Indonesia: Ensuring social assistance reaches those most in need

Jakarta, March 1, 2012 - Every day Murti searches through Jakarta's garbage for things to recycle. When the weather is good, she can make up to Rp 20,000 ($2.2) each day, but only Rp 15,000 ($1.6) if it rains. She is proud to earn her living instead of begging but her income is not really enough to support herself and her son, a high school student. “While it is difficult to make ends meet, I want my son to continue his education so that he will have a better life in the future,” she insists. However, Murti and her son would probably not be classified poor by official Indonesian standards.

Official poverty in Indonesia has fallen from 23.4 percent in 1999 to 12.5 percent in 2011, but around 40 percent of Indonesians live beneath 1.5 times the poverty line, like Murti. This makes them vulnerable to shocks, and people move into and out of poverty easily. Half of the poor each year are newly poor, and one in four Indonesians has been poor at least once in the last three years. A safety net is needed to protect vulnerable households and help the poor work their way out of poverty.

As Indonesia matures into a middle income country, the government is trying to improve social assistance as part of its plan to reduce poverty to 8-10 percent by 2014. There are now a number of household social assistance programs in Indonesia, including subsidized rice, health fee waivers, cash transfers for poor students, a conditional cash transfer, and a temporary unconditional cash transfer. It aims for each program to be more effective, and for the programs to work together better. The World Bank has just completed two major reports which examine social assistance in Indonesia. The intent was to provide Indonesian policy makers with high-quality and independent research that could be used to help inform and guide key policy decisions.

Identifying the Needs, Making Recommendations

Protecting Poor and Vulnerable Households in Indonesia is the first major assessment of social assistance in Indonesia. While some programs have been effective, the report finds that overall social assistance does not go far enough in protecting the poor and vulnerable. Programs do not cover enough people. Benefits are not sufficient or do not arrive at the right time, and some risks are not covered at all. Too many poor people miss out on programs altogether, and awareness of programs is low.

Existing programs need to improve, and greater coordination between programs is needed if Indonesia is to enjoy a complete safety net. Murti pointed out that improvements are still needed. “My son won’t eat the rice because it has bugs and smells bad,” she commented about the rice for the poor program that she receives. 

To create this system, it needs to reach a larger population and adding programs to address a broader range of risks. It also means spending more. Indonesia spends less on social assistance than other countries in East Asia, or in the rest of the developing world. However, it has the capacity and resources to create such a system.

Making Sure Poor Households Receive Benefits

For social assistance to work best, it needs to be received by the households who need it most. Trying to reach these households is called targeting, and this is the focus of Targeting Poor and Vulnerable Households in Indonesia.

Many poor household currently receive social assistance. However, many more remain excluded, while half of all benefits go to non-poor households. Problems exist in the way targeting is designed and performed, and each program targets in a different way.

Improving targeting can be done by building a National Targeting System. This is done in other countries to target all programs using a single list of the poor and vulnerable. Having one system means programs can work together better, target better, and reduce costs. Indonesia has begun building such a system, which is exploring innovative ways of allowing communities and poor households themselves to be part of the process. Hopefully this will mean better targeting and more effective programs.

By expanding and improving social assistance, and making sure it gets to the people who need it most, climbing out of poverty, and being protected from falling back in, can become a reality for the millions of Indonesians who still struggle in their daily lives.