Asia Minute: Targeting Income Inequality in Indonesia

Jul 28, 2016

Credit JasonParis / Flickr

The concept of income inequality was a theme of Bernie Sanders’ presidential campaign, and it’s getting some attention this week at the Democratic National Convention. It’s also getting some publicity in Indonesia—where it played a role this week in a government shakeup. HPR’s Bill Dorman has more in today’s Asia Minute.

The richest 10% of Indonesians own nearly 80% of the country’s wealth.  And the World Bank says the concentration of wealth is growing faster than in other countries.  Indonesia’s president says he wants to reverse the trend.  That’s one reason he picked the Managing Director of the World Bank and this week made her the country’s new Finance Minister.

Sri Mulyani Indrawati is familiar with the post—she served as Indonesia’s finance minister from 2005 to 2010.  Supporters say she helped shield Indonesia from the worst effects of the global economic crisis.  This move comes at a crucial time for the country’s economy—the largest in Southeast Asia.

It’s now growing at an annual rate of about 5%---roughly twice as fast as the World Bank expects the global economy to grow…but slower than expectations of many emerging market economists.  That’s one reason President Joko Widodo overhauled his cabinet for the second time in a year this week.  One other noteworthy political move: he named retired army chief Wiranto as head of security affairs.  Wiranto, who like many Indonesians goes by a single name, was accused by a United Nations court of war crimes during Indonesia’s invasion of East Timor in 1999…but never faced trial.