Poverty runs a thread through Indonesia as COVID-19 puts millions on the brink
As the pandemic reverses decades of progress in Southeast Asia’s largest economy, the programme Insight looks at the impact on the poor and what their future looks like.
JAKARTA: Torikhim knows the streets of Jakarta like the back of his hand.
The 56-year-old, who goes by one name, has been driving a three-wheeled taxi, or “bajaj”, since 1994, taking passengers through the back streets to avoid the city’s notorious traffic jams.
But the COVID-19 restrictions on movements, and other safe distancing measures, are killing his livelihood.
Before the pandemic, he used to earn up to 1.8 million rupiah (S$165) a week. He considers himself lucky if he can get a fifth of that now to support his wife, son and grandson.
The latest round of large-scale social restrictions, imposed on the city of more than 10 million since Sep 14, is another blow he must endure.
READ: Return to Jakarta lockdown will hit economy this quarter, but bitter pill needs to be swallowed: Economists
On top of his financial pain, he has been in physical pain for well over a month. A splinter punctured his right index finger while he was making a wooden table at home.
The infected area has become sore and swollen, but he has not seen a doctor because he cannot afford to pay for his daily needs, let alone seek medical treatment.
“The pain lingers, day and night. I can’t sit still, let alone sleep. I need to walk around to distract myself. It’s painful just to talk about it,” he said.
Life has become harder for not only thousands of motorcycle taxi and bajaj drivers in Jakarta, but also some 14,000 people eking a living as farmers and fishermen 2,600 kilometres east, on Lembata island.
The pandemic has made it difficult for them to sell fresh fish, meat, produce and other perishable goods to customers from nearby islands, as movements have been restricted.
On a good day, fisherwoman Fajariah Jari used to sell around 15,000 rupiah worth of fish. But that is no longer the case, with demand for fish also plunging because of the closure of restaurants and shopping centres.
“The village market is very quiet,” said the 48-year-old. “The price of fresh water is becoming more expensive. We’re extremely worried.”
Stories of poverty, hunger and joblessness have become a common thread running through many of the vulnerable segments of Indonesia’s population these days.
COVID-19 has not only brought the economy to its knees, but also reversed decades of progress in Southeast Asia’s largest economy.
Round the world, COVID-19 could push up to 100 million people into extreme poverty this year, the World Bank has warned.
In Indonesia, close to five million more people may fall below the poverty line by year end. It could be even more, depending on the pandemic scenario.
“In the last 20 years, the growing number of the middle class, especially the people who are leaving the poverty line and then going into lower-middle-class status, is around 55 million people,” noted ISEAS-Yusof Ishak Institute visiting fellow Made Supriatma.
“But these are the segments of society (that are) the most vulnerable. I think the risk of them just going back into poverty is very high.”
Will the situation become worse before it gets better? The programme Insight looks at the impact of the pandemic on the poor in Indonesia and what their future looks like.
WATCH: Can Indonesia’s poor survive the coronavirus crisis? (5:47)
In the second quarter, Indonesia’s gross domestic product plunged 5.32 per cent — its first contraction in more than 20 years and worse than the government’s initial estimate of 4.3 per cent.
By June, the country’s chamber of commerce and industry said more than six million Indonesians had lost their jobs.
“Another concern is the large number of informal workers in Indonesia. A lot of people may be pushed from formal employment into informal employment,” said Winfried F Wicklein, Asian Development Bank (ADB) country director for Indonesia.
“That’ll make them increasingly vulnerable.”
Jakarta food seller Hisam Masruri, for example, works 18 hours a day but barely makes enough money.
The 30-year-old has been busy helping his wife to sell “ayam geprek”, a popular fried chicken dish, because he does not get enough passengers in his other job as an app-based ojek (motorcycle taxi) rider.
The bulk of his regular customers have been laid off or told to work from home. But he cannot afford to give up ride-hailing because his family cannot live off just one source of income.
“My income’s dropped by almost 60 to 70 per cent. I used to earn between 400,000 and 500,000 rupiah a day. But now, just to get 100,000 rupiah is extremely hard,” he said.
I have to search here and there to buy gas and water. I have to borrow money.
He also owes a bank after his garment business collapsed two years ago, and debt collectors often come knocking at his door. He was recently forced to sell his television set to help repay the debt.
Home for the couple and their six-year old boy is a rented room measuring 2.5 by 3 metres. Besides their food business expenses, Hisam must pay for his son’s education as well as their rent and utilities bill.
And he has now run out of things to sell to help cover his debts. Everybody, he said, is suffering.
“Some of my friends don’t even dare to (go) back home whenever they aren’t able to bring back money. They don’t know how to explain this to their wives and children,” he added.
