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The New Poverty and Inclusive Growth Agenda in Indonesia (Presentation)
The New Poverty and Inclusive Growth Agenda in Indonesia (Presentation)
Arianto A. Patunru (LPEM FEUI) T.M Zakir Machmud (LPEM FEUI) Ari A. Perdana (TNP2K)
Constantly declining trend number of the poor, however still rather high, 13%
- Majority of the poor are very sensitive to the poverty line - Non-income poverty is as serious as income poverty problem - Rural Urban, KBI KTI disparities in poverty is substantial. - Most poor people engage in agriculture
Slow decline in unemployment rate, 7% since 2006 Gini ratio tend to increase slightly, 0.376
Gini Coefficient
0.415 (2005) 0.368 (2005) 0.376 (2007) 0.326 (2002) 0.442 (2007) 0.379 (2004) 0.440 (2006) 0.425 (2004) 0.378 (2006)
Poverty in Indonesia
Million People 60 HCR (%) 45 40 50 35 40 30 25 30 20 20 15 10 10 5 76 78 80 81 84 87 90 93 96 98 99 00 01 02 03 04 05 06 07 08 09 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 10
HCR
Source BPS
Source: BPS, Resosudarmo and Yusuf 2009 Note: per capita income in Rp 000 (2008 price)
Unemployment Indonesia
Million People % 12 14 12 10 8 6 4 2 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 10
11 10 9 8 7 6 5 4 3 2 1 -
Unemployment Rate
Source BPS
Inequality Indonesia
Income Distribution (%) 50 45 40 0.30 35 30 25 20 15 0.10 10 5 1980 1981 1984 1987 1990 1993 1999 2002 2003 2004 2005 2006 2007 2008 2009
0.05 -
Source BPS
Simply put, growth for everybody. The benefit of economic growth should not be enjoyed only by the rich, but also by the poor Still driven by sustainable economic growth, but pay more attention on equality of opportunity in terms of access Focus more productive employment rather than direct income redistribution as means to assist the poor
MSME as Channel
Absorb over more than 95% of total work force Account for more than 97% of total firm establishment Contribute for about 55% of total national output (GDP) Cover about 53% of total Investment Supply approximately 16% of total Export
Sectoral engagement: agriculture sector (52%), followed by trade hotel and restaurant (28%) and manufacturing (7%) Located widely scattered in rural areas Typical MSME problems > lack of capital > lack of knowledge and skills > lack of productive assets > lack of market access
MSME Definition
Fixed assets Micro enterprises Small enterprises Medium enterprises Less than IDR 50 million IDR 50-500 million, excl land and building IDR 500 million to IDR 10 billion, excl land and building
Source UU no.20/2008
Annual sales Less than IDR 300 million IDR 300 million to IDR 2.5 billion IDR 2.5 billion to IDR 50 billion
Broadly refers to financing system that is accessible without exception, including the poor/less capitalized MSME The existing formal financial system is largely dominated by banks and cater only to less than 50% of the population Supply and Demand for credit is still mainly through banking and cater large corporate credit.
Singapore 11
Malaysia 11
Philippines 12
India 10
14 13
50 2,901
54 31
14 28
7 19
to develop a financial system accessible by all segment of the society so as to promote economic growth and to eradicate poverty (Perdana 2011)
interest subsidy to small enterprises, indigenous (pribumi) for investment and working capital purposes
Recent Initiatives
Stratification of poverty alleviation program for better coordination, based on Inpres no.13/2009. Stratifies the program into 3 clusters.
CLUSTER STRATIFICATION
CLUSTER I. Household-targeted social assistance
Target: 19,1 million poor household Programs: Raskin, BLT, PKH, Jamkesmas, scholarships
Source: Bappenas
To help implement all of the above, GOI establishes a special team called National Team for Acceleration of Poverty Reduction (TNP2K) that is under direct supervision of the Vice president (Inpres no.3/2010)
Heavily concentrated on trading sector Implementing banks deliver mostly in traditional market high turn over Agriculture, fishery, forestry, cultivation is still perceived as high risk sectors
1%
1% 3%
16%
6%
0% 2% 2% 0%
Trading sector
69%
Policy Implications
Better policy management, coordination and implementation across agencies at central government level, between central and local governments, as well as between government and other stakeholders Participation from stakeholders other than government must be encouraged through innovative policies that allow for multi-party partnership
Policy Implications
Policies on MSME development should carefully take into account variation in characteristics of the enterprises (e.g. size, sector, region specific) Improvement in policy monitoring and evaluation is crucial
Thank you