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Poverty rate at new low but greater severity, depth seen
Jakarta Post - July 20, 2016
The drop brings the figure close to President Joko "Jokowi" Widodo's 9 to 10 percent poverty rate target as stated in the 2016 state budget, but future efforts to reach the goal may be undermined by greater severity and depth of poverty.
The depth of poverty index rose to 1.94 in March this year, from 1.84 the last time BPS collected data in September last year. Meanwhile, severity of poverty increased to 0.52 in March this year from 0.51 in September last year.
"We presume that there has been an increase in either depth or severity of poverty in rural areas," BPS head Suryamin said, citing a higher poverty line in rural areas due to higher prices there caused by logistics issues.
While the overall poverty rate shows a downward trend – along with a declining poverty rate in urban areas – the rate in rural areas increased from 14.11 to 14.09 percent over the same period, compared with a 7.79 percent March poverty rate in urban areas from 8.22 percent in September.
The pace of poverty reduction in Indonesia is slowing, the Manila-based Asian Development Bank noted in an October 2015 paper. From 2006 to 2010, poverty incidence declined by 1.2 percent per year, but from 2011 to 2014, the rate of decline was just 0.5 percent per year.
"Increasing difficulty in reaching the remaining poor and rising disparity in economic growth have contributed to the slowdown," the paper, written by Priasto Aji, reads.
The monthly spending of someone considered "poor" in Indonesia – called the poverty line – is Rp 354,386 or below per person as of March this year, a 2.18 percent increase from September and 7.14 percent increase year-on-year (yoy).
Seventy percent of spending is accounted for by food items, primarily rice (21.55 percent in urban areas and 29.54 percent in rural areas), filtered clove cigarettes (9.08 percent in urban areas and 7.96 percent in rural areas) and eggs (3.66 percent in urban areas, 3.02 percent in rural areas).
Non-food-item spending of people below the poverty line includes housing (9.76 percent in urban areas, 7.56 percent in rural areas), electricity and fuel, which each account for less than 3 percent of below-poverty-line spending.
"In calculating the poverty line, the dominant factor is food prices. If the poverty line increases, it shows that the situation is worse," Bank Mandiri chief of economist Anton Gunawan said.
While the poverty line has risen, Anton said stable consumer prices contributed to the lower poverty rate, as the government was now implementing "more relaxed" import policies to tame prices.
Consumer prices rose 4.45 percent in March yoy, with food materials surging 9.09 percent and processed food and beverages – including cigarettes – rising 6.2 percent.
These figures raise skepticism about the BPS poverty data, said Institute for Development of Economics and Finance (Indef) executive director Enny Sri Hartati.
She questioned the poverty line figure released by BPS, saying that a poverty line rise of around Rp 10,000 (76 US Cent) between September 2015 to March (2.7 percent) does not reflect real conditions, which are closer to a Rp 15,000 increase.
"It just doesn't make sense. If the poverty line is not realistic, the decline in the poverty rate is also not realistic and does not reflect real conditions in society," said Enny, questioning if the poverty line rise accommodated the maximum consumption of 2,100 kilocalories that make a person considered poor. (vps/est)
Source: http://www.thejakartapost.com/news/2016/07/20/poverty-rate-new-low-greater-severity-depth-seen.html.
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