The Well-Oiled Wheels of Poverty in Indonesia (Revised)
Setra T. Yappi

Poverty and social disparity are often identified in developing Asian countries, where the rich are lavished with all kinds of luxuries and the poor live under a few US dollars a day. Indonesia is one of those countries where poverty is mainly a result of unequal social and geographical distribution of resources essential to human development. It is common knowledge that substantial development occurs only in the regions within reach of urbanization. Rural areas are deprived of numerous privileges, such as education, health services, access to clean water and nutritious food, and financial services. Compassion.com educates us on the wheel of poverty consisting of educational, health, environmental, economic, social, and spiritual aspects; this article focuses on some of these dimensions of poverty that have been analyzed from personal experience.

Education, often identified as one of the most crucial aspects of a nation’s development, is very poorly administered in Indonesia. Speaking of the public education sector, most problems root from the inadequate government spending on education. This is both because the Indonesian government has always allocated less than the constitutional proportion (20% of the domestic annual budget, APBN) and due to corrupt bureaucracies that eat away educational subsidies bit by bit along the distribution line. When the puddle of subsidies is finally available to needy students, it has been sipped by different groups of “vampire bats”, from governmental officers to headmasters and teachers. With the proven failures of Biaya Operasional Sekolah (BOS) distribution, it is a question of how governmental subsidies really do the job in improving education. As we speak, the 20% APBN funding is finally approved by Yudhoyono (announced on August 15th, 2008), with some suspicions of using this triumphant event as a leverage for the image of the current administration. Despite the irrefutable, communal agreement on the importance of education, this branches to the regional disparities in the access to quality education. The poor quality of schooling in Indonesia, as assessed by the World Bank, is observable from teacher qualifications and compensation, as well as the quality of teaching facilities in rural schools. Only recently, the government, represented by the Ministry of National Education (MoNE) in this case, realized the necessity of setting standards for academic instructors [3]. They now encourage current and future teachers to obtain certification through national examinations [5]. Yet, it has never been clear which institutions will be authorized to run the certification program and issue the certificates. The definition of the basic competence required for the teachers has not been spelled out. At the moment, only 55 percent and 73 percent of the primary and junior secondary level teachers, respectively, have the minimum qualifications required by the MoNE [3]. Deteriorating classroom quality is another serious problem, particularly at the primary level, where only 44 percent of classrooms satisfy the minimum standards set by the MoNE [3]. This crisis is amplified by the frequent natural disasters or historical riots which have limited school attendance and destroyed schools in the affected regions.

Many economic, political, and academic pundits have put forth education as the key to breaking the vicious cycle of poverty, but Indonesia is one place where widespread multi-generational traps undermines education. Unschooled parents would discourage their children from going to school, and in many cases of street children, would reinforce the more urgent need of earning money. Their disbelief in the rewards of attending school, at times, is justified by the enormous challenges that people of lower class face in attaining employment. Another trapping structure is high-quality education at private schools that is very rarely made financially accessible to the poor. Being beyond the scope of government ruling, many turn into profit-driven nature. The idea of supporting education through scholarships or grants is still foreign to most of academic institutions and the community. Although free or subsidized education is there, poverty often correlates to the inability to perform well academically due to many factors like malnutrition and diseases. All these phenomena catch the poor by the ankles and restrain them from moving forward. And the wheel turns, the cycle goes on.

Restricted access to primary needs such as health care and sanitation (mostly experienced by rural residents) is not yet a resolvable issue. “Disease and poor health conditions mostly afflict the poor and, in turn, it is poverty that prevents them from receiving appropriate treatment, even if cures are known and available” [3]. Illness is an opportunity cost. One must give up the opportunity to improve his or her standard of life when diseases (often curable, but lethal) strike and medical treatment is not available or affordable. In tropical areas, this is intensified by the threats coming from diseases like dengue fever, malaria, and diarrhea. When parents die of sickness, the children are neglected and one cannot speak of insurance covering the child support when it comes to poverty. Access to sanitation (sewerage, waste management, etc) and clean running water is also indescribably important. Sadly, there is a dramatic gap in the provision of sanitary facilities between the rural and urban areas [3]. Even more regrettable, there is still a whole 34 percent of the urban population that is isolated from sanitation facilities. As well, the majority of Indonesians are still highly dependent on rivers and canals, which have been polluted due to poor waste management [4]. The oversight and growing ignorance of these issues highlights the deficient distribution of information and the almost non-existent formal education about environmental conservation, even among the educated ones. And the wheel turns, the cycle goes on.

