’s government is helping to build a more skilled and capable labor force, which will contribute to the overall development and prosperity of the country.

Hazardous Working Conditions

Due to the lack of regulations and protections in this sector, workers in Indonesia’s informal economy often face hazardous conditions. Many are employed in dangerous industries such as construction, mining and manufacturing, where they are exposed to risks such as accidents, injuries and occupational diseases.

Informal workers are also more vulnerable to exploitation and abuse by employers, who may not provide adequate safety equipment or training and may ignore safety standards to cut costs. In addition, informal workers often lack access to health care and other social protections, making it difficult for them to seek treatment or compensation when they experience injuries on the job.

One approach to remedying this situation is for the government to increase regulation and oversight of working conditions in this sector. This can include establishing and enforcing safety standards, as well as providing resources and support to help informal businesses comply with these standards. Alternatively, the Indonesian government could attempt to increase the availability of affordable safety training and equipment for informal workers. This would help workers to protect themselves and their colleagues from potential hazards on the job.

In addition, ongoing U.S. Department of Labour efforts to educate informal workers about their rights and how to advocate for better working conditions could be bolstered. This can include providing information about available resources and support, as well as helping workers to organize and speak out for change.

Conclusion

While Indonesia’s informal economy plays an important role in the country’s economic growth, it is also a source of low-wage, unsafe, insecure employment that traps workers in a cycle of poverty. To truly address poverty in Indonesia, the government must support informal businesses and workers, ensuring that they can participate in and benefit from Indonesia’s economic growth as well as the country’s elites.

– Thomas Everill
Photo: Unsplash

Floating Solar Farms
Indonesia, a Southeast Asian island nation, has developed significantly in recent years. As the government of Indonesia seeks a more prosperous life for its citizens, the demand for energy increases. Indonesia is becoming a key global economic player, not only a member of G20, the international organization which addresses major issues related to the global economy, but it also has the largest economy in Southeast Asia. However, with higher standards of living, Indonesian energy supplies are at their limits.

Developments in renewable energy technologies could provide a solution. Indonesia consists of more than 10,000 islands and huge parts of the country are simply oceans. Recent developments in floating solar farms could provide the perfect solution to Indonesia’s growing energy crisis.

Floating Solar Farms

New companies such as Ocean Sun and SolarDuck are developing floating solar farms which enable solar panels to sit on top of the water, generating electricity, while remaining afloat without taking up valuable land space, BBC reports.

The technology relies on the ability to create a floating solar panel that is robust enough to withstand ocean movement. For example, Ocean Sun creates its floating solar farms using modified silicone solar photovoltaic (PV) modules attached to a flexible membrane that floats on the ocean surface. As the panels sit very close to the surface of the ocean, people cannot view them from the shore.
>Floating solar panels could offer a renewable energy solution for numerous countries. Not only is land incredibly valuable for building, but many people feel that solar panels are unsightly and do not wish to see them in their daily lives. However, placing them far out at sea alleviates many of these problems. Given the vast ocean area which makes up Indonesia, investing in floating solar farms could offer an innovative solution.

Indonesian Energy Needs

Nearly all of the Indonesian population now has access to electricity however, what constitutes access is, by Western standards, relatively low. “Access to electricity” translates to access to basic lighting and the ability to charge a phone or power a small radio for four hours. Despite many people having access to electricity, countless on Indonesia’s islands are still not connected to the grid at all, meaning that more than a million people have to go to great lengths to gain electrical connection, BBC reports.
As the country develops and people desire the kinds of electrical devices which surround us every day in Europe and America, the amount of energy that the government must provide continues to grow. In Indonesia, energy use per capita is at just over 8,000 kWh per year. Whereas in the U.K. usage per capita is almost 30,000 kWh and in the U.S. almost 77,000 kWh, according to Our World in Data.

Innovation in Indonesian Energy

Indonesia is still hugely reliant on fossil fuels in order to produce electricity, a finite and ever-decreasing resource. Currently, only 18.66% of electricity production in Indonesia came from renewable resources in 2021.

The ocean space available in Indonesia offers a huge opportunity for renewable energy generation, whether through floating solar farms or other forms of generation. As Indonesia makes exciting strides, economically and politically, and the life of Indonesian people improves, new forms of electricity generation could create an even greater future for Indonesian citizens.

