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Asean & Global Updates
POSTED | 11:51 AM | 08-12-2015

World Bank warns of Indonesia’s rising inequality

Indonesia is at risk of leaving its poor and vulnerable behind as the nation’s income inequality continues its rapid rise, a World Bank official said on Tuesday (8 Dec 2015).

World Bank Indonesia country director Rodrigo Chaves said Indonesia’s poverty reduction had begun to stagnate as it had a near zero poverty decline in 2014. Indonesia’s inequality level is high, climbing at a faster rate than most of its East Asian neighbors.

“Income inequality is rapidly rising, up to one third of this is explained by the inequality of opportunities,” said Chaves at the launch of the World Bank’s “Indonesia's Rising Divide” report in Jakarta on Tuesday (8 Dec 2015).

The analyst further said that healthy and well-educated children in Indonesia lived side by side with children who suffered from malnutrition, learned little when they were in school and dropped out too early. 

“There are stark inequalities between regions as well. For example, 6 percent of children in Jakarta do not have access to proper sanitation, while at the same time, 98 percent of children in rural Papua have no access,” The Jakarta Post quoted Chaves as saying.

When asked to choose between lower economic growth and less inequality, more than 50 percent of Indonesians chose less inequality.

According to the World Bank report, Indonesia’s economic growth over the past decade has primarily benefited the richest 20 percent and left the remaining 80 percent of the population, about 205 million people, behind.

With rising disparities in living conditions and an increased concentration of wealth in the hands of the few, Indonesia’s level of inequality is becoming increasingly high and continues to climb faster than most of its East Asian neighbors, the report says. 

World Bank Indonesia senior economist Matthew Wai-Pai said that in the long run, it is improved access to quality health care and education that would reduce unequal access to good jobs. In the short run, more could be done to improve the skill of today’s workers and create more productive jobs.

“To improve education, Indonesia could learn from Vietnam. Why is education in Vietnam achieving better results? This is because it has a competitive curriculum and the teachers are well-paid,” he said. 

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