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.