THE founding fathers of Indonesia has declared any countries goals to serve for its citizens. Any goals to become a truly government is written at the Preamble of Indonesian constitutional (UNDANG-UNDANG DASAR 1945) –by realizing common prosperity, educating national life, protecting the whole nation and fatherland of Indonesia, and following world order- fluctuates up and down in its implementation. Economic crisis, which began in mid 1997 has increased the number of poor people in Indonesia. Another part of the constitution exactly on Chapter 34, explains that “poor people and the abandoned children are nurtures by the state” (article 1), and “the state is responsible for treating the poor through empowerment and social security” (article 3). Based on that, the government of Indonesia (GoI) have a mandate to be implemented.
Since 2005 Indonesia’s economy performed quite well despite various obstacle to economic performance and the threat to global conditions posed by high oil prices. Our economic growth in 2005 reach 5.6%, the highest since the crisis in 1998. Meanwhile, inflation in recent yeara has been decreasing steadily, while Rupiah is also gradually stabilizing. Up and down of the Rupiah and also Indonesia Composite Index, and we do hope it will reach a proper value both for the currency and Jakarta Composite Index.
1. The Poverty in Indonesia
BASED on poverty indicator US 2$ a day, more than half of Indonesia’s 250 million are poor. Most Indonesian people struggle to survive on less than US$ 1 a day and are at risk of even more severe poverty. Approximately 60 percent of the population live on rural areas where agriculture is the main source of livelihood.
The poorest areas of Indonesia are the remote eastern islands, where 95 per cent of people in rural communities are poor. In the most densely populated islands of Java and Bali, poverty exists but there are opportunities to make it more transient. Here, unsustainable livelihood systems and isolation make people vulnerable to external shocks and are the principal causes of poverty, mainly in the upland areas. On average, poverty rates in Bali and Java range between 14 and 31 per cent.
In many provinces in Eastern Indonesia farmers make their living by harvesting a single crop on dry land. They live in a subsistence economy and are not able to achieve food self-sufficiency through their farming activities. Many live in coastal areas that are environmentally degraded. Upland villages are the most disadvantaged and require development programmes adapted to the many constraints they face. Many of these remote areas are accessible only by boat, on foot or by small plane. The road network is in poor condition and requires major investment. These provinces are also home to many adat, or indigenous communities, which have often been on the margins of development processes and programmes. A significant part of the rural labour force has migrated to urban areas in search of employment. Many migrants would be willing to resettle in rural areas, but they no longer have land. In some provinces, migration to foreign countries is a way to overcome unemployment and poverty caused by lack of access to land and other productive resources.
In the year of 2007 population of Indonesia’s poverty is 37.17 million people, the proportion is 16.58% of total population (data March 2007). About 19.2 million families received Cash Transfer program. Unemployment is about 10.24% of 103 million labor force. The quantity pf slum area is 56,000 hectare in 110 city (urban poor). The number of rural poverty is 42,000 village (‘desa’) is catagorized as rural poor area -from totally 66,000 village.
2. The Alleviation Poverty Program
ACCESS to get work is the surest way out of poverty. It is precisely understood that employment creation is the key success for poverty alleviation. It holds solid, progressive and long lasting attempt to reduction of poverty. By a get job, then wealth is created, distributed, and accumulated. It is through work so peopele can find a dignified way out of poverty.
In Indonesia it is widely acknoledged that the vast majority of women and men derive their livelihood and incomes from Micro, Small, and Medium Enterprises. In Indonesia, agriculture sector dominates the national employment scene with 41 million workers, of whom 80 percent are attached to the informal economy. Furthermore, poverty is very much a rural pehenomena, as about 75 percent of the total poor household reside in the rural areas and depend on agricultural for their main livelihood.
In Indonesia about 60 percent of working poor youth earn their living in the informal economy.
The rural poor are often confronted with disadvantages stemming from remoteness, lack of education and healthcare, insecure and unproductive jobs, high fertility and discrimation for women or etnic minorities. Thus, povertyreduction policies and programmes must give strategic focus on rural development and must create more opportunites for women and men to find work in the rural areas. Such policies not only promote economic grow but also help alleviate urban poverty through reducing out migration from rual areas to densely populated urban centers.
However, we want to move to even higher growth in the medium term, especially to create jobs and reduce poverty. Our challenge is, at the end, to reduce poverty and to create job. This will require changing investment sentiments and improve international confidence toward the economy. To address this, the GoI have issued reform packages in investment and infrastructure, so that people could witness our seriousness in undertaking structural reform in all sectors of the economy.
