Indonesia: Rich or Poor?

Indonesia: Rich or Poor?

The living standards of the people in Indonesia have improved with the Gross National Income per head having being doubled to $4730 in just a span of eight years from 2002-2010. Consumer ranks have expanded and there has been an upsurge in foreign investment as well. The country has indeed grown rapidly to become one of the largest economies of South-East Asia. But, inspite of all such positives taking place in the country, the poor have got poorer.


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According to a report by World Bank, the country witnessed an increase in the average real consumption by around 4% during 2003-10. The consumption by the rich increased by 5.9% whereas for the poor it increased by just 1.3%. This clearly indicates inadequacy on the part of government in coming up with provisions for uplifting the poor. Even after achieving the status of a developing country, Indonesia’s growth has not benefitted the poor. The growth has been inclined towards the rich which is resulting in glaring up the gap between them and the poor, further strengthening the existing inflation.

Indonesia’s poverty has decreased from 17% in 2004 to 12.5% in 2011 which is a result of the economic growth that has taken place in the country. But when about half the population is living just above the national poverty line, this reduction has proved to be a boon for the elite class only.


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The health and education sectors have shown some improvements but the public services and health standards in the country continue to suffer. Problems like poor access to education, clean drinking water are still deep rooted in the country.

The biggest burden lies on the head of the small scale farmers who are not even able to take advantage of the opportunities that have been created by the government for them.

The government has been spending enormous amount of funds on energy and petrol subsidies which are not at all consumed by the poor. Economists suggest that spending less on these subsidies would allow government to invest more in infrastructure and social welfare. This will in turn widen the scope of spending on public services. Maybe then, the growth in Indonesia will benefit the poor as well.


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