Poverty Alleviation Pattern: Top Down or Bottom Up Approach? (Indonesia and Malaysia Benchmarking)

Abstract

Based on the previous research by Aspiranti et al. (2021), it was found that Indonesia and Malaysia still have impoverished communities that urgently need to improve their welfare. In the poorest areas of Malaysia, the majority of households from each ethnic group (on average, 55%) are vulnerable to poverty, while the core poor group comprises the lowest share (on average, 4%). Among household heads at different education levels, the core poor group represents the lowest share (average 4.5%), while the largest share (average 48%) is vulnerable to poverty. In Indonesia, the percentage of poor people in the poorest areas reached 9.27% in 2018, which is already below the national poverty rate of 9.82%. However, during the period of 2014-2018, the poverty line in Indonesia’s poorest areas continued to increase each year, with a 20.46% increase compared to 2014. The Indonesia Poverty Depth Index (P1) decreased from 1.72 to 1.49, indicating that the average expenditure of the poor is getting closer to the poverty line. Empirical findings from a study conducted in 2021 demonstrate that Indonesia’s poverty rate has shown improvement compared to 20 years ago. However, extreme poverty levels still persist, with income levels below $1.9 per day. In Malaysia, there are no longer people categorized as extremely poor. Based on secondary data published by the ASEAN Secretary Data, Malaysia’s high economic growth is accompanied by high per capita income, reaching $9,000 per year. As a result, Malaysians have a longer life expectancy of 78 years compared to Indonesians (68 years). However, despite Malaysia’s success in bringing prosperity to the population on an aggregate basis, there are still pockets of ethnic Malays experiencing poverty. The Malaysian government has made various efforts to alleviate poverty in these regions, but the poverty rate remains. Both Indonesia and Malaysia continue to implement poverty alleviation measures through top-down and bottom-up approaches. The study aims to benchmark the poverty alleviation models of both countries by conducting surveys in poverty-stricken areas of Indonesia (focused on Garut Regency) and Malaysia (focused on Kelantan). The research findings indicate that Malaysia’s poverty alleviation efforts are more top-down, initiated by the government through macroeconomic instruments. In West Java, the Provincial Government adopts a top-down approach by coordinating with various stakeholders to ensure program and activity synergy. Efforts to accelerate poverty reduction in West Java include the establishment of social protection, public health services, and direct financial support for families, encompassing both non-agricultural and agricultural sectors, to enhance community welfare.

Keywords: benchmarking, poverty alleviation

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