Indonesian Economic Condition

Since the last decade, when the economic and political crisis hit the Indonesian region, poor communities within the regions increased instantly and millions of rural poor in Indonesia fell below the poverty threshold as shown below.

Table 1. Number and percentage of poor people in Indonesia by Urban-Rural areas


Consequently, poverty alleviation program became the most important policy objectives of development of Indonesia, which mentioned in chapter 16 of the Medium- term Development Plan (Rencana Pembangunan Jangka Menengah Nasional) 2004 – 2009. This describes policy guideline for poverty reduction focusing on the fulfillment of the rights of the poor, and the promotion of regional development through acceleration of rural development, revitalization of urban development, coastal areas development and acceleration of lees-developed region. In addition, the GOI has launched the Poverty Reduction Strategy Paper (PRSP), which describes GOI’s long-term national Poverty Reduction Strategy in line with its commitment to realizing the Millennium Development Goals (MDG). The GOI has set a deadline of 2015 for most of these goals, including bringing down the number of poor people to 7.5 percent of the total population. In 2004, this percentage stood at 16.6, furthermore, it was increased to 17.75% in 2005.