– Florence Jones
Photo: Flickr

Earthquake in Indonesia
On November 21, 2022, a 5.6 magnitude earthquake hit the Cianjur region, located on the west coast of Indonesia’s Java Island. The earthquake was particularly deadly with a shallow epicenter of 6.2 miles deep. Records showed a minimum of 140 aftershocks by November 23. Search and rescue attempts have occurred so that people can locate their loved ones. This is an earthquake that will undoubtedly have an immense effect on poverty for Indonesia already has 9.5% of its population living in poverty as of March 2022. This article will be laying out what the effects of the earthquake in Indonesia are presently and will be in the future as well as the initiatives already in place to help mitigate the damage.

The Damage

As a result of the earthquake in Indonesia, more than 73,800 people have experienced displacement due to the destruction of more than 22,000 buildings. Many of the people displaced have been moved to shelters, providing temporary medical assistance, food, water and a place to stay. On the other hand, some are staying outside near their homes as they look for missing loved ones. The earthquake damaged 63,219 houses in Cianjur, and of that number, the earthquake seriously damaged 26,237. Due to this, citizens will not have a secure place to call home nor have a stable income with unemployment since the earthquake destroyed workplaces or caused injuries.

Furthermore, children have accounted for a third of the approximate 310 killed. Many children were in lessons when the earthquake hit leading to questions about the best way to reconstruct schools so they can withstand earthquakes. University of Indonesia Engineering professor Widjojo Prakoso stated that “School buildings should get special attention because they are not only supposed to withstand earthquakes, but they should also act as temporary shelter during disasters.” Indonesia’s biggest challenge regarding education has been to improve quality instead of access, with the Indonesian Government hoping to develop a world-class education system by 2025. However, the Indonesia earthquake is likely to halt, or at least delay these efforts. The earthquake damaged 142 school buildings, resulting in the need for repairs so that people can access them.

The Impact of the Earthquake on Poverty

A natural disaster as severe as the Indonesia earthquake will undoubtedly have a long-term impact on poverty in the country. As aforementioned, poverty is at 9.5% based on the national poverty line, which means that a significant proportion of the country lives in impoverished circumstances. Indonesia’s location as a hotspot for natural disasters has an impact on poverty as infrastructure is very difficult to build and maintain. This earthquake will add to the already high amounts of economic pressure facing the country.

Places that are more economically stable are able to prepare and build infrastructure according to their geography in relation to vulnerability to natural hazards, but for nations such as Indonesia, this proves to be harder. Indonesian President Joko Widodo has committed to ensuring that all damaged homes are rebuilt so they are earthquake-resistant. However, considering that 43% of Indonesia’s population live in rural areas and in poorly constructed homes, this is a huge feat to tackle. 

The earthquake has affected stability, both economically and mentally. Yayasan CARE Peduli Humanitarian and Emergency Response Manager Renee Manoppo stated that “The community remains traumatized and fearful of reentering their homes – they will require a lot of support in the coming weeks, months and years.” 

Initiatives to Help

Victims of the Indonesia earthquake are already experiencing help through the implementation of numerous emergency funds, deployment of emergency response teams and the provision of resources. It has been proven time and time again that help from external nations at a time of crisis is vital in a country’s recovery and the need for this help is even more prominent in developing nations. Emergency funds collect donations to help damaged communities rebuild and recover. Immediate needs require monetary support from organizations for things such as medical supplies, food, water, tents and other temporary shelters, fuel and personnel. In order to help the rescue efforts, the Indonesian Red Cross has already mobilized items including 13 personnel, 800 hygiene kits, 20,000 medical masks and 300 mattresses 

Looking Ahead

The earthquake in Indonesia will likely have long-term effects. However, it is the above efforts that will help them along this long road to recovery.

Ruby Wallace
Photo: Flickr

Indonesia’s economy
Indonesia’s economy was a part of the “fragile five” emerging economies according to U.S. investment bank Morgan Stanley in 2013. Experts considered it to be the most vulnerable to any jumps in U.S. interest rates. However, Indonesia has remained surprisingly stable a decade later as U.S. interest rates have risen rapidly and a global energy, food and climate crisis are happening. With a booming economy and a stable political arena, Indonesia’s currency is currently performing the best in Asia. In addition, the country’s stock market is hitting record highs. As other countries in the region struggle to keep afloat, Indonesia prospers due to unique circumstances.

