Indonesia’s ambitious social reforms launched

New social security programmes targeting tens-of-millions of the country’s poorest are the largest in the world.

As a scavenger recycling rubbish, Imas makes between $49-$74 a month [Al Jazeera]
Jakarta, Indonesia  Imas isn’t too sure when she was born, but she thinks she’s about 35. Proving her age is impossible as she doesn’t have a birth certificate; even confirming her name is problematic as she has no ID.

Imas – who like many Indonesians uses one name – lost her documentation when her house burned down two years ago after an explosion on a nearby construction site. She was already poor by most standards, relying on one of her five children to bring home about 50,000 rupiah ($4) a day as a street musician.
“Now I do this,” she told Al Jazeera, ripping a label from an empty water bottle, gesturing with it towards the trash piled up along the banks of Jakarta’s Ciliwung river. As a scavenger recycling rubbish, Imas makes between 600,000 ($49) rupiah and 900,000 rupiah ($74) a month – an income level that determines her as “near-poor”, according to the World Bank.
“My children got taken away by a foundation, they got picked up playing next to the road,” she said, pointing upwards to the flyover, under which she now lives in a home made of plywood scrap with her new husband. “It’s a good thing though – they are paying for my kids to go to school, and I can see them a few times a month.”

The situation for Imas and 100 million Indonesians living on between $1-$2 a day is likely to be made worse by a 30 percent fuel subsidy cut announced last week by new President Joko Widodo.

Fuel subsidies, which largely benefit Indonesia’s middle and upper classes, will cost the country about $21bn this year, and the government must redirect the funds into much-needed ports, roads and power plants.

But in the short term, higher fuel prices will push up the price of essential goods, including food.

Boosting social welfare

To mitigate the impact of rising prices on the poor, the government this month launched the Welfare Family Savings Programme (PSKS), comprising three new social security cards: the Prosperous Family Card (KKS), the Healthy Indonesia Card (KIS), and the Smart Indonesia Card (KIP). The new cards – which in their first phase are designed to target the poorest 15.5 million Indonesians, including “homeless and internally displaced people” – are part of what the World Bank described as the “largest social security reform effort in the world today“.
On face value, the scheme is merely a rebranding of existing programmes set up under the previous administration, including Indonesia’s national BPJS Kesehatan – the world’s largest “single payer” health scheme – that was set up in January.
But there’s a crucial difference. As part of the three-card package comes a pre-activated mobile phone SIM card linked to a saving account at state-owned Bank Mandiri. Using this system, the government said it hopes to transfer 200,000 rupiah ($16.50) a month to 15.5 million poor and homeless families to ease the pain of the fuel subsidy cuts. Beneficiaries will be able to cash in their payments at designated bank branches and post offices.
If successful, the new system will become the world’s largest government-funded cash-transfer programme, bigger than Brazil’s Bolsa Familia, a similar scheme that has covered 12 million families since its launch in 2003.
The government’s goals – to provide targeted welfare payments, guarantee access to 12 years of free education, and provide universal healthcare by 2019 – are admirable, but the system faces big challenges, first of which is boosting public awareness.

You currently have 8.5 million children who are school-age who are outside of the school system, so just in terms of putting the schools there ... that's a massive investment.

by - Cristobal Ridao-Cano, World Bank Indonesia

Questions remain

Imas had not heard of any of the new programmes, or even the Jakarta Health Card – a regional pilot scheme implemented two years ago when President Widodo was still the capital city’s governor. And like millions of other undocumented Indonesians, Imas said she believes she is unable to access these initiatives without being able to prove her identity.
The mobile phone technology behind the new programme is designed to help people without a mailing address or documentation to access services, but details remain vague and public knowledge of the schemes is extremely poor.
Health Minister Nila Moeloek and Social Affairs Minister Khofifah Indar Parawansa failed to respond to repeated requests from Al Jazeera to explain what the government is doing to educate Indonesians on how to access the benefits to which they are entitled.
Equally challenging for the new administration will be to actually provide the services promised by the new social security cards, particularly in the more remote eastern provinces of Indonesia’s disparate archipelago.
“[Besides public awareness] this is also a concern: As the demand for these services – whether it’s health or education – is increased by greater coverage, they must ensure that the supply of the services is adequate,” said Cristobal Ridao-Cano, lead economist at the World Bank Indonesia.
“Say with the KIS card, if you go to a health centre and the doctor is not there, then it’s an empty promise – it’s a card that gives you access to nothing.”
According to the World Bank, Indonesia spends 1.2 percent of its GDP on health, the fifth lowest percentage of GDP spent on health in the world. Unless greater funds are freed up there are concerns it will not be able to provide the benefits the new system claims to provide.
“There needs to be a lot more money,” Ridao-Cano said, adding the World Bank recommends that the Widodo administration increase spending to 2.5 percent of GDP on healthcare over five years, with further increases in the long term. Similar increases are also needed in education.

Imas (R) lives with her husband underneath an overpass in the bustling capital Jakarta [Al Jazeera]
Ridao-Cano also noted that education reform promises will be hugely costly. 

“You currently have 8.5 million children who are school-age who are outside of the school system, so just in terms of putting the schools there with the classrooms and the seats, never mind the quality, that’s a massive investment,” he said.

Growing rich-poor divide
The reforms come at a time of growing inequality in Indonesia. The creation of 20 million new jobs since 2001 and average annual GDP growth of about 6 percent over the past decade has bolstered the ranks of Indonesia’s “consumer class”.

But despite experiencing growth that might have completely eliminated extreme poverty, poor public services have contributed to the growing divide between rich and poor.
Between 2003 and 2010, the consumption of the richest 20 percent of Indonesians grew by 5.9 percent, but for the poorest 40 percent of households, it grew by only 1.3 percent.

Indonesia’s Gini coefficient – a measure of income inequality – was comparable to other lower middle-income countries at 0.41 in 2013, making a significant jump from 0.29 in 2000.

Despite a halving in the number of Indonesians living on less than $1.25 a day between 1990 and 2005, child malnutrition rates have increased over the last decade and are higher than poorer countries such as Vietnam. More than 37 percent of Indonesian children under age five suffer stunted growth, which causes impaired brain development, up from 28.5 percent in 2004.
Millions of Indonesians have been lifted out of absolute poverty, but most have not reached much further. The government’s ambitious social security reforms will be needed to ensure the poor, or “near-poor” such as Imas, are not written out of Indonesia’s growth story.
Source: Al Jazeera