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Government to maximize village funds to reduce poverty

The government seeks to maximize village funds to help reduce poverty this year as the latest poverty figure is below expectations

Rachmadea Aisyah and Marchio Irfan Gorbiano (The Jakarta Post)
Jakarta
Thu, January 4, 2018

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Government to maximize village funds to reduce poverty

T

he government seeks to maximize village funds to help reduce poverty this year as the latest poverty figure is below expectations.

The poor population declined by 1.18 million people to 25.58 million people in September from the corresponding month in 2016, according to the latest data from the Central Statistics Agency (BPS). The figure also dropped by 1.19 million people from data released last March.

The poverty rate in September stood at 10.12, down 58 basis points (bps) from a year earlier and down 52 bps from last March.

In line with the data, the wealth gap, indicated by the Gini ratio, also slid 0.003 bps to 0.391 bps from last year’s 0.394.

The agency attributed the achievement to well-maintained food prices and an increase of wages of non-formal workers, who dominate the poor population.

Finance Minister Sri Mulyani Indrawati said on Tuesday that her side would amend village funds disbursement this year by providing a greater amount to least-developed villages.

“To reduce poverty, we are changing the formulation of village funds. Villages with a high poverty rate and index will get larger transferred funds,” she said. “We also hope to combine the special allocation funds [DAK] for regions and the Social Assistance Fund [Bansos] programs — hopefully the poverty rate can be suppressed that way.”

In addition to that, the government will also revamp the funds by adding the “cash for work” program, Sri Mulyani added.

Under the program, local authorities are required to allocate at least 30 percent of the funds to employ locals, a move that is expected to further improve the welfare of villages, where the country’s poorest people mostly reside.

Many areas had been left behind, making it difficult to eradicate poverty in the country’s easternmost regions, such as Maluku and Papua, Sri Mulyani said. “Those regions [Maluku and Papua] have been lagged behind for quite a long time, so although in the last three years President [Joko “Jokowi” Widodo] has been focusing to improve [the region’s condition], the attempt has yet to bridge the significant gap,” the minister said.

The government has annually raised the allocation of village funds, which Sri Mulyani earlier said should be able to slash down the rural poverty rate to below 10 percent.

The funds settled at Rp 20 trillion (US$1.4 billion) in 2015 and doubled to Rp 40 trillion before reaching Rp 60 trillion last year. This year, it has earmarked a similar figure to last year and will disburse 20 percent of the funds, equal to Rp 12 trillion, in January.

While appreciating the progress of the government’s efforts to eradicate poverty nationwide, Center of Reform on Economics (CORE) Indonesia executive director Mohammad Faisal said efforts were still too centered in the villages, with a lack of attention toward the urban poor. “The urban poverty issues are still not handled well, even though more than 60 percent of our citizens live in big cities,” Faisal told The Jakarta Post over the phone on Wednesday. “Urban poverty will keep on growing because people from the villages will keep on going to the city.”

Faisal suggested that the government provide more labor-intensive jobs to improve the income of the urban poor, which in turn, could improve their life quality.

Separately, Coordinating Economic Affairs Minister Darmin Nasution said that while the poverty rate had yet to hit any lower than the 10-percent mark, the most important thing would be to keep the rate down.

“To do that, we need right-on-target policies, such as giving non-food cash aid. We have started giving money directly to the poor families,” Darmin said on Wednesday.

Land distribution and certification would also be crucial to alleviate poverty, he added, pointing out the issuance of more than 5 million land certificates throughout 2017.

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