“You’re dying. If you’re a patient, you’re already in a critical stage. Just imagine if you only earn 30,000 to 50,000 rupiah a day (in Jakarta) and you have two or three children?”
In Surabaya, Indonesia’s second largest city, dance troupe leader Sugiyanto is also struggling to make ends meet. His troupe, which performs the “reog”, a traditional masked dance, relies solely on money from event organisers.
In normal times, with the usual public cultural and private events, they can receive up to 20 million rupiah a month, divided among members of the troupe.
But with social distancing measures, coupled with public fear of coronavirus infection, they have had five months of zero performances.
“We’re in a dire situation. It’s not only us but every artist in Surabaya (who) is affected,” said Sugiyanto, 57, who has been with the same troupe since he was six.
His savings have dwindled to almost nothing, and he had to pawn his family’s jewellery to survive and support them.
“We’ve pawned everything valuable … including our vehicle ownership document and TV set. The last items we pawned were our wedding rings. We were desperate,” he said. “We had to do it, otherwise the children wouldn’t be able to eat.”
Only two years ago, Indonesia made history when it reduced the poverty rate to a single digit for the first time since independence in 1945.
It cut the rate by more than half since 1999 to 9.2 percent in September last year, when the national poverty line was set at 441,000 rupiah per capita per month, or about S$1.35 a day.
But the country’s poverty incidence may now go up to 12.8 per cent, estimates the ADB — out of a population approaching 270 million.
The government is doing what it can, said Finance Minister Sri Mulyani Indrawati, to alleviate the sufferings of ordinary Indonesians.
“We’re widening our deficit, which is traditionally or legally … a maximum three per cent of GDP. With the special law that was passed and agreed on by Parliament, we’re allowed to have more than three per cent,” she noted.
“We’re expecting to have a 6.3 per cent deficit, and that’s to cover almost 700 trillion rupiah of additional spending for COVID-related (funds), including for the economic recovery.”
This includes 2.4 million rupiah being wired to almost 16 million formal workers, and 28.8 trillion rupiah in 13th month salaries paid to civil servants and state pensioners. The main objective is to boost consumer spending and revive the economy.
Financial support and credit assistance have been extended to state-owned firms and small private enterprises. A staple food programme, which provides food items for the poor, has also been expanded to cover 20 million households during the pandemic.
Around 200 trillion rupiah have been allocated for social protection, which also includes programmes like the Family Hope Programme providing initial cash transfers of 600,000 rupiah a month to poor families.
“The government’s response to the recovery has been quite strong. The design of the recovery programme — we’ve looked at it very carefully — is in line with international good practice,” said Wicklein.
What the trick will be, however, is to implement these measures in a speedy manner.
As at the end of August, less than half of the social safety net budget had been used, before the disbursements reached 72 per cent last week.
Analysts put the blame for the slow distribution of aid on red tape, inadequate data on applicants and the country’s sheer size.
Torikhim is one of those who have yet to receive any help from the government. “It’s not that I’m begging for pity … but I swear that I haven’t got anything. Neither has my wife,” said the taxi driver.
Indonesia’s finance minister acknowledged the “very hard situation for all”.
“Even our social safety net programme, which is covering the 20 million poorest families … isn’t always capturing all the real poor people. There’s always an exclusion/inclusion error,” said Sri Mulyani.
“Our challenge is that since 2015, the updating of the poor families’ data has been delegated to the local governments. And unfortunately, not all local governments (have been) updating those data, until COVID hit.”
WATCH: COVID-19 crisis in Indonesia — the full episode (48:58)
RESILIENCE, SO FAR
While the country’s poverty eradication efforts have been pushed back by a decade, many Indonesians have displayed enough resilience to weather the economic impact so far.
A couple of months ago, Lilik Ismawati lost her job as a cosmetic sales assistant — and her monthly income of 3.4 million rupiah — in one of Surabaya’s shopping centres. But the 39-year-old has not lost hope.
“I have to rack my brain and come up with a solution,” she said. “I’ve been dreaming of starting my own business … I want to expand my horizon so that I don’t have to rely on somebody else for employment.”
She has learned to make “cireng” (rice tapioca) snacks, which are popular among Indonesians, from her sister. And she has been offering her products for sale via Instagram.
Her husband helps her to promote the snacks online and delivers them to customers.
It is a tough business, and he himself has taken a massive pay cut because his company requires him to come to the office only once a week now.
But the couple, who have two young sons, are grateful that they can earn more than 200,000 rupiah on a busy day.
“I’m lucky that my husband still holds government health insurance. So we’re covered. But from the start of the pandemic, I don’t remember receiving any other assistance from the government,” said Lilik.
