Proverty in Indonesia: A Comparison Between the World Bank Poverty Line and the Indonesian Government Poverty Line

Figure Ilustration AI

FORMOSA NEWS -  Kupang - World Bank Standard Reveals Indonesia’s Poverty Rate Far Higher Than Official Figures. This is the key finding of a study conducted by Agatha Helena Deze from Oemathonis School of Economics (STIE Oemathonis Kupang), together with Thomas Ola Langoday from STIE Oemathonis Kupang, and Marius Masri from Widya Mandira Catholic University. The research was published in 2026 in the Asian Journal of Management Analytics.

The study is particularly significant because poverty statistics are not merely numbers. They serve as the foundation for social assistance programs, poverty alleviation strategies, and national development planning. When poverty is measured differently, the number of people considered poor and therefore eligible for government support can change dramatically.

Two Poverty Lines, Two Different Indonesias

Indonesia’s government currently measures poverty using the national poverty line developed by BPS, which is based on minimum household expenditure required to meet basic food and non-food needs. This approach is designed to reflect domestic socioeconomic conditions and is primarily used for national policy planning.

 

In contrast, the World Bank applies international poverty lines based on Purchasing Power Parity (PPP). These standards enable global comparisons but also set higher minimum living thresholds, especially for upper-middle-income countries such as Indonesia.

According to the researchers, these methodological differences are the main reason why poverty estimates produced by the World Bank are significantly higher than Indonesia’s official figures.

Data from 2019–2023 Show a Stark Contrast

Using data from 2019 to 2023, the study demonstrates consistent and substantial gaps between the two poverty measurements.

According to BPS data:

• Indonesia’s poverty rate has remained below 10 percent since 2019.
• In March 2023, the number of people living in poverty stood at 25.90 million, or 9.36 percent of the population.
• This figure was recorded as the lowest level since the COVID-19 pandemic.

According to the World Bank, however:

• Using the USD 3.20 PPP per day threshold, around 19 percent of Indonesians are classified as poor
• Using the USD 6.85 PPP per day threshold—the standard for upper-middle-income countries—more than half of Indonesia’s population falls into the category of poor or economically vulnerable
• In 2023, the World Bank estimated that approximately 172 million Indonesians, or 60.3 percent of the population, were living in poverty or near-poverty conditions.

Major Implications for Public Policy

The findings carry significant implications for public policymaking in Indonesia. Relying on a single poverty measurement standard may result in:

• Social assistance programs missing vulnerable groups.
• Poverty alleviation strategies that are insufficiently inclusive.
• Persistent inequality and limited long-term resilience.

The authors recommend that Indonesia harmonize poverty indicators by using World Bank poverty lines as a complementary reference, rather than a replacement for BPS data. This approach would provide a more comprehensive understanding of welfare conditions in a middle-income country context.

Author Profiles

Agatha Helena Deze, S.E.

Lecturer in Accounting, Oemathonis School of Economics (STIE Oemathonis Kupang).
Her research focuses on social accounting, poverty, and development economics.

Thomas Ola Langoday, S.E., M.M.
Lecturer in Management, Oemathonis School of Economics (STIE Oemathonis Kupang).
His expertise includes public policy, poverty analysis, and macroeconomics.

Marius Masri, S.E., M.E.
Lecturer in Development Economics, Faculty of Economics, Widya Mandira Catholic University.
His research interests include poverty, inequality, and regional development.

 

Source

Agatha Helena Deze, Thomas Ola Langoday, Marius Masri. Poverty in Indonesia: A Comparison Between the World Bank Poverty Line and the Indonesian Government Poverty Line. Asian Journal of Management Analytics, Vol. 5 No. 1, hlm. 181–196. 2026

DOI: https://doi.org/10.55927/ajma.v5i1.16169  

URL: https://journal.formosapublisher.org/index.php/ajma