The attempt is by implementing what we would call the triple track strategy. The government of Indonesia (GoI) has declared Triple-track strategy for 2004-2009. That’s growth, employment, and poor. Growth means pro-growth, to achieve sustainable higher economic growth through a combination of strong exports and increased investments –both domestic and foreign. From 5.5% in 2005 become 7.6% in 2009 economic growth.
About 70% of our poor people are living in the country side, are working in the agriculture sector, around 40 millions. And another 20 millions of the near poor, they are mostly living in the country side and in the agriculture sector. So if we could improve, if we could revitalize the agriculture sector, and rural economic development, we believe very strongly in the years to come we can reduce significantly the number of the poor people by stimulating our agriculture and rural economic development.
If we remain on track with the the triple track strategy, we will be able to meet the economic target set by my government immediately upon assuming office. Economic growth can only be accelerated if we increase productivity in every sector of the economy. And such an increase in productivity will only take place if macro-economy reforms are continued and synchronized with various reforms at the micro level. We can be assured that GoI is actively persuing various reforms to improve investment climate, to ensure flexibility of the labor market and to combat corruption in order to reduce high cost economy.
On 2007, the Government of Indonesia launched “National Program on Community Empowerment” or PNPM (Program Nasioanl Pemberdayaan Masyarakat). Specially in Social Department, we launched BLPS or Bantuan Langsung Pemberdayaan Social (Conditional Cash Transfer for Social Empowerment).
On September 7, 2006, the President of the Republic Indonesia has declared a new government policy to accelerate poverty reduction and jobs creation in the framework to achieve the target in the mid term national development plan to halve the number of poor people by the year of 2009. The GOI has launched the National Program for Community Empowerment (PNPM= Program Nasional Pemberdayaan Masyarakat) as a main vehicle or program instrument to accelerate poverty reduction and jobs creation –start in fiscal year 2007.
PNPM (Program Nasional Pemberdayaan Masyarakat or National Program for Community Empowerment) is adopted from the success of Kecamatan Development Program (PPK= Program Pengembangan Kecamatan) and Urban Alleviation Poverty Program (P2KP= Program Penanggulangan Kemiskinan Perkotaan).
3. The History of Program
POVERTY oriented development programs started systematically in Indonesia in 1975-1976, when the success of Repelita 1st (Repelita= Rencana Pembangunan Lima Tahun, Development Planning for 5 years) in speeding up economic growth also revealed serious income distribution inequalities. The proportion of Indonesians below the poverty line dropped from 40 percent (54.2 million) in 1976 to 11 percent (22.5 million) by 1996, the fastest decline having occurred in 1993-1996. The onset of the crisis arrested this rapid drop.
The GoI revived Padat Karya programmes that commonly used in Indonesia since 1970’s to create employment and generate income through infrastructure development, it were phase out in the early 1990’s. Padat karya programmes faced many problems however as a short-term social safety net programme it was effective.
The IDT (Inpres Desa Tertinggal, or Presidential Instruction on Program for Assistance to Backward Villages), launched at the end of 1993 under Repelita VI, has three goals: to speed up the national movement for poverty eradication and ensure that it becomes a people’s movement; to reduce inequalities of income and wealth; and to develop the people’s economy. Poor groups are identified according to categories reflective of local village standards. By 1996, the program had covered 28,000 of the least-developed villages, or 43 percent of all villages in the country. Beneficiaries were 136,000 self-help groups, or pokmas, comprising 3.4 million poor households. Each pokmas has about 30 poor families, and there can be several such groups in a village. Organizing these groups facilitates the channeling of services and funds to poor families as well as promotes interaction among group members. This continuing contact reinforces people’s selfesteem.
Often the poor are so isolated—psychologically, socially, culturally, economically, and politically—that they tend to have a sense of powerlessness: a belief that there is no way out of their present situation and that it is their destiny to be poor.
Facilitators who are community workers act as catalysts to improve the human resource base of pokmas members, improve the capabilities of their committees, and promote savings and the economic and entrepreneurial skills of members. Women’s participation is significant and in many places pokmas members are predominantly or all women. Most of them draw on IDT funds for income-generating activities such as small trading activities, raising goats, and operating a newly purchased fishing boat with their husband.
It is important to recognize that the vast majority of the populace survives through the people’s economy. All too often, however, both the government and private sector undermine this economy by supporting large business enterprises that actually compete with the myriad small-scale activities sustaining the majority.
All in all, the most effective strategy for enhancing participation of low-income people in development in the broadest sense is to improve their access to economic activities and let them make their own decisions. The economy is the most realistic entry point of all empowerment efforts because achievements there will cultivate the sense among the poor of “having power.”
