Indonesia after Economic Crisis: A Poverty Issues

Real per capita GDP rose four-fold between 1965-1995. with annual growth rate averaging 4.5% per year.

The poverty head count rate declined from over 40% in 1976 to just under 18% by 1996.

When economic crisis hit in the medio 1997, the GDP growth decreased to between 12-19% until 1999.

The economic crisis affected the poverty increasing to 27% between 1997 and late 1998. The increasing of rice price became an important factor because it share 20% of the poor budged share. While, the income of the non-poor was predicted decreasing to 20%.

The data in this study was obtained through IFLS (Indonesian Family Life Survey) conducting in 1997 and 2000. The total samples were 33,441 people in 1997 (15,770 people in urban areas) and 42,733 people in 2000 (20,732 people in urban area).

The FPI (food price index) since the economic crisis has increased 3 times, thus when the share of food is higher to the total expenditure for a certain areas there would be the economic crisis impact badly to the people in the area.

The share of food in the rural area is higher compare to the urban areas and it was predicted 56.3% in 1997 and 56.8% in 2000. The food expenditure for the poor is the highest (58,1% in 1997 and 57.6% in 2000). Thus we may say, the poor and the rural community particularly the non-food producer might have been theaten badly by the economic crisis. I should note that the rice was one of the most important food expenditure variable that used in this study inwhich at national level its share reached 13.8% in 1997 and 11.4% in 2000.

The other interesting finding of this study was the poverty number since and after the economic crisis. At national level, the poverty numbers reached 17.4% in 1997 became 15.5% in 2002. The poverty number in the urban area was 13.3% in 1997 became 11.6% in 2000, while in the rural area the number was higher to reached 20.1% in 1997 and 18.7% in 2000. The reseach also depicted ditail figures of individuals living in poverty propotion based on their ages in which the children was badly impacted by the crisis.

Based on those data, I would like to mentioned two points: first, there was a decreasing trend of the poverty at the national level or based on the area chategory and ages three years after crisis. The second, the movement FPI, as mentioned previously in point number 7, contribute positively to the movement of the poverty numbers. Thus, food will still become one of crucial issues in the current Indonesian development discourse.

Well, how about the current policy on new fuel price released 1 October last year? Recently, government also plan to make new policy on electric tarrif (TDL), how about this one? Is it also such energy crisis (particularly the oil) will give the same impact to the poverty as the economic crisis? The impact of such policy to the inflation might become the main key factor particularly to the particularly to the food price in which has determined as the key indicator to assess the poverty number. Let me to cite one simulation data published by Teguh Dartanto (click Inovasi Online) in which the policy on new fuel price on October 2005 increase the poverty number 1% or 2 million people (the intial number 16.25% based on BPS data). Thus, the oil crisis will also become the other important issues of the current Indonesian economic development.

How about the poverty of the community in the pesisir? Well, the poverty in the pesisir is not only corelated to those mentioned-issues but also link to the scarcity of the natural resources, let we say fishery resources. But, let me discusse about this matter next time with the spesific issues.