Yosef Pali Limbongan, 57, is another who lost his job. He used to run a guest house and local tours in Surabaya, but the provincial capital of East Java became one of Indonesia’s major cities hit hardest by the pandemic.
He decided to return to his hometown and tend to his family’s rice fields in the Toraja highlands on Sulawesi island.
“I’d stopped farming for 20 years now. With COVID, I’ve no other choice. I have to carry on living by becoming a farmer again,” he said.
The death of tourism has encouraged locals like him to return to agriculture, which is proving to be resilient during the crisis, growing by 2.19 per cent year on year in the second quarter while most other sectors are suffering.
His family are not selling their rice, however, as they need it for their own consumption, he said. So he also raises livestock and sells essentials such as sugar and cooking oil to make ends meet.
His monthly income has dropped by more than 70 per cent to two million rupiah. But there are others who less fortunate.
“The government’s providing cash assistance during the pandemic for my family, but I can’t accept it. There are other people who need it more,” he said.
Over in Lembata, dozens of women including Fajariah supplement their meagre incomes by continuing the tradition of weaving the island’s famous textiles. They are also growing cotton as a future investment.
But selling the textiles to collectors outside the island is challenging because of the transport costs.
While the debate goes on about how much longer the lockdowns should last, the country is financially more stable compared to over 20 years ago, when the Asian financial crisis plunged more than 15 million Indonesians into poverty.
“They might have lost their incomes from tourism, but if we look at whether they’re able to fulfil their basic needs, it seems that they can,” said Singapore University of Social Sciences senior lecturer Rita Padawangi.
DOUBTS ABOUT THEIR FUTURE
The government’s latest GDP forecast this year ranges from a 1.1 per cent contraction to a 0.2 per cent growth, compared with last year’s 5.02 per cent expansion.
“I think we’re still within zero per cent into minus 0.5,” said Sri Mulyani.
“But this really depends on the fourth quarter. We’re aiming to have a better recovery. And then for next year, we’ve already discussed with parliament, the growth estimation is between 4.5 and 5.5 per cent.”
President Joko Widodo has said Indonesia’s COVID-19 cases would peak in September and then fall. For many of the poor who have doubts about their future, all they can do is hope.
“If nothing changes by January, I hope that my faith is strong enough to weather this crisis,” said Sugiyanto. “If you’re not strong, then what can you do? What would you do when you see your grandchildren and children crying?”
While it remains uncertain if growth will bounce back in the short term, President Joko unveiled a 2,747.5 trillion rupiah budget in August to put the economy back on track next year through increased spending.
READ: Jokowi unveils US$185 billion budget for 2021; Indonesia's GDP targeted to grow between 4.5% and 5.5%
The government set aside 419.3 trillion rupiah for social safety net programmes and direct cash transfers to the poor, while healthcare was allocated 170 trillion rupiah to meet the growing demands.
The problem, however, is that healthcare “hasn’t been a priority” before, said Rita. “We can see how many hospitals there are outside Java and what the quality is.
“How would we expect that the areas with high incidences of poverty would be able to get the opportunity to fulfil these healthcare needs if the facilities aren’t sufficient?”
The best way to reverse the impact of the health crisis, believes Torikhim, is to return a sense of normality to the streets, to help ease his financial burden.
“How can you survive and live in Jakarta if there’s no end to this?” he questioned.
Hisam agreed that reopening the economy will allow them to get back on their feet.
“If every day we have to deal with news about COVID-19 and all the updates about affected areas, then things would never return to normal,” he said.
Normal means factories are running again, students go back to schools, the economic wheel is running again, app-based motorcycle riders are getting passengers.
For now, he and his wife get ready every day to sell their chicken dish, hoping that business will be better than the day before.
“(People) prefer to buy goods at the market and then cook at home … I’ve tried to sell my chicken online, but I’ve only got a single order, and even that came from my friend,” he said.
“But there are people who are less fortunate than me. Some have to live on the streets because they can’t pay the rent. Some have to go back to their hometown after being retrenched … There’s a long list of sad stories.”
Torikhim does not know if he will be one of them. “If my wife and I return to the village, we’ll just end up eating tapioca and whatever we can get our hands on,” he said.
He wants to see a doctor for his wound but does not have “any money at all”.
“Even if I had 200,000 rupiah … I’m afraid he’d amputate my finger. I may have to pay only 100,000 rupiah for an injection, but if I need surgery, even a minor one, it will cost me a lot,” he added.
“I hope that COVID-19 will go away soon. I want life to return to normal.”
Watch the full Insight episode here. The programme airs on Thursdays at 9pm.