Poverty Rate Indonesia Falls to Historic Low, Inequality Eases
According to the latest data from Indonesia’s Central Statistics Agency (BPS), poverty in Indonesia has fallen to a historic low. BPS provides an update on the country’s poverty statistics twice per year, covering the state of poverty in the months of March and September. On 16 July 2018 the agency, which is a non-ministerial government institution, released the March 2018 data. And these data showed a welcome surprise.
In March 2018 the number of Indonesians who lived below the national poverty line amounted to 25.95 million, down from 26.58 million people in September 2017. Although it is still a very big number there is something positive to mention here. The number (25.95 million poor people) equals 9.82 percent of the total population and that is actually a great development because for the first time in history Indonesia’s relative poverty rate is in the single digits.
However, it is worth taking a closer look at the methodology that is used by BPS. We actually believe that the true state of poverty in Indonesia is worse than is portrayed by BPS.
Regarding the national poverty line, BPS raised the threshold to a per capita income of IDR 401,220 (approx. USD $27.90) per month in March 2018. This is a rather low threshold because it means those who are not categorized as poor have USD $27.90 (or more) to spend per month; that is USD $0.93 (or more) to spend per day. It is very hard to imagine how someone can survive with only USD $0.93 (or slightly more) per day, even by Indonesian standards.
For comparison, the World Bank had updated its international poverty line to USD $1.90 a day back in October 2015. Thus, there exists quite a wide discrepancy between the Indonesian and the international standard in terms of the poverty threshold. Hence, if we would count the number of poor people in Indonesia using the international standard, then Indonesia’s absolute and relative poverty figures are bound to rise as there exists a big group of Indonesians (possibly dozens of millions) who live narrowly above the nation’s poverty line (they are the “near-poor”).
Read the full article in the July 2018 edition of our monthly research report