4 Indonesian billionaires have collective wealth of over 100 mil population – report

 24th February 2017

DESPITE Indonesia’s economic boom, the collective wealth of the richest four billionaires was more than the total wealth of about 100 million of the population, a study revealed.

The study by international aid and development charity organisation Oxfam, released earlier this week, said the four billionaires were worth US$25 billion in 2016, which was more than the wealth of the bottom 40 percent of the population combined.

“In just one day, the richest Indonesian man can earn from interest on his wealth over one thousand times more than what the poorest Indonesians spend on their basic needs for an entire year,” Oxfam said in the 48-page report.

“The amount of money earned annually from his wealth would be sufficient to lift more than 20 million Indonesians out of extreme poverty.”

According to the organisation, Indonesia has the sixth worst inequality of wealth in the world, with the wealthiest 1 percent of the population owning nearly half of the country’s total wealth in 2016.

There was only one billionaire in 2002 and that number grew by tenfold to 20 in 2016 –  all of which were men.

Oxfam also said gender inequality, which is regarded as one of the oldest forms of inequality, is pervasive in Indonesia and acts as both a driver and a consequence of economic inequality.

The group also noted that since 2000, economic growth has taken off in Indonesia with a significant increase in the country’s score on the UN’s Human Development Index (HDI) with the proportion of people living in extreme poverty falling from 40 % to 8 %.

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However, it said the benefits of growth have not been shared equally, and millions have been left behind.

Urban inequality, Oxfam pointed out, has been rising, which presents an inequality risk for the future as Indonesia has the highest urbanisation growth in Asia.

Jakarta government workers clean up a canal which runs into the Cilliwung river in Jakarta, Indonesia. Pic: Reuters

“The widening of the gap between the rich and the rest is a serious threat to Indonesia’s future prosperity,” Oxfam said, also pointing out the high inequality between rural and urban areas.

Between rural and urban areas, Oxfam said unequal access to infrastructure such as electricity and good quality roads compounded spatial inequalities.

“If inequality is not tackled, then reducing poverty will be much more difficult, and social instability could increase.”

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Comparing the situation for regular Indonesians with the $3.10 World Bank ‘moderate’ poverty line, Oxfam said the number of Indonesians living in poverty shoots up to 93 million or 36 percent of the population. It said many more Indonesians live just above the poverty line, making them vulnerable to falling back into poverty.

In the past 20 years, Oxfam said the gap between the richest and the rest has risen faster than in any other country in Southeast Asia.

“The drivers of inequality in Indonesia are complex and multi-layered, ranging from structural causes to more specific policy choices.”

Following a period of relatively equitable growth, Oxfam said Indonesia’s move to introduce market fundamentalism following the financial crisis of 1997 has produced an economy that enables “those at the top to capture by far the greatest share of the benefits of growth.”

It said this has resulted in an increase in political capture, as those at the top have been able to use the influence that wealth bestows to rig the rules in their favour at the expense of the many.

“Low wages and insecure work for those at the bottom further compounds inequality and prevents workers from lifting themselves out of poverty.”

Oxfam also said concentration of land ownership in the hands of big corporations and wealthy individuals means that the benefits of land ownership accrue to those at the top, at the expense of the rest of society.

“Research also suggests that inequality is hampering economic growth. Conversely, taking action to narrow the gap could lift millions of people out of poverty, lead to a more cohesive society, contribute to sustainable and equitable growth, and help Indonesia to meet its Sustainable Development Goal (SDG) targets.”