Comprehensive poverty reduction requires the involvement of various stakeholders, including central government, local governments, businesses (private individual sectors) and the general public. The government has been implementing poverty reduction efforts through various programmes in an effort to meet the basic needs of citizens, increase the socio-economic welfare of the poor, strengthen the socio-economic communities and accelerate the development of disadvantaged areas in order to achieve a prosperous democratic and just Indonesian society.
Without the support of stakeholders, efforts to alleviate poverty would have suffered. To support a comprehensive acceleration of poverty reduction, four major strategies were formulated:
The first principle is to improve and develop the system of social protection for the poor and vulnerable. Social protection systems aim to protect individuals and communities from shocks during their lifecycle, such as sickness, death in the family, job loss, natural disasters, etc. Effective social protection systems anticipate which individuals or people are experiencing shocks and prevents them from falling into poverty.
Implementing this strategy and others responds to the large numbers of people who risk falling into poverty in Indonesia. In addition to potentially high social vulnerability, Indonesia has an aging population that risks creating a significant economic burden on the younger generation in terms of support or a high dependency ratio.
The high degree of vulnerability also increases the possibility of people moving in and out of poverty. To cope with such a risk, social assistance programmes need to be implemented to protect at-risk populations from poverty as well as to prevent those who are already poor from becoming even poorer.
The second principle of poverty reduction is to improve poor people's access to basic services. Access to education, healthcare, clean water and sanitation, food and nutrition will help ease the spending burdens of the poor. In addition, an increase in access to basic services encourages investment in human capital.
One of the important basic services to increase poor people’s access to is education. Education should be prioritised because as it provides an effective long-term escape for the poor out of poverty. Maintaining a gap in education between the poor and non-poor will only preserve intergenerational poverty. With children from poor families unable to achieve adequate levels of education, they will likely remain poor for life.
In addition to education, improved access should also be considered for healthcare. Better health leads to increased productivity at work that will, in turn, generate higher incomes and provide a way out of poverty. Improved access to clean water and proper sanitation are key to achieving optimal health. Consumption of water that is unfit for drinking and poor sanitation increases the vulnerability of individuals and communities to disease.
The third principle aims to empower the poor by improving the effectiveness and sustainability of poverty reduction efforts. In poverty reduction, it is very important to not treat the poor merely as objects of development. Efforts to empower the poor must facilitate a way out of poverty and ensure that vulnerable groups do not fall back into poverty.
The importance of implementing a strategy in this principle also considers poverty caused by injustice and economic structures that are not pro-poor. This causes the output growth is not evenly distributed across all groups of society. Poor people who are politically, socially and economically powerless cannot enjoy the fruits of proportional development. This leads to physical and social marginalisation.
Development aimed at reducing poverty generally uses top-down mechanisms. The drawback of this is that it lacks the inclusion of public participation. All poverty reduction programme initiatives comes and are handled by the central government. Implementation guidelines and technical instructions are standardised and made without regard to the individual characteristics of the poor in each region. As a result, programmes often have no correlation with the priorities and needs of local poor populations. With this in mind, poverty reduction strategy must include the empowerment of the poor as a main principles.
The fourth principle is inclusive development, which is defined as development that both engages and benefits entire communities. Participation is the key word in executing development. Data from numerous countries shows that poverty can only be reduced in an economy that is growing dynamically. In contrast, stagnant economic growth almost certainly leads to an increase in poverty. Growth generates productive jobs in large numbers. Furthermore, the multiplier effect triggers an increase in the income of the majority of the population, an increase in the standard of living and poverty reduction.
To achieve the condition mentioned above, it is necessary for countries to create conducive business climates. Macroeconomic stability is an important prerequisite of business development. It is also necessary to clarify and make certain various policies and regulations. This could include easing of permits, taxes and the protection of ownership.
Furthermore, micro, small and medium enterprises should be encouraged to continue to create added value, including through exports. Improved growth also requires greater priority of the rural and agricultural sectors. These sectors are also areas where the poor are often most greatly involved. Thus, the development of the rural economy and agricultural sector has great potential to trigger economic growth and generate significant levels of employment and poverty reduction.
In inclusive development, it is also important to understand regional contexts. Each region in Indonesia can serve as a centre of growth, with different resources and commodities. These regional economies will become part of the national economy. Local economic development is important to strengthen domestic economies.