The contribution of Department of Social Affairs in implementing poor people empowerment program among the other department is KUBE. Kelompok Usaha Bersama (KUBE) or “co partnering groups” is a group of poor families created based on their choice, co interacting to each other, living in a certain areas with the purpose of improving the productivity of their members, building harmonious social relation, fulfilling the needs of their member, solving social problems existing around them and becoming the mean of co-partnering business activities.
4. Rural Community Development: Access and Employment
RURAL development has long been recognized as crucial in promoting economic growth. There are both indirect and direct benefits from infrastructure development both having a significant impact on employment creation and an effective strategy for poverty alleviation.
Investing in local resource based rural infrastructure has both economic and social benefits on rural society. Economic indicators such as increased income, employment, productivity gains and better income distribution are obvious. Social benefits include time savings, easier access to schools and health facilities and improved information.
Rural infrastructure development contributes to the achievement of the Millennium Development Goals (MDGs). It is essential for employment creation and income generation (reducing by half the proportion of people living on less than a dollar a day), improving access to primary education and health care (ensuring universal primary education, reduce child mortality and improve maternal health) and improved living conditions (ensuring environmental sustainability by, amongst others, reducing by half the proportion of people without sustainable access to safe drinking water).
Rural development is an important strategy in achieving development objectives. This may cover agricultural and rural infrastructure in rural areas including rural roads, water supplies, irrigation. systems, electricity, health and education facilities and markets.
AN OVERVIEW OF RURAL DEVELOPMENT: AGRICULTURE. The strategic value of agriculture in the overall economic development of developing countries like Indonesia is very significant such as the source of food, its share in GDP formation, its linkages with other sectors, and, most importantly, the agricultural sector is a source of employment. Though the contribution of the agricultural sector to total GDP which declined from 24 percent in 1980 to 16.5 percent in 2000, agriculture was the third largest contributor to GDP in 1999, which then upgraded to be the second largest contributor after the crisis. However the agricultural growth rate had been relatively slow, 3.8 percent annually during the 1980s and it slowed down to 2.9 percent during 1990 to 1995. Within agriculture, half of the value added comes from food crops, followed by tree crops and horticulture; fisheries, forestry, and livestock products each contribute 17-19 percent and 9-12 percent respectively. Per capita GDP in agriculture in 2000 was just one fifth of that of non-agricultural sectors. Such low agricultural growth resulted in low productivity. Which is among the lowest when compared to other sectors.
The share of agricultural employment in Indonesia has always been substantial. Although the percentage of people working in agriculture had been declining overtime the absolute number has remained on the increase. The percentage of employed people in agriculture had been on the increase after the economic crisis; it was 40.73 percent in 1997 and rose up to 46.54 percent in 2001, more than half were women (CBS, 2002).
During off-peak season, many rural workers look for work in the urban informal economy. Seasonal nature of work is also accompanied with low wages in the agricultural sector. Data by CBS shows that the Indonesian average monthly wages of workers in the agricultural sector were the lowest in comparison to those of the other economic sectors. The 2001 CBS data showed that 65 percent of women working in agriculture were employed as unpaid workers. Furthermore for those women who are classified as wage earners, they earn about half of what male agricultural workers do. It was 53 percent of that of males’ wages in 1997 and improved to 56 percent in 2000. It is thus no surprise that agricultural workers'are among the groups with the highest incidence of poverty in Indonesia.
Like in many other developing countries in Indonesia agricultural workers are excluded from any employment injury benefit scheme, because none exists for them or because agricultural workers are specifically excluded from general schemes. A large extent agricultural workers are considered as informal workers.
The picture of the agricultural workers depicts that decent work deficits are pervasive in the agricultural sector. Recognizing the importance of the agricultural sector, the Indonesian government has stipulated in its policies directives and programs to give priority upon the development of the agricultural sector. The Ministry of Agriculture (MOA) has determined that agribusiness is to be the grand strategy for the agriculture development in Indonesia.
AN OVERVIEW OF RURAL DEVELOPMENT: INFRASTRUCTURE.
Infrastructure has an important position in Indonesian national development especially in the government and private sector budget allocation acting as promoting and facilitating sector for local economic development, despite its low allocation of financial resources from public expenditure by international standard.
