New World Bank reports say Indonesia can afford to reform and scale-up social assistance programs
Jakarta, March 1, 2012 – A new World Bank report says key reforms are needed to build a comprehensive and integrated social safety net in Indonesia. Protecting Poor and Vulnerable Households in Indonesia, launched today, examines the performance of all major social safety net programs in Indonesia, including Raskin (subsidized rice for the poor) and Jamkesmas (health fee waivers for the poor).
“Indonesia already has the building blocks in place for a modern social welfare system,” says Stefan Koeberle, World Bank Country Director for Indonesia. “But there is much room for improvement to ensure that these programs function as a true social safety net, so that the right benefits reach the right people at the right time.”
The report recommends Indonesia to first reform current programs so that they can better improve the futures of poor families. Raskin, Jamkesmas and a collection of scholarship programs for the poor will need core reforms to improve how they protect poor families. Research conducted by the World Bank indicates that some programs show promise and can be expanded. Program Keluarga Harapan, a conditional cash transfer program, is effective in helping extremely poor families access health services, but reforms are needed so that the program also has an impact on improving education outcomes.
One of the challenges that Indonesia has faced in the past is ensuring that social safety net programs reach those who are most in need. The World Bank co-launched a companion report, Targeting: Poor and Vulnerable Households in Indonesia, which assesses how social safety nets are targeted and provides recommendations for how to improve targeting accuracy. With falling poverty rates, however, the World Bank encourages Indonesia to focus additional resources on the bottom 40% of the population that is at high risk of falling into poverty.
Indonesia can afford to reform and scale up its social safety net programs changes, claims the report. The country currently spends 0.5% of GDP in this sector, but middle-income countries typically allocate much more to tackle poverty and vulnerability. The Philippines budgets 1% of GDP, while Brazil and India allocate 1.4% and 2.2%, respectively.
“Our research helps to diagnose some of the problems with Indonesia’s social safety net programs,” says Vivi Alatas, Senior Poverty Economist for the World Bank in Indonesia. “Looking to the future, however, we can also learn from other countries that have successfully transitioned into middle-income economies and have modernized their social safety nets. These countries provide examples of how fragmented programs can be integrated into integrated social safety net systems, which are more effective and more efficient.”
The World Bank reports caution that while social safety nets are needed, they are one component of a broader national strategy for poverty reduction and social protection. Other components include job creation, social security, community development, and sustaining economic growth.
Both World Bank reports were officially launched at a conference co-hosted by the Secretariat of the National Team for the Acceleration of Poverty Reduction (TNP2K). Guest speakers included practitioners from Brazil and Chile, where integrated social assistance systems have been successfully established.