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Indonesia resolves to tackle inequality in 2017

Joko Widodo waves to his supporters. (Credit: EPA/ADI WEDA)

Indonesian President Joko Widodo announced on Wednesday that narrowing the wealth inequality gap is at the top of this year’s agenda, and he plans to do so primarily by improving access to land, financial services and education for the poor.

“Despite a slight improvement in our Gini ratio, it is still relatively high,” Widodo told his cabinet, according to Jakarta Globe.

On a scale of zero to one, with zero being complete equality and one being complete inequality, Indonesia’s Gini ratio – a statistical measure of income or wealth inequality – dropped from 0.402 in September 2015 to 0.387 in March 2016, according to the country’s Central Bureau of Statistics (BPS).

However, data in the latest Credit Suisse Global Wealth Report published in November show that Indonesia is still the fourth most unequal nation in the world, with 49.3 percent of the nation’s wealth controlled by the top 1 percent of the population.

“We have to work as hard as we can,” Widodo said, according to the Jakarta Post. “Disparities should be cut down further, both between the wealthy and the poor and also between regions.”

One of Widodo’s primary strategies to improve equity and reduce poverty – from 10.86 percent in July 2016 to 10.5 percent by the end of the year – is to increase and hasten land redistribution through formalized ownership rights.

“This is important because we want people to have access to land,” he said, according to Jakarta Globe. “In regards to concessions for people, such as customary land and certificates, I believe that this must be a focus for all, and we need to do it as much as possible within the two years.”

Formalizing land rights also increases the poor’s access to credit, another of Widodo’s goals. He urged his cabinet to facilitate increasing the value, accessibility and reach of state-subsidized loans.

Additionally, the president emphasized improving educational equality. According to the results of the latest Program for International Student Assessment (PISA) test, school performance is still greatly affected by socioeconomic status in Indonesia. The test, administered by the Organization for Economic Cooperation and Development (OECD), found that Indonesia has one of the largest percentages of low performers in science among disadvantaged students globally. Out of 72 countries, Indonesia was ninth on this measure of inequality.

The cabinet also reportedly discussed increasing tax revenue to fund social programs. According to Finance Minister Sri Mulyani Indrawati, just increasing the ratio of tax to national gross domestic product from its current 11 percent to 15.3 percent would generate 14 quadrillion rupiah (more than $1 trillion) in new tax revenue.

“The numbers show that if we make taxation more effective, then we can take money from those in a better economic situation and distribute it to state spending that favors those below the 40 percent. Education, health, infrastructure and even cash transfers can be distributed to the poor,” she said in a press briefing according to the Jakarta Post.

Amid high hopes for economic growth and investments this year, it seems a number of Indonesian leaders – not just the president – have the country’s most disadvantaged on their minds.

“It’s not the far right or far left that are dangerous here,” legislative assembly speaker Zulkifli Hasan said in a New Year’s Eve address, according to Jakarta Globe. “Our main enemy is inequality.”

Reminding his audience of the fifth key principle in Indonesian political philosophy, he added, “Social justice should be for all citizens, not just a few.”


About Author

Joanne Lu

Joanne Lu is a South Carolina-based writer and editor dedicated to global development, poverty alleviation and social justice. After a year in Rwanda, she now covers the Asia-Pacific and economics. Find her on Twitter @joannelu or email