Indonesia Aims to Reduce Gini Ratio to 0.36 by 2019

The Indonesian government is determined to reduce the country’s GINI coefficient, which measures the level of economic inequality in a society, from 0.393 as of March 2017 to 0.36 by 2019.

National Development Planning Minister Bambang Sumantri Brodjonegoro said the government is not only trying to lower the GINI coefficient, at the same time it is also trying reduce the poverty rate from 10.6% of Indonesia’s population of 258 million to 7-8% by 2019.

“Therefore, what we want to achieve is equal [distribution of] wealth, because reducing the GINI index without reducing poverty will only result in equal [distribution of] poverty,” Bambang said.

The government has implemented numerous policies to improve the welfare of low-income groups, such as in education with Kartu Indonesia Pintar (Indonesia Smart Card), Program Bantuan Operasional Sekolah (School Operational Aid program), scholarship distribution, new vocational schools, and more.

In healthcare, Indonesia has BPJS Kesehatan (universal health insurance program), constructed sanitation facilities, and delivered housing programs for low-income groups (Masyarakat Berpendapatan Rendah/MBR). The government also disburses village funds to finance village-level projects.

In addition, the government is currently pushing infrastructure development throughout Indonesia to stimulate regional economic growth.

However, to accelerate the growth of the middle-to-low income group, the government requires inputs in the form of innovative ideas and breakthroughs from various sectors, especially the business sector. 

Bambang cited the founder of Go-Jek, an on-demand motorcycle taxi hailing service via a smartphone app, who has helped to effectively improve living standards among the low-income group.

“Ojek [motorcycle taxi] driving, previously an informal [livelihood], has become a formal occupation with Go-Jek. It’s the same work, but there is an increase in income, increasing welfare. [And] the number is very significant,” Bambang said.

Regarding the disruption of information technology, Bambang specifically recalled the many economic opportunities that have become available, including job opportunities. However, the same disruption has largely reduced employment opportunities in many countries.

“We have to intensively follow this development,” he said.   

Improving the general community’s welfare can also be done by improving regional leadership. Bambang said that regional leaders with strong leadership qualities have to be guided towards the right programs.

In order to gather the needed inputs, Bambang said the government is working together with an Indonesian-Australian governmental cooperation agency, Knowledge Sector Initiative (KSI), to hold Indonesia Development Forum (IDF) in Jakarta on 9 - 10 August 2017.

This first IDF will tackle the theme of “Fighting Inequality for Better Growth”. As many as 44 papers covering 11 sub-themes related to inequality will be presented during the event.