Indonesia’s Economy in 2022

The southeast Asian country, with a population of around 276 million, is extremely resource-rich. It has undergone impressive economic growth ever since the 1990s Asian financial crisis. According to the World Bank, Indonesia is not just the largest economy in the South-East Asian region but is also the 10th largest economy globally in terms of purchasing power parity. Since 1999, Indonesia has cut poverty rates by more than half to about 10% prior to COVID-19.

The COVID-19 pandemic caused a slight halt in the progress of Indonesia’s economy. For example, poverty rates rose from 9.2% in September 2019 to 9.7% in September 2021. Estimates indicated that the GDP growth of the country was 5.1% in 2022 as Indonesia recovers from COVID-19’s impact. One of the most significant impacts the pandemic had was on children’s learning capabilities. The pandemic resulted in the closing down of schools and could result in the stunting rate of the country increasing.

However, as of September 2022, Indonesia sees unprecedented growth and stability. The country has one of the lowest inflation rates in the world at 4.7% in August 2022, and the country’s GDP has expanded to 5.4%, much more than the amount that was estimated. With exports also increasing to 30.2%, the highest they have been on record, Indonesia’s economy stands in stark contrast to other countries in the region that have struggled with COVID-19’s impact.

Reasons for Indonesia’s Prosperity

One can credit the success of Indonesia’s economy to multiple factors:

  • Political Stability: A large part of Indonesia’s success lies with President Joko Widodo. He has remained popular with the population as well as investors for eight years. A poll that Indikator Politik conducted this month showed his approval rating to be 62.6%, a 10% drop from May 2022, but still significant to show his immense support in the country. With Widodo also hosting the G20 summit in Bali in November 2022, his popularity has kept investors interested in the country’s future.
  • Low Inflation Rates: In comparison to many neighboring countries, Indonesia’s inflation rates have remained consistently low. Combined with interest rates raised for the first time in three years to 3.75%, there have not been major shocks to the system for Indonesians. Although exports are quite high, other factors have also had a significant impact. For example, Widodo’s “omnibus law” aimed at job creation by reducing employment regulations.
  • Indonesia’s Nickel Reserves: With one of the biggest reserves of nickel in the world, Indonesia stands at an advantage, particularly in the electric vehicle industry. The country will likely provide a significant chunk of the nickel supply that the global electric vehicles industry requires going forward. This will also further help the exports of the country.

Concerns for the Future

While Indonesia’s economy has remained stable, there are some concerns for the coming years. While the economy’s stability is not causing concern, the political factors are. Widodo’s lack of a clear candidate combined with the recent drop in his popularity due to cuts in fuel subsidies has raised concerns. Moreover, the country’s main commodity exports like coal are still a huge driving force behind the economy. Additionally, future commodity prices should drop. Many also predict an increase in inflation by October.

Despite such concerns, Indonesia has shown to be invulnerable to shocks like the COVID-19 pandemic and continues to outperform other countries in the region.

– Umaima Munir
Photo: Unsplash

Healthcare in Indonesia
The COVID-19 pandemic drew attention to the spread of airborne diseases and the vulnerability of the human population, but in everyday lives, another form of disease continues to haunt humans. These are non-communicable diseases (NCDs), which are typically long-lasting and do not have a specific cause. The most common NCDs are cardiovascular and respiratory diseases, cancer and diabetes. The cause of death for individuals around the globe remains NCDs in 71% of all cases, an alarming statistic that becomes more apparent considering most of these deaths are premature. Of those dying from NCDs, 85% are located in “low- and middle-income countries.” The prevalence of these types of diseases in Indonesia and other countries harms specifically those living in poverty. Among numerous other challenges in their daily lives, people do not have the resources for medical treatment or must utilize all of their remaining resources for treatments. The prevention of NCDs prevails as an important policy goal to implement in the fight against decreasing the number of deaths associated with NCDs and reducing poverty.

Non-Communicable Diseases in Indonesia

Located in Southeast Asia and consisting of numerous islands, Indonesia boasts a tropical climate. Indonesia is one of the most populous countries in the world, behind China, India and the United States. The demographics of the population are young with 42% under the age of 25. About 10% of the population lives in poverty.

