The two decades from 1976 to 1996 were among the most impressive periods of development in Indonesia and became known for rapid poverty reduction. During this period, the poverty rate in Indonesia fell from about 40 to 11.7 percent.
This downward trend ended when Indonesia was hit by the 1997–98 Asian financial crisis. From the beginning of the year 2000, however, the downward trend in poverty rates resumed but at a slower pace compared with the pre-1997–98 crisis period. This slowdown in poverty reduction continued until the beginning of the SBY-Boediono administration in 2009, as shown in figure 1.
Figure 1. Decline of Poverty in Indonesia, 1976-2015
The deceleration in the rate of poverty reduction is explained by at least two facts. First, when the poverty level is relatively low, the rate of poverty reduction will naturally decelerate more slowly than when the poverty level is high, for example, in the range of 30–40 percent. Second, when the rate of poverty reduction slows at a relatively low poverty level, it likely indicates chronic poverty, which requires a more complex and time-consuming response.
TNP2K was established in early 2010 through Presidential Regulation (Peraturan Presiden or Perpres) Number 15 in response to the slowing decline of the poverty rate and increasing inequality. This Perpres was followed by the issuance of Ministerial Regulation (Peraturan Menteri or Permen) Number 42 of 2010 on the Institutional Structure and Process of the Local Poverty Reduction Coordination Team (Tim Koordinasi Penanggulangan Kemiskinan Daerah or TKPKD).
The main mandate given to TNP2K was to increase the effectiveness of poverty reduction programmes, including improving (1) targeting, (2) programme design and delivery processes, (3) coordination among agencies to increase programme effectiveness, and (4) supervision and control of poverty reduction programme implementation.
In 2010–14, TNP2K improved policies related to poverty reduction by developing the Unified Database as a way to improve targeting of household- and individual-based programmes. TNP2K also improved the design and delivery processes of each programme from Clusters 1, 2 and 3. TNP2K made these overall improvements based on the needs of beneficiaries and other evidence obtained from the field.