NATSEM Workshop Contemporary Issues on Inequality in Developing Countries: Lessons learnt from Indonesia Speaker s Abstracts

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1 NATSEM Workshop Contemporary Issues on Inequality in Developing Countries: Lessons learnt from Indonesia Speaker s Abstracts Session 1: Conceptualising and measuring Inequality This paper examines the concepts and tools we have invented to describe and analyse inequality and poverty with special reference to developing countries. The paper commences with an overview of global inequality and the Paradox of modernity opulence and deprivation. Next, the nature of inequality is examined both in terms of concept and measurement. Finally, and attempt is made to explain why poverty remains such an enormous global problem in the contemporary world and what we are doing to reduce its incidence. Mark Turner is Professor of Development Policy and Management at the University of Canberra. He specializes in public sector management and politics in developing nations with specific reference to the Asia-Pacific. Mark has published extensively in books and journals in these fields and has undertaken many consultancy assignments for the UNDP, World Bank, Asian Development Bank and bilateral donors. He is also a Part-time Professor of ANZSOG where he runs the Indonesia Program. Learning from the Past and Planning for the Future: Policies to Alleviate Poverty and Reduce Inequality in Indonesia This presentation takes a broad look at the evolution of polices to improve living standards and alleviate poverty in Indonesia. Draws heavily on a joint introduction with Dr. Sudarno Sumarto to a forthcoming book entitled Employment, Living Standards and Poverty in Contemporary. It traces how Indonesia learnt from the experience of dealing with the Asian Financial Crisis in 2010, the later sharp rise in world fuel prices and international experience to develop a new raft of anti-poverty policies. The most important challenges are targeting the poor more effectively and delivering community development programs for which the poor have ownership. Tackling both these challenges will help to reduce inequality in program benefits. However we also argue that direct support for poverty alleviation cannot be viewed in any way as a substitute for pro-poor growth, which creates better jobs and helps reduce inequality on a more sustained basis. Chris Manning is an Associate Professor in the Arndt-Corden Department of Economics in the Crawford School, at the Australian National University (ANU). He has a Phd in economics from the ANU and Masters degree from Monash University. He was Head of the Indonesia Project at the ANU from , and Joint Head in Before moving to the ANU in

2 1991, he worked at Flinders University in South Australia, and Gadjah Mada University in Yogyakarta, Indonesia, and for shorter periods with USAID, the Agricultural Research Institute in Bogor and the University of Indonesia. He is author of over 30 refereed journal articles and 30 book chapters, as well as several books, research monographs, edited volumes and consultancy reports. His publications deal mostly with Indonesian labour markets and labour force, Indonesian economy and political economy, and labour markets and international migration in East Asia. His most important publications are Indonesian Labour in Transition: An East Asian Success Story? (Cambridge, 1998) and Structural Change and International Migration in East Asia (Oxford, 1999, co-authored with Prema-Chandra Athukorala). His specialist academic interests are in labour economics, labour policy and international migration related to economic growth and poverty alleviation in Southeast Asia, and particularly Indonesia. Session 2: Inter-Regional Inequality Trends in Indonesia Following the Asian financial crisis in 1997, Indonesia underwent a major political transformation. The old centralized system of government was replaced by decentralized one, effectively in The essence of decentralization is improvement of people s welfare through better public service provision. Therefore decentralization can not be viewed as a separate issue from national development objective, including when the issue of interregional inequality is discussed. The overall economic performance of Indonesia during last ten years as measured by several macroeconomic indicators was good. In spite of this development process, however, surprisingly inter-regional income distribution became more dispersed over time, suggesting increasing inequality. This paper aims to examine two important areas on inter-regional inequality. First, we shall look at the trends of inter-regional inequality in order to see to what extent the development progress in Indonesia has taken place before and after the implementation of regional autonomy and its challenges. Second, by producing an inter-regional inequality map and its analysis based on the existing data, we will have a better understanding of regional disparity trends in Indonesia. Having problems in inter-regional inequality inform that geographically targeted programs will be more appropriate than nationwide programs in Indonesia. Sonny Harry Budiutomo Harmadi is the University of Canberra s DVCR Distinguished Visitor. He obtained his Doctor in Economics and Master of Science in Economics from the University of Indonesia. He was a visiting scholar at the University of Illinois at Urbana- Champaign, USA in He is currently a permanent teaching staff at Department of Economics and the Director of Demographic Institute, Faculty of Economics, University of Indonesia. He lectures regional and urban economics classes as well as economic modelling, macroeconomics, population study, labour economics and microeconomics in the undergraduate and graduate programs at the University of Indonesia. He was recently