With the COVID-19 pandemic bringing into focus some of the pre-existing health conditions that remain health risks when contracting the virus, it is important to address the concerns of high rates of NCDs and improve health care in Indonesia. According to the World Bank, NCDs caused 76% of deaths in Indonesia in 2019, a number that continues to rise over time. This is above the rate of 71% of deaths that NCDs have caused in the world, meaning that people must pay close attention to the risks of NCDs within this population.

Project Hope

In 1958, a Navy veteran, Dr. William B. Walsh founded an organization called Project Hope. His service in World War II inspired him to address health concerns that he encountered during wartime. The organization’s work started on a restored ship called SS Hope which delivered healthcare around the world, especially during the Cold War. Now, Project Hope operates by training the local medical community of volunteers in more than 20 countries. Over its 60 years of service, the organization trained more than 2 million individuals and delivered $2 billion in resources to communities in need.

To respond to the problem of NCDs in Indonesia, Project Hope assists with diagnosis and education about the issue, even utilizing remote training during the COVID-19 pandemic with a partnership with Brown University. The organization works especially hard on the ability to diagnose patients because it predicts many cases of NCDs remain undiagnosed. This realization is relevant because it assists in knowing how to respond and treat diseases within the population, the ability to prevent certain diseases and asserting control over diseases rather than simply reacting to emergencies involving one’s NCD. The organization educates doctors on diabetes and delves into issues related to asthma by training medical professionals and providing information on the detention of asthma. Project Hope helped more than 11,000 people seek treatment for their diseases, transforming the field of health care in Indonesia.

Project Hope’s Larger Impact

Apart from its work in NCDs, Project Hope also assists in other areas of health care in Indonesia. The organization works to address the deaths of mothers and infants, which largely occur in live births and due to malnutrition, respectively. Through health programs for mothers and children and “monthly wellness clinics,” local communities work together to address maternal and child health. Similarly, Project Hope responds to disasters within the region. For example, after the tsunami in Sulawesi in 2018, Project Hope assisted in providing insecticide to prevent malaria, providing water through new purification systems and checking for NCDs in the population.

The range of work that Project Hope completes in health care in Indonesia is broad but equally important. Through its main project of addressing NCDs in the region, improving maternal and child care and emergency response, the organization continues to make a large impact on the region after more than 60 years.

– Kaylee Messick
Photo: Flickr

combating-sexual-violence-against-women-in-indonesiaWomen in Indonesia stand as a key population for economic growth and development in Indonesia. Yet, the rights of women do not receive sufficient protection. A 2019 survey conducted by ValueChampion ranked Indonesia as the most dangerous nation for women in the ASEAN region. Regardless of women’s pivotal roles in the Indonesian economy, cultural and societal constructs of the “ideal woman,” along with gender roles, contributes to the disempowerment of women and the prevalence of structural sexual violence against them. For this reason, combating sexual violence against women in Indonesia is imperative.

Perception of Sexual Violence against Women in Indonesia

The long-standing gender norms and biases against women in Indonesia have limited women’s rights and opportunities. Furthermore, due to a conservative culture and societal stigma that considers the victim a disgrace to the family, women are reluctant to report sexual assaults.

In West Java province specifically, in 2021, the reported cases of violence against women stood highest at 58,395 cases. In 2022, Indonesia’s Commission on Violence Against Women reports that a minimum of three women in Indonesia endure sexual violence every two hours.

A study published in 2021 involving an Islamic Higher Education Institution in West Java highlights the prevalence of sexual violence against women in higher education institutions. Out of 333 female respondents, including students, employees and lecturers, 27.5% of respondents had faced verbal sexual violence and 13.8% had faced physical sexual violence.

Also, the research results found that some of the female respondents incorrectly understood the issue of sexual violence, even “positioning victims or survivors as the ones who were responsible for any sexual violence incidents.”

The Impact of COVID-19 on Women

With the onset of the COVID-19 pandemic, violence against women increased in Indonesia and across the world. For instance, the number of violence cases reported to the National Commission on Violence against Women doubled amid the pandemic. By October 2021, the National Commission on Violence Against Women (Komnas Perempuan) received more than 4,200 complaints in comparison to the total complaints of 2,389 for the entirety of 2020.

Also, according to data from the Indonesian Ministry of Women’s Empowerment and Child Protection, there were almost 5,000 more cases of sexual violence in Indonesia in 2021 than in 2020.

