Indonesia is the world’s third most populous democracy, and its people are spread out among thousands of islands in the Indian ocean. The country’s unique geography and turbulent history have made poverty reduction a challenge. However, Indonesia has made strides in addressing poverty thanks to strong economic growth and concentrated poverty alleviation legislation.
- Poverty in Indonesia is both urban and rural, which makes reduction efforts by the government and international groups a uniquely challenging problem. Furthermore, due to Indonesia’s geography, natural disasters are a much more costly threat than in other nations, and they disproportionally affect poor people.
- Poverty reduction in Indonesia has been very effective in the 21st century. Approximately 11 percent of the population lives in poverty, a more than 50 percent reduction since 1999. Between 2006 and 2013, 10 million people climbed out of poverty in Indonesia.
- Despite the clear downward trend in poverty numbers, according to Indonesia Investments, “the Indonesian government applies rather easy terms and conditions regarding the definition of the poverty line, resulting in a more positive picture than reality.” As a result, Indonesia has a high population of people who are “near poor,” or in danger of falling into extreme poverty in an economic downturn.
- In recent years, however, the economy of Indonesia has been performing very well. Indonesia has the largest economy in Southeast Asia and the 16th largest in the world. The Indonesian economy has seen steady annual growth rates of between four and six percent annually since 2004. Furthermore, the unemployment rate is very low, recorded at just 5.5 percent in 2015.
- There has been a recent uptick in public spending by the government to improve public services in the country. The Indonesian government now invests about $30 million every year in its five major poverty reduction programs. The government has also been increasing its loan allocations in order to help small businesses.
- The country has a positive growth outlook for coming years. The Indonesian government has shown its commitment to fiscal reforms to increase foreign investment, and economic growth is expected to increase in coming years.
Despite the challenges that Indonesia faces, the last 15 years of economic growth and poverty reduction are encouraging for the future.
– John English