After the crisis the Government of Indonesia (GOI) worked hard to answer the question above by changing the paradigm of poverty reduction (Djoharis Lubis, nd). Indonesia has made significant progress to push economic growth leading to poverty reduction since the peak of the crisis. In 2000, the economic condition and poverty alleviation started to show an upturn, indicated by economic growth of 4.9 per cent and a 4.3 per cent drop in poverty. This condition has stabilized in the past four years due to more economic and political stability. Average yearly GDP growth has been 4 per cent and poverty declined by 0.74 per cent per year.

Unfortunately, this aggregate data does not reflect variations within a country well known for its domestic diversity. In the analysis at the provincial level of poverty data provided by BPS four groups can be identified, each reflecting different conditions. The graph below displays these groups along two axes showing the evolution of poverty after the crisis in urban and rural areas.

Figure: Poverty change in rural and urban areas after the crisis
(see pdf file)

Group 1, which groups provinces mainly in Sumatera, represents 10.57 per cent of the Indonesian population and 12.95 per cent of Indonesian GDP, and shows an increase of poverty in rural and urban areas. In Group 2 urban poverty decreases while rural poverty increases. It represents the generic poverty change of the country after the crisis. This group consists mainly of Java and Bali, it includes 62 per cent of Indonesia's population and represents 51 per cent of Indonesia's GDP. The poverty level in this group has not shown significant progress with only a 0.31 per cent change after the crisis. Group 3 represents provinces where poverty dropped both in rural and urban areas. Interestingly, this is the smallest group with only 9 per cent of the Indonesian population (8.63 per cent) and 5 per cent of its GDP. Group 4 reflects conditions where poverty decreased in rural areas but increased in urban areas. This group consists of provinces in Sumetera, Kalimantan and provinces in east Indonesia.

Aceh, Moluccas and North Moluccas are areas of conflict. Aceh is the province that has shown the most significant increases in poverty due to the long-standing struggle with the militant separatist movement, with a 10.9 per cent increase in poverty in rural areas and a 7.3 per cent increase in urban areas. Surprisingly the conditions are opposite in Moluccas and North Moluccas. These provinces face social conflict but are showing a 23.6 per cent decrease in poverty in rural areas and a 7.9 per cent decrease in urban areas. The number of Internally Displaced Persons (IDP) or the fact that there have been so many donations given to these areas are likely to explain the unexpected progress towards poverty alleviation. But still the validity of the data, especially in the case of Moluccas and North Moluccas should be intensively looked into.

Although Indonesia seems altogether to have recovered from the peaks of poverty generated by the crisis, the situation within the country still shows unequal poverty reduction among provinces. South Sumatera shows the highest poverty rise, North Sumatera, Bengkulu and East Kalimantan (Group 1) in particular, need to be paid special attention to understand why these provinces still experience negative growth in poverty alleviation and what could be done to solve the outstanding problems so that they can contribute to the achievement of the Millennium Development Goals ¡

Written by Naoko Nagai, Internship Student UNESCAP-CAPSA and Dian Kusumaningrum, Research Assistant-CIRAD, Bogor, Indonesia.

(References available upon request)