3 awarded as the Best Indonesian Lecturer by the Minister of National Education and the Best Lecturer by the Rector of the University of Indonesia in recognition of his work as a lecturer. Currently, Dr. Harmadi is also the Adviser to the Minister of Agriculture and Fisheries, Democratic Republic of Timor-Leste. He was just appointed as the Chairman of National Population Coalition in December Dr. Harmadi has been making a substantial contribution to the Ministry of Home Affairs, Coordination Ministry of Social Welfare, National Family Planning Board, Ministry of Health, Ministry of Education Republic of Indonesia, in designing several policies and instruments. Dr. Harmadi s work and his substantial knowledge of regional economics have led to his further involvement in whole-of-government approaches to improve accountability, such as setting Minimum Standards for Service Delivery. This ambitious program of the Government of Indonesia will once and for all allow citizens to hold local governments accountable for the provision of services. Chronic Poverty and Eastern Indonesia It is well known that Eastern Indonesia, particularly East Nusa Tenggara, Maluku and Papua, are the backward regions of Indonesia. It is an area of slow growth where pockets of chronic poverty abound. This presentation descriptively reviews the dynamic structures of development and poverty in Eastern Indonesia to understand the cause of this stereotype. In general this presentation argues that Eastern Indonesia has been growing at much the same rate as the average growth of other regions. Poverty has also declined in this region though not as fast as in some other regions in Indonesia. However, there are some problems associated with this encouraging development. This presentation discusses the opportunities and challenges involved in combating these problems and aims to promote a better understanding of related issues rather than to provide solutions. Budy P. Resosudarmo is an Associate Professor at the Arndt-Corden Division of Economics, Crawford School of Economics and Government, at the Australian National University (ANU). His research interests include determining the economy-wide impact of environmental policies, analysing the impact of fiscal decentralisation on regional economies, and understanding the political economy of natural resource utilisation. He has published papers in scientific journals such as Economic Record, Ecological Economics, Oxford Development Studies and Bulletin of Indonesian Economic Studies. In 2005, he edited a book The Politics and Economics of Indonesia s Natural Resources and, in 2009, he co-edited a book Working with Nature against Poverty: Development, Resources and the Environment in Eastern Indonesia, both published by ISEAS-Singapore. Before joining the ANU, he was a lecturer at the Graduate Program in Economics, University of Indonesia, as well as a researcher at the Indonesian Agency for the Assessment and Application of Technology. Resosudarmo received his PhD degree in development economics from Cornell University. Improving gender equality in Indonesia: Assisting internal stakeholders to bring about change. Addressing gender inequalities and empowering women s full participation in economic, social and political life are key priorities in Australia s aid program. In October 2009, AusAID

4 developed a Gender Action Plan (GAP) that identified strategic priority areas where Australia s aid program in Indonesia could most effectively promote gender equality. This presentation will outline the GAP s strategy for promoting gender equality in Indonesia as well as the preliminary results of a recent internal review tracking AusAID s performance on implementing the GAP. The presentation will also discuss the opportunities and challenges of implementing gender principles in development activities in Indonesia as well as what lies ahead as the aid budget scales up. Sue Ellen O Farrell is the gender analyst for the AusAID Indonesia program in Canberra. Her roles include assisting the Jakarta-based gender unit implement the Gender Action Plan, assisting colleagues with the integration of gender equality principles in development activities and evaluating development programs from a gender perspective. Sue Ellen has been involved in the Indonesian women s movement since 2005 when she started a three-year volunteer placement working on indigenous women s issues in Jakarta. During this period of time she worked closely with a number of local women s organisations and international human rights organisations deliver trainings and produce training materials on women s rights in Indonesia. Session 3: The analysis of income inequality before and after 2008 Indonesian personal income tax reform Since 1983, the Indonesian tax policy has been the subject of ongoing reforms in order to replace the old colonial tax, reduce the income dependency from oil and gas, decrease government s foreign debt and maintain its fiscal sustainability. Nevertheless, after 25 years of reform, the actual Indonesian tax performance is still far from what expected by having one of the lowest Total Tax Ratio among the ASEAN countries. Apart from that recorded low tax performance, the government continuously improved their tax law and administration. A significant modernization of tax administration and law reform conducted in It had boosted a significant increase in tax revenues. In 2008, government introduced a radical reform with more lenient tax rate, wider income bracket, generous increase of non taxable income, and increase of occupational and pension allowance. This paper aimed to contribute to the discussion on the personal income tax reform by looking at the impact of the changes in tax rates and personal exemptions on the distribution of tax burden among Indonesian labour tax payers. It conducts a personal income tax micro-simulation model using the Indonesian labour force survey dataset (SAKERNAS) to examine whether the latest changes decrease personal income inequality.

5 Bimo Wijayanto is an ALA scholar. He is conducting his PhD research at NATSEM under the supervisory of Professor Alan Duncan and Dr Yogi Vidyattama. Bimo received his MBA from the University of Queensland in He graduated with a Bachelor of Science in Accounting from University of Gadjah Mada in Before joining NATSEM, Bimo worked in the Directorate General of Taxes, Ministry of Finance in Indonesia since 2003 and was the Head of Macroeconomic Impact Section since His research focus is on building tax microsimulation in Indonesia. He also has experience as a Lecturer of Auditing, Accounting and Taxation at several Universities in Indonesia. Understanding the linkages between inequality and localized conflict in Indonesia: different methodological approaches Local conflicts occur on a daily basis throughout Indonesia. Research from some provinces highlights that over one in ten households have directly experienced disputes within the last two years. The main types of disputes are directly related to the economic livelihoods of communities: land, disputes of distribution of government resources, petty criminality and family law issues. This presentation will examine some of the methodological approaches to improving the knowledge base on localized conflicts and dispute resolution in Indonesia. In particular, the presentation will focus on efforts to better understand how inequality impacts on both the types of disputes experienced by communities and the options available to communities in resolving their grievances. As part of the Government of Indonesia's Support for Poor and Disadvantaged Areas (SPADA) program, detailed research into dispute processes in Aceh and Maluku was conducted. Following a brief analysis of different approaches that already exist to understand the links between conflict processes and inequality, the presentation will layout some quantitative and qualitative tools that can be used to improve the understanding of the linkages between poverty and dispute resolution processes. The presentation will end with a brief overview of findings from research conducted as well as identifying some challenges for researchers in defining the linkages between inequality and localized conflicts. Matthew Zurstrassen is a consultant specializing in access to justice and village governance issues. From he was a Social Development Specialist with the World Bank, Indonesia and Team Leader of the Justice for the Poor Program. Prior to that he worked on reintegration issues on Aceh for Bank's Conflict and Development Program.

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