According to a study in 2020, there is a strong correlation between the COVID-19 pandemic and the growth of domestic violence. The growth of domestic violence was likely driven by the increase of stress associated with the continuous lockdowns, health risks and economic instability within the households.

Furthermore, “Indonesian women carry the burden of unpaid work, including caregiving, due to persistent gender inequality in Indonesian society and segregation in the labor market.” The pandemic has only exacerbated this situation.

Legislative Approach to Sexual Violence against Women

On April 12, 2022, the Indonesian parliament passed the Sexual Violence Bill a decade after its first introduction in 2012. For years, Muslim conservative groups opposed the bill arguing that ” it contravenes religious and cultural values.” The eventual passing of the law came about as women’s rights groups highlighted several cases of sexual violence, arguing that this equates to a “state of emergency.”

The sexual abuse case regarding an educator raping 13 students (aged 13 to 20) at an Islamic boarding school in West Java drew the attention of President Joko Widodo. The president then called on the Indonesian parliament to accelerate deliberations on the Sexual Violence Bill.

The sexual violence bill broadens the legal framework for the victims of sexual violence and imposes harsher punishments. The new law covers nine forms of sexual violence, “physical and non-physical sexual abuse, forced contraception, forced sterilization, forced marriage, sexual torture, sexual exploitation, sexual slavery and sexual abuse through electronic contexts.”

The law also grants victims of sexual violence restitutions and adequate counseling. In terms of sexual criminal cases, the new law allows “one item of evidence to be submitted in addition to the testimony of the victims.” Prior to this Sexual Violence Bill, the court required two items of evidence. The establishment of this new law prioritizes the victim’s testimony.

Future of Women’s Rights in Indonesia

Although the Indonesian Parliament passed the Sexual Violence Bill, women’s rights activists are raising concerns about its implementation. On May 19, 2022, Nuril Qomariyah, who played a key role in promoting the Sexual Violence Bill, noted during an interview with CIVICUS, “We will need to keep moving together to ensure a successful process of implementation.”

In comparison to other nations in Asia, “Indonesia has ratified and adopted most of the international human rights instruments and global commitments related to human rights and women. “The recent passing of the Sexual Violence Bill proves the power of women’s rights activists and NGOs. But, the nation must implement this new law in order to uphold women’s rights and reduce the number of sexual violence cases against women in Indonesia.

Youngwook Chun
Photo: Flickr

Mangrove Conservation in Indonesia
Mangroves grow in salty water and thrive in conditions that most timbers cannot tolerate. The Indonesian government has set up a goal of rehabilitating 600,000 hectares (1.5 million acres) of mangroves by 2024. In 2021, the country had 10.1% of its population living below the national poverty line. Mangrove conservation in Indonesia plays an important role in improving the ecosystem as well as the economy.

Benefits of Mangrove Planting

Mangroves have several environmental benefits. These trees or shrubs provide habitats for different species such as fish, birds, reptiles and mollusks. Mangroves also act as shelters for hatchlings, providing both nutrition and safety.

In 2012, USAID and the Indonesian NGO Yayasan Gajah Sumatera (Yagasu) worked with Rusli, a local fisherman in Paluh Kurau in Langkat, North Sumatra, Indonesia, along with other fishermen. The aim was to create a “community-based mangrove forest restoration effort” and then research the ways coastal villages can derive advantages from mangroves.

Research indicates that mangroves can reduce poverty by generating income. Based on the data from USAID, coastal communities experienced a growth in income by 60% from 2009 to 2016 by means of conserving mangroves. The mangrove planting has led to an increase in the production of other species as well: “[seven] to 12 tons of crab, [three] to [five] tons of shrimp and 500 to 700 tons of fish per week.”

Mangroves provide natural resources to create products that individuals can later sell in the market. Individuals can use the branches and roots of mangroves for the natural coloring of fabrics. With these fabrics, locals can produce dresses and shirts. Furthermore, the fruits from mangroves “can be processed into flour” for baking.

Empowering Indonesian Women

A group of women from Tanjung Rejo and neighboring villages started utilizing natural coloring to create batik fabric and clothing. Yagasu and USAID assisted these women in establishing a business and gave training in “management, design technique and quality control.” Eventually, Yagasu, in partnership with the Livelihoods Fund, flew these women to an exhibition in Paris, France, to display their products. Purchasers for the luxury goods company Hermès liked the women’s colorful designs and signed a contract with the women to provide the company with “high-quality mangrove-colored fabrics.”

