Indonesia: Growth of the Few is No True Growth
January 12, 2014 Leave a comment
Editorial: Growth of the Few is No True Growth
By Jakarta Globe on 1:58 pm January 11, 2014.
Economic growth should benefit all members of society. A widening income gap hurts social stability and slows overall gross domestic product growth.
According to Paramadina University, the wealthiest 10 percent of Indonesians are expected to enjoy 30 percent of the country’s GDP this year, while the poorest 10 percent will only be able to enjoy 3 percent.In cities across the country, shopping malls are being built, people are buying more cars and fast-food restaurants are opening faster to meet the growing appetite of an emerging middle class.
With that shift in the population, rural areas could lose out, being passed over for development. Historically, in any growing economy, industrialization has played a key role in this demographic shift, and the nation’s youth tend to flock to cities for higher-paying jobs.
A government scheme to pay its people in the countryside as part of a welfare program can only end up keeping them in poverty, when the state should be finding ways to provide our rural population with a substantial means of living.
As the nation aspires to have among the biggest economies in the world within a generation, policy makers should ensure that economic prosperity benefits all and not just the metropolitan elites.
The solution, however, is not greater welfare but enhanced economic opportunities, including greater access to credit, especially for micro businesses.
Currently the banking sector only reaches about 20 percent of the population. This means that the vast majority of Indonesians are excluded from the financial system. They must be included if we are to narrow the income gap.
Growth with equity has long been the stated objective of the government. There remains much work to be done in terms of helping the least economically well-off improve their lives.
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