Poverty and inequality remains one of the major challenges in Indonesia’s development. The various poverty reduction programs implemented over the past decade have not yet been able to accelerate the reduction of poverty. The rate of poverty reduction has tended to slow down while inequality in expenditure increased and stabilized at the highest rate ever, with the poverty rate increasing slightly in 2015.

This trend has been affected by various factors, including the volatility of food prices, slower economic growth, and the low human resource capacity of the poor and vulnerable. Responding to this challenge, Bappenas requested that SMERU develop a policy paper intended to provide recommendations for an alternative policy approach to accelerating poverty reduction.

In summary, the paper highlighted that the strategy proposed in RPJMN 2015-2019 was comprehensive, but that the programs were scattered across various sectors, meaning that they lacked strength in coordination. In addition, the livelihood support components of the strategy – which are a key factor in increasing the income of the poor and the vulnerable – are still weaker than the other two strategies – comprehensive social protection and fulfillment of basic needs.

Thus, the paper recommends that the government place a higher priority on supporting the livelihoods of poor and vulnerable communities through direct programs and developing inclusive institutions, as well as mainstreaming poverty reduction in all development programs. In addition, some aspects relating to social protection and fulfillment of basic needs should be improved.