In 2014, Hamidah, a housewife in Tanjung Rejo, received USAID training to create batik material and food products using mangroves. She also received business management training to advance her small business and increase her family’s income while helping other community members to increase their business skills too.

MONMANG App for Monitoring Mangroves

The country of Indonesia has the largest mangrove ecosystem globally, with more than 3.5 million hectares of mangroves, which equates to about 23% of the world’s mangrove ecosystem.

The Indonesian Institute of Sciences (LIPI) developed the MONMANG smartphone app to monitor and track mangroves in Indonesia. Through monitoring via the app, data is collected, which researchers can then use to create a Mangrove Health Index (MHI).

The app can be used to “perform data input and analysis directly from the field site while monitoring mangroves.” In addition, the app “provides structural parameters of mangrove communities, such as density, morphological size, frequency [and] dominance.”

The data that MONMANG provided will help to ensure the process of mangrove conservation in Indonesia is on the right track. Therefore, the advent of this android-based app will ensure social and economic stability for communities relying on and living close to mangrove ecosystems. MONMANG plays an imperative role in protecting the coastal environment by collecting and summarizing thousands of data points to inform local and international research on mangroves.

Looking Ahead

Mangrove planting improves the living conditions in Indonesia by reducing poverty and providing natural resources. As the mangrove conservation in Indonesia continues, the nation will reach its 2024 rehabilitation goal and continue exploring the benefits mangroves can bring to the community.

– Jiaying Guo
Photo: Flickr

Poverty Reduction in Indonesia
Indonesia is the world’s fourth most populated country, with growth expected to peak in 2065. Therefore, there will soon be a need to provide more food and job and market opportunities for Indonesia’s coming generations. It is imperative that poverty greatly reduce in order to meet these ends for Indonesia’s future population growth. While poverty reduction in Indonesia faces a myriad of challenges, there is also a pantheon of solutions to meeting this goal.

Poverty in Indonesia

Though Indonesia has a large population and is considered a middle-income country, most of the populace does not have adequate wealth. The richest four men in the country have more wealth than the poorest 100 million combined. This inequality, which includes gender inequality, brings great obstacles to improved infrastructure and economic stability for Indonesia’s future.

Impact of COVID-19

Indonesia had the second-highest number of COVID-19 cases in Southeast Asia (5.91 million), with the impact of the pandemic pushing nearly 5 million more people into poverty throughout Southeast Asia. This has complicated Indonesia’s goal of getting more people out of poverty alongside neighboring countries. The pandemic caused increased unemployment and lowered tourism rates across the region. However, Indonesia is still pressing forward with policy and economic changes to combat the pandemic’s ill effects.

Economic Change

Indonesia’s Finance Minister Sri Mulyani Indrawati is pushing for the World Bank to make major reforms in order to provide more investment into helping nations like Indonesia combat the effects of COVID-19 and climate change well into the future. Most notably, the desired change is the expansion of the forms of responses to monetary crises. These crises are issues ministers like Indrawati claim the World Bank is not currently equipped to handle. Indrawati also said that using mixed leverage of funds from multilateral funds, private investment and government revenue will help Indonesia and its blended finance in order to adequately cover the costs of combating its current issues and cementing institutions to help in future economic and health-related issues.

Environmental Change

Indonesia is a nation consisting of chains of flush forest islands and environmental diversity. This biodiversity has experienced deforestation in the past. The biodiversity is vital to reinforcing Indonesia’s natural infrastructure to counteract the effects of climate change and natural disasters. Therefore, Indonesia has recently experienced decreased deforestation and the integration of local indigenous groups into the maintenance of its forests. These efforts are ensuring natural resources and environments can aid poverty reduction in Indonesia. Efforts like the Green Growth Plan and the BioCarbon Fund Initiative for Sustainable Forest Landscapes are allowing more of the small impoverished communities, such as the Jambi province, to engage in new job and conservation opportunities, fortifying poverty reduction in Indonesia.

