Oxfam highlights Indonesia wealth gap

Jakarta’s poor. Source: Wikimedia

Indonesia’s four richest men have more wealth than the 100 million poorest residents of the archipelago, Oxfam claims, although inequality statistics can often be misleading.

The NGO said Indonesia had the world’s sixth-worst inequality, coming second to Thailand throughout Asia.

Oxfam said the number of dollar Indonesian billionaires had increased from one in 2002 to 20 last year.

The four richest Indonesians, led by brothers Budi and Michael Hartono, controlled US$25 billion of assets: roughly equal to the wealth of the poorest 40 per cent Indonesia’s 250 million citizens.

“Market fundamentalism” had allowed the wealthy to benefit from nearly 20 years of strong economic growth while the concentration of land ownership and pervasive gender inequality were also factors named in the report.

Last year, the wealthiest 1 per cent owned 49 per cent of total wealth, the report claimed. Inequality statistics are often unreliable as many westerners living luxury lifestyles are registered below the poorest subsistence farmers because they are have debts.

The richest Indonesian could earn 1,000 more in a day from the interest on their wealth than the poorest Indonesians spend during a year.

The investment returns from one of the cigarette tycoons, Budi Hartono, Michael Hartono and Susilo Wonowidjojo, would eliminate extreme poverty in a year with the interest from their assets, Oxfam calculated.

The Hartonos own a clove cigarette company.

The report said the numbers living on less than US$1.90 a day had declined since 2000 but 93 million Indonesians earned less than US$3.10 a day, which is the World Bank’s moderate poverty line.

“The growing numbers of millionaires and billionaires, when set against a backdrop of staggering poverty, confirms that it is the rich who are capturing the lion’s share of the benefits of the country’s much-vaunted economic performance, while millions of people at the bottom are being left behind,” the Oxfam report said.

The financial institution reported in 2015 that Indonesia’s tax collection was the second lowest in Asean and that the tax system was “failing to play its necessary role in redistributing wealth”.

To increase spending on education and health, Indonesia needed a higher tax rate on the wealthiest and stricter inheritance tax, the World Bank said.

Dini Widiastuti, Oxfam’s spokesperson in Indonesia, said: “It is simply not right that the richest person in Indonesia earns more from the interest on his wealth in just one day than our poorest citizens spend on their basic needs in an entire year. Inequality in Indonesia is reaching crisis levels. If left unchecked, the huge gap between rich and poor could undermine the fight against poverty, exacerbate social instability and put a brake on economic growth.”