Pandemic wipes out years of progress on Asian poverty, from Indonesia to the Philippines and Thailand
Millions of Indonesians have been left struggling by the pandemic, with the country on track to record one of its highest poverty rates in over a decade
/NOVOSTIVL/ Times have been tight for Lasmi Asih’s family ever since her husband lost his job at a department store in Jakarta amid the coronavirus pandemic.
She is now the sole breadwinner, and must provide for both herself, her husband and their two children on a single garment factory worker’s wage – which has forced some difficult choices.
“We are really struggling to get by, we used to have two incomes … not that much but enough to fulfil our daily needs,” Lasmi said. “Our finances have been badly hit by the pandemic, we’ve had to adjust everything, even what we eat … like substituting chicken with egg.”
The 4.2 million rupiah (US$298) Lasmi earns working at the factory each month is not enough to cover the family’s expenses, and a cash handout of 2.4 million rupiah from the government went straight to buying baby milk formula, nappies and other essentials for her one-year-old daughter, she said.
o she borrowed 10 million rupiah from a bank and another four million from a loan shark, who charges so much interest that Lasmi fears she might never pay the money back.
“It’s like digging a hole to fill a hole. It’s hard to pay them back because our expenses are bigger than our income,” the 36 year-old said. “I can afford not to eat, but my kids cannot.”
Lasmi is one of millions of Indonesians who are struggling financially amid the pandemic, and are now at risk of slipping back into poverty as years of painstaking progress in Southeast Asia’s largest economy looks set to be wiped out.
Even in the best-case scenario, the Jakarta-based SMERU Research Institute predicts the pandemic will force some 1.3 million Indonesians into poverty this year, with the country’s poverty rate projected to rise to 9.7 per cent from last September’s 9.2 per cent.
Under its worst-case projections, however, the poverty rate will increase to 16.6 per cent by the end of the year – higher than it has been at any point since 2007.
Official government figures will not be announced until January, but according to the World Bank 115 million Indonesians have been left vulnerable to poverty by the pandemic.
Coronavirus infections, meanwhile, show few signs of slowing, with around 6,000 new cases being recorded every day in recent weeks. On Wednesday, the country also posted its highest daily death toll yet from the pandemic with 171 fatalities, bringing the national toll to more than 18,000 – the highest in Southeast Asia.
“Before the pandemic, Indonesia was on track to achieve its sustainable development goals,” said Asep Surhayadi, a researcher at SMERU. “Now the situation has changed for the worse, so we can predict that there will be some delays in achieving the goals, not only for poverty but also for other goals such as gender and income equality, and improving education, health, and employment.”
Indonesia plunged into a recession this year for the first time since the Asian financial crisis of 1997-98, after recording economic contractions of 5.32 per cent and 3.49 per cent in the second and third quarters, respectively.
It is labourers like Lasmi who will be among the hardest hit by the downturn, especially with the freeze on minimum wage increases that has been put in place by 29 of Indonesia’s 34 provinces, at the central government’s request.
“Labourers don’t go from middle class to poor, but we go from poor to poorer in this pandemic,” said Dian Septi from local workers’ rights group Marsinah FM. “Many labourers are now indebted to loan sharks … [and] are also at risk of losing their rented houses because they can’t pay rent.”
As of August, 2.67 million Indonesians had lost their jobs amid the pandemic, according to data from the country’s statistics agency, pushing the country’s unemployment rate above 7 per cent – a level not seen since 2011.
For 26-year-old Siti Nurrahmah, who quit her job as a flight attendant last summer while still pregnant with her first child, this has meant watching her husband lose his position at a “big-name production house” as her own prospects of finding work again have withered.
“Before I resigned, our joint income was 20 million rupiah per month. Now? It’s nothing,” she said.
To try and make ends meet, the couple cleared out their savings and sold the family car, but even with the money Siti makes from an online clothes shop she launched this year, they still do not have enough to cover their daily expenses.
“My greatest worry is that there will be no job for me [in future]. I don’t view my prospects of working as a flight attendant again too brightly, to be honest,” Siti said. It is not just Indonesia suffering the adverse economic effects of coronavirus, with poverty rates expected to rise elsewhere in Southeast Asia, too.
An estimated 2.7 million people in the Philippines have been pushed into poverty this year, the World Bank said on Tuesday, while Thailand’s state planning agency last month estimated that more than 11 million households were at risk of poverty amid the pandemic.
In Malaysia, a decision to revise the poverty line upwards in July from 980 ringgit (US$242) to 2,280 ringgit also bumped the poverty rate up to 5.6 per cent from the 0.2 per cent it had been under the old threshold, based on last year’s statistics.
Less-developed countries such as Cambodia have been badly hit too, with the World Bank estimating that the country’s poverty rate will increase by as much as 11 percentage points this year. In Laos, up to 214,000 more people are projected to fall back into poverty and in Myanmar, over 60 per cent of 1,000 rural households surveyed by the International Food Policy Research Institute in September said they were getting by on less than US$1.90 per day – a huge increase from January’s 16 per cent.
Overall, as many as 38 million additional people are expected to be living below the poverty line across the Asia-Pacific region by the end of this year, according to the World Bank. That is 33 million more than there would have been had the pandemic had never happened, bringing the total number of people living in poverty across the region to 517 million.
Worldwide, the organisation projects up to 115 million people will be pushed into extreme poverty this year, reversing around three years’ worth of global progress.