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Jakarta Post

Jakarta sees rising poverty, widening income gap

  • Dewanti A. Wardhani and Corry Elyda

    The Jakarta Post

Jakarta   /   Thu, January 29, 2015   /  11:44 am

The Jakarta branch of the Central Statistics Agency (BPS) has revealed that the poverty rate and Gini coefficient ratio that measures the income gap in Jakarta increased significantly in 2014 as a result of inflation and the weaker rupiah.

According to data from the Jakarta BPS, the number of poor residents of the city significantly increased year-on-year to 412,790, or 4.09 percent of the total population in September 2014, from last year'€™s 371,700, or 3.72 percent of the population.

BPS data shows that Jakarta'€™s population is 10 million at night and 11.2 million during the day, as many residents from neighboring areas commute to Jakarta for work.

Further, the city'€™s Gini coefficient ratio increased to 0.436 in 2014 from last year'€™s 0.364. The Gini coefficient ratio, which ranges between 0 for perfect equality to 1 for absolute inequality, measures income distribution among citizens and measures inequality in the economy.

According to BPS Jakarta head Nyoto Widodo, the city'€™s poverty ratio increased largely due to inflation. The city'€™s inflation in 2014 increased to 8.95 percent from 8 percent in 2013, higher than the national average of 8.36 percent.

'€œInflation plays a big part in the increase in the poverty index. Only the upper and upper middle class enjoyed the city'€™s economic development last year. Meanwhile, the poor are becoming poorer,'€ Nyoto told The Jakarta Post over the phone on Wednesday.

Nyoto said the poverty line in Jakarta was set at US$1.24 of spending per person per day in general, in accordance with the UN, and the regional minimum wage, was set at Rp 2.7 million ($216.29) per month.

He added that the stagnation in micro businesses and the lack of development of labor-intensive industries had also caused poverty and resulted in the widening income disparity.

'€œEspecially in Jakarta, labor-intensive industries declined due to inflation. Instead, modern industries such as banking have dominated,'€ Nyoto said.

He said the city administration should support the development of micro, small and medium-sized businesses in order to narrow the gap. Nyoto also advised that the city subsidize public transportation and manage inflation in order to reduce poverty.

Nyoto said he could not comment on whether the eviction of thousands of families and micro businesses last year contributed to the rising poverty.

Responding to the BPS'€™ latest statistics, Governor Basuki '€œAhok'€ Tjahaja Purnama acknowledged that the city still had hundreds of thousands of residents living below the poverty line.

'€œI think there are actually more poor people in Jakarta than the statistics say [...] I suspect the proportion of poor people in Jakarta could actually amount to 40 percent of the total population,'€ Ahok told reporters at City Hall in Central Jakarta on Wednesday.

He disputed the poverty line set by BPS, which he said was too low, saying the poverty line should be determined by the basic cost of living, which is currently Rp 2.53 million per month in Jakarta.

Ahok said that the city this year had increased the funding for the Jakarta Smart Card (KJP) and would also focus on organizing micro businesses, including street vendors. The city, he went on, would also disburse loans to small traders.

Meanwhile, Jakarta Chamber of Commerce and Industry (Kadin) vice chairman overseeing cooperatives, small and medium enterprises and agribusiness Akhmad Syarbini said the city should cooperate with Kadin in supporting small businesses.

'€œThe administration can provide access to soft loans, capacity building and space for production and trade,'€ he said recently.

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