Indonesia’s Future

With Indonesia being one of the largest lending partners of the World Bank, there are plenty of opportunities and avenues for the development of future programs to reduce inequality and poverty. The World Bank notes that areas of gender, digitalization, improved infrastructure, human capital, natural asset management and environmental challenges will all be important factors in poverty reduction in Indonesia. However, if the World Bank makes reforms, alongside internal development and recovery, then Indonesia can eliminate poverty.

– Albert Vargas
Photo: Pixabay

Inequality in Indonesia
Over the past 20 years, the disparity between wealthy Indonesians and the rest of the population in Indonesia has increased exponentially. Special Staff of the Vice President of Indonesia, Bambang Widianto said at a 2021 guest lecture that Indonesia is the fourth most unequal country globally. According to Oxfam, “the four richest men in Indonesia have more wealth than the combined total of the [most impoverished] 100 million people.” This increase in inequality in Indonesia undermines the fight against poverty while slowing the nation’s economic growth.

How Inequality Affects Citizens

Inequality in Indonesia affects the nation’s inhabitants in many ways. Some groups including women face harsher impacts of inequality. Poverty impacts women disproportionately as does low wages and job insecurity. In terms of Indonesia’s Gini coefficient, “a measure of national consumption inequality,” the country notes an increase from 31.1 in 1999 to 38.2 in 2019. This means “income distribution has become much more unequal.” The Asian financial crisis brought impacts mostly affecting the wealthiest, however, “since 2003, Indonesia’s richest 20% have enjoyed much higher growth in incomes and consumption,” thus contributing to inequality in Indonesia. According to the Asian Development Bank (ADB), almost 10% of the nation lived below the national poverty line in 2020.

5 Facts About Inequality in Indonesia

  1. Geographic Disparities. Indonesia has a complex geographical setting as it comprises about 7,500 islands and more than 43% of the population lives in rural areas. In these areas, access to basic infrastructure and services, such as electricity or decent roads for transportation is rare. In addition, large corporations control some territories and their business activities contribute to increasing inequality by benefiting mostly the wealthy.
  2. Education Inequalities. The Indonesian education sector suffers from underfunding and there are many barriers to equal access, such as poverty. This is notable in secondary education where net secondary school enrollment rates stood at 78.7% in 2018 while the primary school net enrollment rate was 93% in the same year. Without a complete education, impoverished Indonesians cannot access higher-paying, skilled jobs to break cycles of poverty. In addition, children from wealthier families have the benefits of a high-quality private school education while others attend average schools with lower-quality education standards. Impoverished children are more likely to drop out of school because education in Indonesia is only free until Grade 9. These inequalities are notable within the job market: “High-salary, formal jobs for highly qualified workers on the one hand and informal, low-wage jobs requiring low skills on the other.” The Jakarta Post said that “unequal access to skills and rising wages for the skilled has increased wage inequality.”
  3. Economic Growth Inequalities. According to a 2016 article by The Jakarta Post based on World Bank findings, just 20% of Indonesians reaped the benefits of the country’s economic growth over the past decade. This means that the economic growth did not benefit 80% of the nation, equating to 205 million people.
  4. Children Face the Impacts of Inequality. Due to poverty stemming from inequality, inadequate nutrition means that 37% of Indonesian children endured stunting in 2016. Stunting impairs mental and cognitive development, increasing children’s struggles in attaining an education, which limits their skills and thus limits their chances of securing higher-paying jobs.
  5. The Family Hope Program (PKH). This program provides “conditional social assistance” to impoverished families in Indonesia. It began its operations in 2007 as an initiative of the Ministry of Social Affairs. The program’s assistance improves access to “basic social services in health, education, food and nutrition, care, assistance and other social protection.” In 2019, the Indonesian government provided 10 million households with conditional cash transfers worth $2.21 billion. The program allocated each household “a base benefit” of Rp 550,000 (Indonesian rupiah) with additional benefits “such as an additional Rp 2 million per annum” for every secondary school student in the household. In 2020, a study shows that the PKH program improved by 53% the school re-enrollment rates of unenrolled or drop-out students aged seven to 15 years old from beneficiary families. PKH also decreased by 48% “the number of children engaged in wage work.” In relation to health outcomes, “toddlers of recipient families are now 23% less likely to suffer from stunting.”

