Indonesia Pushes Back on World Bank Poverty Measure, Citing Local Economic Realities

 

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JAKARTA, investortrust.id — Indonesia’s top statistics official has pushed back against the World Bank’s latest poverty assessment, arguing that global benchmarks cannot be applied without considering local economic conditions.

 

Amalia Adininggar Widyasanti, Head of Statistics Indonesia, said poverty thresholds must reflect each country’s unique socioeconomic landscape and cost structures, rather than relying solely on standardized global figures.

 

“Poverty should be measured based on the distinctive characteristics of each country,” Amalia said in a press briefing at the Presidential Palace in Jakarta on Wednesday, April 30, 2025.

 

She explained that Indonesia calculates its national poverty rate by aggregating data from all 38 provinces—each with different living costs and standards. The method is designed to better reflect disparities across regions, such as between Jakarta and South Papua.

 

 

World Bank’s $6.85 Poverty Line Not Comparable

 

The World Bank recently reported that 60.3 percent of Indonesians live below the poverty line using a threshold of $6.85 per person per day, based on 2017 purchasing power parity (PPP) for upper-middle-income economies.

 

However, Amalia emphasized that this figure should not be interpreted literally, as it is derived from outdated PPP data and does not account for current exchange rates.

 

“You can’t simply convert the figure using today’s exchange rate. The PPP used was from 2017, so the conversion value will differ,” she said.

 

Based on that PPP benchmark—Rp 4,756.17 per US dollar in 2017—the daily spending threshold equates to Rp 32,579.70 per person, or around Rp 977,393 per month.

 

Purchasing power parity is a statistical adjustment used to compare the cost of a fixed basket of goods between countries. While it allows cross-country comparisons, it does not reflect actual prices faced by consumers today.

 

The World Bank forecasts that poverty in Indonesia, measured by the $6.85 threshold, will gradually decline to 58.7 percent in 2025, 57.2 percent in 2026, and 55.5 percent in 2027.

 

Under the lower-middle-income threshold of $3.65 per day, Indonesia’s poverty rate stood at 15.6 percent in 2024 and is expected to fall to 14.2 percent in 2025.

 

Focus Should Be on Reducing Poverty Quickly, Not the Numbers

 

Amalia stressed that Indonesia’s priority is not the specific poverty rate itself, but the pace at which poverty is being reduced.

 

“What matters most is not the number or level, but how quickly we can bring it down,” she said.

 

She added that each country uses its own methodology to define and measure poverty, and the World Bank’s estimates should be interpreted in that context.

 

“Let’s be cautious in interpreting the 60.3 percent figure from the World Bank,” she said.

 

Indonesia’s own poverty line is based on expenditure—not income—and is meant to capture the cost required to meet minimum living standards. This includes the cost of food that provides 2,100 kilocalories per person per day and essential non-food items.

 

In Jakarta, for example, the poverty threshold is about Rp 850,000 per person per month. For a household of four, the minimum monthly expenditure would be around Rp 3.4 million.

 

“If a household has five members, then the minimum spending would be about Rp 4.2 million per month. This isn’t income—it’s what’s required to meet basic needs,” Amalia explained.

 

 

Extreme Poverty Standard Already in Use

 

Amalia also noted that Indonesia already applies the World Bank’s global standard for extreme poverty, defined as living on less than $2.15 per person per day based on PPP.

 

“That’s the benchmark we use for identifying extreme poverty,” she said.

 

Even so, Amalia cautioned against assuming that those living above the poverty line are economically secure. Many remain highly vulnerable and at risk of falling back into poverty.

 

“Just because a household is above the poverty threshold doesn’t mean they’re well off. There’s a segment we classify as economically vulnerable,” she said.

 

To address this, the government provides social assistance programs that offer benefits valued at two to four times the poverty threshold, ensuring broader protection.

 

Nationally, the average poverty line stands at around Rp 595,000 per person per month, though this varies significantly between provinces.

 

“Even the World Bank acknowledges that poverty lines should differ across regions, depending on local conditions,” Amalia said.

 

She concluded that Indonesia’s methodology is designed to more accurately reflect the actual cost of living and ensure that anti-poverty measures are effectively targeted.