You are using an older browser version. Please use a supported version for the best MSN experience.

Indonesia 'unable to cut chain of poverty'

AAP logoAAP 19/08/2016 Lauren Farrow, AAP Southeast Asia Correspondent

When Indonesia President Joko Widodo gave his state address to mark Independence Day this week he conceded neither he nor his predecessors had been able to break the "chain of poverty" in Indonesia.

Mr Widodo said since gaining independence 71 years ago, each and every president had struggled to "sever the chains of unemployment and narrow the social gap".

It's an area that was also ranked one of Mr Widodo's weakest points in terms of performance in a survey released this week.

According to the survey of 1220 people aged 17 and over, 68 per cent said they were satisfied with Mr Widodo's performance and 74 per cent believed in his capacity to lead.

But only 16 per cent were in favour of his performance in tackling unemployment and only 18 per cent supporting his lead on poverty reduction.

Lead economist for the World Bank in Indonesia, Ndiame Diop, said the government had made some inroads but continue to struggle due to some key factors.

"One is the slowdown in growth. Since 2013 growth has been slowing, that translates into job creation and that effects people's income," he told AAP.

According to the World Bank, Indonesia made enormous gains in poverty reduction, cutting the poverty rate to more than half since 1999, to 11.2 per cent in 2015.

But while poverty was falling from 1 per cent annually from 2007 to 2011, it has only decreased by 0.3 percentage points a year since 2012.

More than 28 million Indonesians live below the national poverty line at 330,776 rupiah a person a month (A$33) while approximately 40 per cent of people are clustered around the line, the World Bank states.

While long-term changes targeting coastal and forestry communities in Indonesia are needed, in the short-term the best the government could do implement reforms around growth and improve social assistance programs, Mr Diop said.

"You have some programs that are great but receive very little budget."

An example of this, he added, is the Program Keluarga Harapan (PKH), a system where households receive conditional cash benefits based on their participation in health and education services.

This program was small, had a low number of people involved but was "super effective".

In contrast, a larger program, which was supposed to deliver rice to 15 million people, had much of the food go "missing".

Mr Diop said the government was looking to reform this with plans to triple the number of beneficiaries of the PKH.

Dr Arianto Patunru from Australian National University (ANU) said it was a little too early to evaluate Mr Widodo's success in terms of long-term indicators such as poverty rates, with the president having only taken office in 2014.

"I think his focus on infrastructure is right. It is just that we cannot expect the benefits to materialise in the short run," he told AAP.

"Bear in mind that in the short run, what we are facing is a demand problem. The global economy is still weak and economic growth almost everywhere is still lacklustre, reflecting a demand-side issue.

"In such a situation, you would need such policy that can directly stimulate spending ... this might take the form of cash transfer, employment guarantee mechanism etc ... though all these might be politically challenging."

image beaconimage beaconimage beacon