More than 2 million people in Java at risk of falling into poverty due to coronavirus outbreak: Finance Ministry

View of the Bundaran HI area from the MRT entrance in February 2020. <em>Photo: Nadia Vetta Hamid for Coconuts Media</em>
View of the Bundaran HI area from the MRT entrance in February 2020. Photo: Nadia Vetta Hamid for Coconuts Media

Indonesia’s Finance Ministry recently estimated that the national poverty rate will continue to increase amid the COVID-19 pandemic, with Java expected to be the most affected island in the country. 

Putut Hari Satyaka, who heads the Special Funds Transfer of the ministry’s Directorate General of Fiscal Balance, said that the population in poverty in Java is projected to increase by 640,000 to 2.13 million people this year.

“The heaviest [impact] is in Java, because the epicentrum of COVID-19 is in Java. It doesn’t mean that other regions are not impacted heavily. Sumatra is severely [impacted],” Putut said in a virtual teleconference today.

With Java being Indonesia’s most populated island, the Large-Scale Social Restrictions (PSBB) protocols that have been implemented throughout have severely disrupted the island’s economy.

Meanwhile, the population in poverty in Sumatra is predicted to rise by 280,000 to 850,000 people.

As for Bali and Nusa Tenggara islands, the poverty rate is predicted to increase by 70,000 to 250,000 in each province. Sulawesi is predicted to see 70,000 to 240,000 people falling below the poverty line, while Kalimantan could see 60,000 to 180,000 entering poverty.

The current estimates show that 40,000 to 130,000 people may fall into poverty for both Maluku and Papua.

Putut said the government has taken several measures to avoid these grim projections, including by strengthening the financial aid for villages (TKDD), which has been diverted for COVID-19 countermeasures as regulated in Presidential Decree (Perpres) issued earlier this year. In the Perpres, regional governments are advised to rationalize spending of this year’s regional budget (APBD) to instead focus on handling the viral disease.

Finance Minister Sri Mulyani previously said that the Indonesian economic growth this year could potentially decline to 2.3 percent or -0.4 percent at the very worst. Under Indonesia’s worst case scenario, official estimates show that up to 3.78 million people could fall below the poverty line and 5.23 million could be unemployed.

Additionally, the Indonesian Chamber of Commerce and Industry (Kadin) reported today that up to six million people in Indonesia have been furloughed or laid off as the COVID-19 pandemic takes its toll on businesses. Kadin’s Deputy Chairwoman Shinta Kamdani said in a virtual discussion that most workers were furloughed as business owners didn’t have sufficient funds for severance pay.


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