During the period of 1990/ 91-2000, government budget allocated for infrastructure is around 3,8% with the highest figure reaching 5% in 1993/94. During that period local development and isolated areas, energy and road sectors received higher allocation than other sectors. With such allocation, one problem to be tackled is the disparity among regions especially with regards to the eastern part of Indonesia. During the 1997 crisis in Indonesia, there was a large shift toward self-employment in both urban and rural areas, and a smaller shift towards unpaid family-based employment in both rural areas. Real wages have declined and open unemployment has appeared.
The increase in female and child employment acted as a coping mechanism to compensate for falling household incomes. Child employment has been observed to increase and, although the impact on female employment is ambiguous, some 40% of those recorded as newly unemployed are female (the latter particularly due to the impact of textile sub sector production). With low personal savings and no effective social welfare system, people cannot afford to be unemployed for a very long.
The establishment of CTRID (Coordinating Team on Rural Infrastructure Development) is a milestone in the Indonesian rural infrastructure development since it demonstrates concerted efforts of various ministries and agencies to curb problems and to tackle issues in rural infrastructures development. The result has been an increase in under employment (with falling real wages and purchasing power) and substansial increase in lower-paid agricultural employment. Unskilled men have suffered most from the consctruction industry decline. Since construction sector particularly road sector adopts labour intensive techniques, it is capable of absorbing a large proportion of workers this sector is thus a significant target for poverty reduction efforts. Conditions in rural areas show that most of the workers (97,2%) are low-level labourers indicating the ability for this sector to dominantly absorb unskilled or semi-skilled workers-those affected most by the poverty. The GoI ever revived Padat Karya programmes since 1970’s to create employment and generate income through infrastructure development. The programme were phase out in the early 1990’s, faced many problems however as a short-term social safety net programme it was effective.
The result has been an increase in under employment (with falling real wages and purchasing power) and substansial increase in lower-paid agricultural employment. Unskilled men have suffered most from the consctruction industry decline. Since construction sector particularly road sector adopts labour intensive techniques, it is capable of absorbing a large proportion of workers this sector is thus a significant target for poverty reduction efforts. Conditions in rural areas show that most of the workers (97,2%) are low-level labourers indicating the ability for this sector to dominantly absorb unskilled or semi-skilled workers-those affected most by the poverty.
With the public purse strings still tight and most government spending being used to cover day-to-day costs and servicing the country's sovereign debt, Indonesia will have to rely on the private sector to help reduce poverty and unemployment. Vice President of Indonesia, Muhammad Jusuf Kalla, ever said that Indonesia would need at least Rp 1,000 trillion (about US$111 billion) in new investment in order to achieve higher economic growth, which was essential to significantly reducing the country's currently high poverty and unemployment rates. The money should come from three sources, the government, the private sector and foreign investment. Indonesia’s the current growth rate was not sufficient to alleviate poverty and unemployment. In order to create significant numbers of new jobs, growth would need to be at least 7 percent. According to government estimates, every one percent growth in GDP creates 250,000 new job.
5. Finally
POVERTY is nearest the way to a crime (in Islamic word: fakir near to kafir. Kafir means ‘being covered’). The time to combat poverty has arrived, sure that hard work lies a head. We have to commit to ending poverty. The first step is commitment to the task: focus to halving poverty by 2015 and struggle to ending poverty by 2025. It is still a problem to make e close connection between real sector and monetary. There is a disconnection between the improvements in the macroeconomic fundamentals and poverty alleviation. The GoI still on going make a great policy to connect the regulations with creating a conducive environment for microfinance (MF) in Indonesia and the SME. In the past, we had more government failures than market failures. Now, it may be the other way around and we have to carefully analyze whether we are dealing with a market failure or a government failure before taking any action.
Sustainable rural development is expected to provide more employment opportunities and increasing income, which in turn will encourage rural workers to stay and work in their villages. This in the long run will be better for both the urban and rural economies. Sustainable agricultural development would support rural development. Strong and labor-intensive agricultural growth can be sustained with adequate levels of investment in infrastructure. As rural poor are getting more dependent on non-farm activities for their income sources, therefore measures to stimulate off-farm rural income will be critical to poverty alleviation. In line with the Ministry of Agriculture's strategy that agribusiness is to be the path of agricultural development, thus small/micro agribusiness development may be used as the vehicle for improving farmer incomes.
Rural infrastructure development is instrumental in facilitating and responding to development challenges. Through Sustainable rural infrastructure development, the needs and opportunities for social and economic development can and will be expressed in their highest potentials. Labour based approach in rural infrastructure development would be important strategy to help the poor.
Community based approach is very useful in addressing the needs of women in poverty. It can help promote equity and equality towards work. The involvement of women in the technical and supervisory functions of projects managed by communities can help overcome biases against the recruitment of women workers.
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