Bay Ismoyo

Bottling Indonesia’s Gini

During much of Indonesia’s early history, its egalitarian distribution of wealth and assets set it apart from its neighbors. And if the country is to remain one of Asia’s most robust economies, the government, confronting rising income and wealth inequality, along with deep regional disparities, must recommit to egalitarian policies.

JAKARTA – When Indonesia declared independence from Dutch rule in 1945, the country’s founder, Sukarno, called on his people to build a nation that would “stand in strength,” eternally united. That mantra – unity and strength – helped shape the country’s future, including its approach to economic development. During much of Indonesia’s early history, its egalitarian distribution of wealth and assets set it apart from its neighbors.

But seven decades later, the legacy of equality is fading. If Indonesia is to remain one of Asia’s most robust economies, it is essential that its current leadership recommit to narrowing the socioeconomic gap.

During much of the 1970s and 1980s, Indonesia’s low level of income inequality helped raise living standards and reduce poverty. In 1970, just 25 years after independence, the country managed an enviable distribution of wealth among a diverse population, with a Gini coefficient (a common measure of income inequality) of 0.35 (with zero representing maximum equality). By comparison, neighboring Malaysia had a Gini coefficient of 0.50.

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