The government, through the National Economic Council, is planning to revise Indonesia’s national poverty line, as the current indicators are deemed no longer relevant to the country’s socio-economic conditions. Previously, the World Bank raised the global poverty line following the adoption of a new purchasing power parity (PPP) measure, which reclassified around 68.3% of Indonesians, or 194.72 million people, as living in poverty.
Responding to this, Dr. Nurhadi, a lecturer from the Social Development and Welfare Program, Faculty of Social and Political Sciences, Universitas Gadjah Mada (Fisipol UGM), expressed support for the government’s proposal.
However, he emphasized the need for a carefully designed strategy to anticipate the political and policy implications of revising the national poverty standard.
“If we look at it, the poverty line we currently use is indeed no longer relevant,” said Dr. Nurhadi on Wednesday, Jun. 25, 2025, at the UGM Campus.
Dr. Nurhadi cited several key reasons: first, it no longer reflects actual market prices; second, adjustments are needed to align Indonesia’s data with global standards; and third, the current poverty measurement approach is due for an update.
He stressed the importance of adopting the Multidimensional Poverty Index (MPI), which measures poverty not only by income but also by access to basic services such as education, healthcare, sanitation, and housing.
According to him, this approach offers a more comprehensive picture.
“For instance, there are households that are financially adequate but have very limited access to education and health services. They should still be considered poor,” Dr. Nurhadi said.
Nevertheless, Dr. Nurhadi acknowledged that the proposed revision has raised valid concerns, most notably the potential for a statistical spike in poverty rates.
Based on World Bank standards, if Indonesia applies the poverty threshold for lower-middle-income countries, the national poverty rate could rise to around 20%.
If the upper-middle-income country standard is used, the figure could even reach approximately 60%.
“This could create a negative perception that the government is failing to reduce poverty, when in fact, it’s a change in measurement standards,” he explained.
He emphasized that support for the poverty line revision must be conditional and accompanied by a robust strategy.
He proposed four main strategies.
First, the use of a moderate standard. Dr. Nurhadi recommended adopting the lower-middle-income threshold to ensure a reasonable, non-dramatic rise in poverty rates.
Second, transparent data transition by presenting poverty data using both the old and revised standards concurrently, so the public can understand the context behind the changes.
As a third strategy, Dr. Nurhadi called for the government to undertake active public education and communication efforts.
This would involve informing the public that the increase in poverty rates is not due to worsening economic conditions but rather to updating the measurement standard to better reflect current realities.
Lastly, he recommended policy intervention adjustments, differentiating between the “new poor” and the “existing poor.”
“The newly classified poor should be prioritized for empowerment programs, rather than just receiving consumptive aid,” he explained.
Equally important, Dr. Nurhadi emphasized that social empowerment must be the primary approach in poverty alleviation.
“We need to help people help themselves. It’s not just about giving aid but also about providing the capacity, access, and opportunity for them to become self-reliant,” he added.
In this context, he also highlighted the critical role of institutions such as the Poverty Alleviation Acceleration Agency (BP Taskin), which already has a National Poverty Reduction Master Plan.
He believes that integrating both technocratic and political approaches is essential to ensure that the poverty line reformulation proceeds safely and yields a meaningful impact.
“Revising the poverty line is a progressive step, but we must handle it wisely and carefully. The ultimate goal is to ensure greater social justice and equitable welfare,” Dr. Nurhadi concluded.
Author/Post-editor: Lintang Andwyna
Editor: Gusti Grehenson
Photograph: kompas.com