Poverty remains major challenge for Indonesia: World Bank

from Yahoo News via AFP

JAKARTA (AFP) - Nearly 50 percent of Indonesia's population still lives on less than two dollars a day despite progress in recovering from the economic crisis of 1998 which plunged millions of people back into poverty, the World Bank said.

While poverty rates were now back to pre-crisis levels, reducing poverty remains one of the country's main challenges, the bank said in a report titled "Making the New Indonesia Work for the Poor".

"Despite good progress in reducing poverty since the crisis, nearly 50 percent of the population still lives on less than two dollars per day.

"The secret to reducing poverty is to help these people participate in Indonesia's rising economic growth," World Bank country director Andrew Steer said.

Many poor remain trapped in a vicious cycle of inter-generational poverty as they cannot afford to give their children an education which would enable them to escape, he said.

"At present the poor have less access to the assets that enable them to participate (in the economic growth), and 40 percent of them cannot afford to give their children a secondary education, thus perpetuating poverty from one generation to the next," Steer said.

A large number of Indonesians also live just above the poverty line and are vulnerable to falling into poverty, the bank said.

Indonesia's vast geographic spread also created wide regional disparities in income, with people in some regions having attained developed world standards while others were at the lower range for developing countries, the bank said.

The bank outlined three priorities to help the poor take advantage of economic growth, including improving infrastructure to revitalise agriculture, creating a network of rural roads to give the poor access to markets and providing microfinance.

The bank also urged Indonesia end its ban on rice imports to prevent the large price rises that hurt the poor the most, as shown by a 33 percent price rise which the bank said largely accounted for an increase in poverty rates last year.

"Lowering the rice price and creating greater price stability by removing the ban on rice is the fastest way for the government to reduce poverty quickly," it said.

The report also urged increased spending to reduce high maternal mortality rates, improve access to water, and improve sanitation.