One Method to Improve the Official Poverty Line in Indonesia

Abstract

Poverty is one of the long standing problems in Indonesia. Using the national absolute poverty line, itwas estimated that the proportion of the poor has declined from 40.1% in 1976 to 10.5% in 2014. However,many people claim that the above percentage of the poor is only true in terms of statistics. The poor argue thatthe amount of rupiah expenditure set as the ofcial poverty line is inadequate to fulfl their basic needs. Thispaper, based on a feld survey of 360 respondents of the poor and the non-poor in three villages in three different provinces located in the Eastern, Western and Central parts of Indonesia, aims at examining a methodto improve the national poverty line and to determine the minimum rupiah expenditure of the poverty lineusing a subjective approach. The method used to examine this research question is by - using questionnaires,Focus Group Discussion (FGD) and in depth interviews. Sample respondents were asked their perceptions onvariables, dimensions and indicators that should be accommodated in formulating the subjective poverty line.They were also questioned about the minimum rupiah expenditure threshold to defne the subjective povertyline. The study found that the ofcial poverty line that has been determined by the government was far belowthe subjective poverty line that was defned by the respondents. Also, the variables, dimension and indicatorsthat should be accommodated in the national poverty line should not only be food items, but also access toemployment, housing, health and education for children. The minimum rupiah expenditure of the povertyline was argued to be more than Rp 500 000 equal to US$40 per capita per month. This minimum rupiahexpenditure of the subjective poverty line is almost double that of the ofcial poverty line set at the average ofRp 300 000 or US$24 per capita per month. Therefore, the government not only needs to revise the presentpoverty line, but also needs to revise policies and programs to eliminate poverty by taking into account thedimension and variables of poverty viewed by the poor and the non-poor. If not, the incidence of poverty willremain with us.