Poor people in rural areas also suffer from the lack of access to financial services such as credit, insurance, and savings, which they are simply unaware of. “The lack of formal financial services and institutional support available to poor rural communities is a major impediment to rural enterprise development” [2]. It is obvious that self-employed citizens, constituting most of the population in Indonesia, require financial capital to help expand their businesses. Not only in Indonesia, entrepreneurs in third-world countries are commonly constrained with limited capital. Due to lack of business skills, they conduct their businesses with traditional procedures where the idea of expansion is seen as an extraordinary opportunity. Attaining a loan from third-party financial institutions for business development is foreign to them. The loan itself, many times, is not available or extremely difficult to get. Indonesian banks obtain most of their funding from short-term deposits, and more than 90 percent of bank deposits are less than one month in maturity (only 10 percent stays for over a month) [6]. Prudent asset-liability management calls for banks only to offer short-term, floating-rate loans [6]. Banks would prefer to deal with individuals and companies of high credibility. Besides, the concept of microfinance still has not reached the Indonesian financial system. Therefore, there is little room for small and medium businesses to grow.

A recent traveling experience to rural Uganda has allowed me to witness many similarities to the conditions in Indonesian poor communities. When comparing the extent of poverty in Uganda and Indonesia, Indonesia is much better off according to the Human Poverty Index (HPI-1) which is measured according to the quality of health, education, and economic livelihood [1]. Yet, the same concerns exist in Uganda in terms of the failing education, health, and financial systems. These sectors are where international volunteers, like myself for a whole month in Iganga, Uganda, usually enter the picture. The health facilities are deprived of proper basic medical necessities; a rural hospital may not have an oxygen tank or blood transfusion capability. One life is none but news that may stay or slip away, as maternal or infant mortality is too common. With agriculture and retail as the backbone of the economy, farmers and entrepreneurs stumble when their businesses fail and there are no financial resources to lift them up. Saving can be very inconvenient for banking is only available in towns in selected districts; whereas, lending services become none other than a profit-driven business where interest rate is a point of competition. Microfinance “businesses” have been flourishing like rampantly-growing weeds, luring desperate business owners needy of capital to push themselves to attain loans without being educated on how to utilize them. In the end, microfinancing frightens them as loans usually cannot be paid off when more urgent needs arise and force them to use the loans to handle the situations. Furthermore, education perils although the current president has come up with free primary education. Teachers are under qualified and too busy supplementing their low-wage job with other occupations, and thus neglect teaching even though teaching wages are still earned. Having a similar face as education in Indonesia, proper education and university enrolment is for the financially-privileged. Additionally, an African setting is identical with corruption. It’s just like home after all.

As a personal account, education appears to be a strong candidate as the weapon to break the countless chains of poverty. Education takes many forms – formal schooling, public information and media, seminars and workshops, etc – and these various faces of education can be used as a medium to spread the awareness of the causes of poverty. Education can develop one potential to produce better urban and rural planning to bridge the disparities of resources. Education is the way to stimulate people to step up and improve the environmental aspects of civilization like sanitation, clean water sources, and even the public health. Education is the way to sensitize rural residents about the financial services available and about using them wisely in order to alleviate their economic conditions. Education is the way to influence young minds about the fatality of deep-rooted corruption. Lastly, education is the way to cultivate young people who will have different significant roles in nation building and ending poverty. Then, reality hits: education that can actually empower Ugandans, and certainly Indonesians, to earn their rights and opportunities to advance themselves now becomes a closed giant gate that has kept the poor far enough from a decent living.

The eradication of the multi-dimensional poverty in Indonesia is hindered by poor educational system and infrastructure, difficult access to basic needs, and unreliable provision of financial services. The problems are generally concentrated in rural areas, where allocation of resources is deprived. This poverty cycle has perplexed the idealists and optimists and taught many to become ignorant. For this reason, Indonesia needs a powerful renewal of human capital and education to slash the roots of poverty and empower those whom poverty is holding captive.

Works Cited

[1] Human Development Report 2007/2008. 2007. UNDP. 9 July 2008. < http://hdr.undp.org/en/media/hdr_20072008_en_complete.pdf>

[2] Indonesia: Community Empowerment for Rural Development Project. 2000. Asian Development Bank. 22 February 2007. <http://www.adb.org/gender/practices/agriculture/ino001.asp>

[3] Making the New Indonesia Work for the Poor. November 2006. The World Bank. 22 February 2007. <http://siteresources.worldbank.org/INTINDONESIA/Resources/ Publication/280016-1152870963030/2753486-1165385030085/ MakingtheNewIndonesia.pdf>

[4] Richardson, Michael. Water Woes Threaten Growth in Indonesia. 26 June 1995. International Herald Tribune. 22 February 2007. <http://www.iht.com/articles/1995/06/26/water.php>

[5] Setiono. Issues on enforcement of teacher law. February 11, 2006. The Jakarta Post. 22 February 2007. <http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20060211.E03>

[6] Unlocking Indonesia’s Domestic Financial Resources: The Role Of Non-Bank Financial Institutions. December 2006. The World Bank. 22 February 2007. <siteresources.worldbank.org/…/Resources/Publication/280016-1168483675167/Ex-Summary-NBFIFinal-Eng.pdf>

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