The Path Going Forward

There is a desire on the part of the Indonesian government to reduce inequality in Indonesia. President Jokowi’s administration made addressing inequality a priority during 2017. To further reduce inequality in Indonesia, a 2017 report by Oxfam indicates that “a living wage for all workers” is important as is ” increasing spending on public services” and raising the tax obligations of wealthy individuals and companies. With a commitment to reducing inequality in Indonesia, nationwide poverty can simultaneously reduce.

Ander Moreno
Photo: Flickr

Child Poverty in Indonesia
Young children between the ages of 0 and 14 made up almost 26% of the population in Indonesia in 2020. Moreover, according to UNICEF, about 2.1 million children endure child poverty in Indonesia in 2021. Taking a closer at the country’s circumstances of child poverty provides insight into the severity of the situation.

5 Facts About Child Poverty in Indonesia

  1. Secondary Education Completion Lags Behind. In Indonesia, the net primary school enrollment rate stood at 93% in 2018, however, in that same year, the net secondary school enrollment rate stood at 78%. The reason for this disparity stems from the fact that Indonesia offers free education only up until grade 9, meaning, the next three years of secondary education that follow are not free. This serves as a barrier to secondary school completion as many impoverished families cannot afford the costs. Additionally, some families suffer from such severe poverty that they require their children to work to add to the household income instead of going to school. Many parents also pull their daughters out of school to shoulder the burden of household responsibilities because they do not see girls’ education as valuable in comparison to boys’ education. In addition, in impoverished communities, child marriage is prevalent. Many families resort to taking their daughters out of school and pushing them into a child marriage to ease the economic burden on the family.
  2. Child Labor is Rife in Indonesia. In 2020, the number of child laborers in Indonesia equated to 1.17 million, with many working in agriculture. The prevalence of child labor stems from circumstances of poverty as well as a lack of access to education. Indonesia pledged to eradicate child labor by 2022, and although it has not fully achieved this goal, it has made significant progress. Between 2009 and 2018, Indonesia reduced the number of child laborers from 4 million to 2.9 million by improving access to quality education to prevent children from dropping out of school and engaging in labor. The nation also has a commitment to informing parents about the importance of children’s education.
  3. Child Marriage is Prevalent. Child marriage is more common in impoverished/rural communities. According to UNICEF, Indonesian girls from families “with the lowest levels of expenditure” are nearly “five times more likely” to enter a marriage or union before the age of 18. In addition, girls from rural Indonesia “are three times more likely to marry before age 18” in comparison to urban Indonesian girls. Over a span of 10 years, child marriage rates in Indonesia reduced by 3.5%, although this rate is still far from the goal of 8.74% for 2024. UNICEF also states that one in nine Indonesian girls enter into marriage before the age of 18, which equates to 375 girls marrying each day.
  4. Poverty Impacts Future Earnings. According to a study that the Asian Development Bank Institute published in September 2019, Indonesian children who grow up in circumstances of poverty are likely to earn less in their adulthood. The study says, “Our instrumental variables estimation shows that a child who lived in [an impoverished] family when aged between 8 and 17 years old suffers an 87% earnings penalty relative to a child who did not grow up in [an impoverished] family.”
  5. Save the Children Addresses Child Poverty in Indonesia. The global children’s organization has provided assistance to Indonesia’s impoverished children for more than 30 years. Save the Children has also provided emergency assistance for almost all of Indonesia’s natural disasters. When a severe earthquake and tsunami hit Sulawesi Island in Indonesia, Save the Children supplied water, shelter, hygiene supplies and healthcare to children and families. Emergency responders provided assistance to more than 70,000 affected children. Child sponsorship programs beginning in 2014 ensure children learn the knowledge and skills necessary for success and ensure the overall health and nutrition of children. All in all, Save the Children has provided more than 23,000 “[Indonesian] children with a healthy start in life” and “protected 45,079 children from harm” while supporting more than 11,000 families in meeting their children’s basic needs.

Looking Ahead

Although the situation of child poverty in Indonesia is improving, disparities remain. Geographical differences lead to inequalities between different regions, which directly affects the country’s children. The fact that the nation comprises 17,000 islands spanning about 3,200 miles makes it very difficult to assist all population groups. Regarding the nation’s economic development, since 2016, Indonesia maintained annual GDP growth of around 5% until the onset of the COVID-19 pandemic.

With ongoing efforts to reduce child poverty in Indonesia, impoverished Indonesian children can look to a brighter future.

– Ander Moreno
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