The Indonesian Crisis: A Human Development Perspective

11. State-Created Socio-Cultural Poverty: Lessons from Some Micro Studies

296 Sukamdi and Setiadi© 2003 Institute of Southeast Asian Studies, Singapore m n SUKAMDI AND SETIADI1 Introduction There is great variation in the perceptions and evaluations on the economic crisis in Indonesia made by academicians and practitioners. How did the crisis affect the people’s lives and how could it be solved? How was the socio-economic situation during 1998 and 1999? How vulnerable and miserable were the people at that time? Mubyarto (2000) has shown that there are roughly two different views on the conditions during the crisis in 1997–99. The first is the doomsday view, which perceives the situation as being catastrophic and devastating. The second is the “not that bad” view, which sees Indonesians suffering but not that much. The doomsday view is usually macroeconomic in nature. The drastic drop in the value of the rupiah, the sky-rocketing prices, the collapse of the banking system, the fall in foreign reserves, the high rate of unemployment, and its drastic increase are some examples of indicators often cited as signs of the collapse of the macroeconomy. Policy-making, including recommendations by foreign institutions such as the International Monetary Fund (IMF), is also often based on this macroeconomic point of view. On the other hand, the “not that bad” view is reflected in the almost “business as usual” activities of many people, especially among the 11 296 STATE-CREATED SOCIO-CULTURAL POVERTY Lessons from Some Micro Studies Reproduced from The Indonesian Crisis: A Human Development Perspective, edited by Aris Ananta (Singapore: Institute of Southeast Asian Studies, 2003). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at . State-Created Socio-Cultural Poverty 297© 2003 Institute of Southeast Asian Studies, Singapore middle and lower income groups. Both traditional markets and modern supermarkets are as crowded as before. Traffic in Jakarta is as bad as before the crisis. Small and medium-sized firms, including those in the informal sectors, continue to make profit. The poor, who had been poor even before the crisis, may not have noticed the difference between the crisis and non-crisis periods. This chapter argues that the doomsday view was the underlying factor in policy-making (by both Indonesian and international institutions) during at least the first half of 1998. With this assumption, the Government of Indonesia, helped by international donor agencies, established the SSN (Social Safety Net) programme, to help people cope with the crisis. However, this chapter attempts to show that the SSN programme has created socio-cultural poverty among the people. This discussion is based on anthropological research carried out in some rural areas in Central Java and Yogyakarta. The results may not be applicable for other areas in Indonesia, but it can provide important lessons in formulating programmes to help the people. Crisis Overblown One of the topics frequently discussed by experts concerning the economic crisis since 1997 is the impact of the crisis on the people’s economic life. The discussions often use two indicators: poverty and unemployment. Many estimates have been made on the incidence of poverty during the crisis in Indonesia. Interestingly, estimates produced in 1998 (especially in the first half of the year) were mostly very pessimistic. The crisis seemed to have brought doomsday for Indonesia. As quoted by Feridhanusetyawan (2000), the International Labour Organization (ILO), for example, estimated that 50 per cent of the Indonesian population lived under the poverty line in 1998. The Central Board of Statistics produced an estimate of 39 per cent for mid-1998. If these estimates were accurate, the conditions in 1998 would have resembled those of the 1970s. Yet, these figures have been widely quoted by journalists, policy-makers, and even scholars, both in Indonesia and other countries as indicators of the effects of the crisis, at least for the first half of 1998. As more data and observations became available, estimates were revised. The situation during 1998 was not as bad as was earlier estimated. Using 1998 standards, Badan Pusat Statistik (2000) has reported that the poverty rate in 1996 (before the crisis) was 17.7 per cent. It rose 298 Sukamdi and Setiadi© 2003 Institute of Southeast Asian Studies, Singapore to 24.2 per cent in December 1998, but declined to 23.5 per cent in February...