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Indonesia Progress Report on the Millenium Development GoalsGoal 1: Eradicating ExtremePoverty And HungerTarget 1: Halve, between 1990 and 2015, the proportionof people whose income is less than one dollar a dayIndicators used:• Proportion of population below the national poverty line (poverty head count ratio)• Proportion of population below $1 per day• Poverty gap (incidence x depth of poverty)• Share of poorest quintile in national consumptionStatus and trendsPoverty head count ratio. The proportion of poorpopulation—those living below the national povertyline—decreased from 15.1 per cent in 1990 to 11.3per cent in 1996 (Figure 1.1). In 1998, the IndonesianGovernment adopted new thresholds for the nationalpoverty line that reflected a higher standard of living.Subsequently, 1996 poverty levels were adjustedto incorporate the 1998 criteria (Box 1). During theeconomic crisis, the proportion of poor populationincreased to 23.4 per cent in 1999 and then declinedto 18.2 per cent in 2002 and 17.4 per cent in 2003.Projections of trends between 1999 and 2003 showthat Indonesia is on track to achieving the MDG targeton poverty reduction of 7.5 per cent, or half the1990 levels for the country as a whole (Figure 1.2).However, prospects of achieving the MDG targetacross the provinces are uneven. (Table 1.1).Depth of poverty. The mean depth of poverty, b asa proportion of the poverty line, has varied from 10to 28 per cent since 1990. In 2002, the mean consumptionof the poor was 16.5 per cent below theNational Poverty Line (Table 1.2b)Figure 1.1. Population below the National Poverty LineFigure 1.2. Proportion of population below theNational Poverty LinePoverty gap. The poverty gap, or the Foster-Greer-Thorbeke P1 measure , has not shown much change,fluctuating between 2 and 4 per cent between 1990and 2002. In 2002, this measure a was 3 per cent (Figure1.4 and Table 1.2a).a The Poverty Gap is defined as Incidence times Depth of Poverty, also expressed aswhere n= population size; q= the number of poor people; z= poverty line; and yi = is the income of the individual=i.b The Depth of Poverty, I, is calculated as: ,where yp denotes the mean consumption of the poor.26
Indonesia Progress Report on the Millenium Development GoalsBox 1. The national poverty lineThe national poverty line is the rupiah value an individual needs to fulfil his or her daily minimum requirementfor food of 2,100 kilocalories (kcal), plus non-food minimum needs, such as housing, clothing, health,education and transportation. The food poverty line is the cost of meeting the basic food needs of 2,100kcal per day, while the non-food poverty line is how much a person has to spend to fulfil their basic, minimumnon-food requirements. People whose expenditures are less than the Poverty Line are classified asliving below the Poverty Line, or as poor population.The poverty standard used by the Central Statistical Office (BPS—Statistics Indonesia) is dynamic becauseit has to be realistic and adjust to shifts in consumption patterns and national aspirations. For example,Figure 1.1 shows two different estimates for the proportion of people living below the poverty line in 1996,based on two different criteria: the 1996 standard and 1998 standard. 1 The 1998 revision was done not onlybecause of the shift in consumption patterns but also because the definition of minimum basic requirementsand commodities had to be broadened to take into account new policies affecting family expenditure, suchas the introduction of nine years of compulsory basic education. The poverty data across years in Table 1.1are based on the two standards—1996 for the earlier years and 1998 for the later ones.Box 2. Assessing MDG achievementHow the MDG achievement is judgeddepends on which criteria are used.Applying the international criteria of$1 per day a , the proportion of poorpopulation in Indonesia in 1990 was20.6 per cent. In effect, this meansthat Indonesia had already achievedthe 2015 MDG target of 10.3 percent by 1996 and then again, followingthe economic crisis, by 2002.Figure 1.3. Proportion of population living below $1 and $2 per dayOn the other hand, using the $2a day criteria gives quite a different picture: poverty fell from 71 per cent to 54 per cent from 1990 to 2002,making the target for 2015 35.5 per cent. This means that Indonesia has been successful in eradicating extremepoverty, but still has some way to go in eradicating moderate poverty.a Standardized to 1993 international prices.27
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