SUMMARY REPORT

WORKSHOP ON INDONESIA MULTIDIMENSIONAL POVERTY INDEX

DEVELOPMENT: ISSUES AND OTHER COUNTRY EXPERIENCES

LPEM FEB UI & UNDP

Opening remarks:

UNDP DIRECTOR OF INDONESIA

Indonesia is quite successful in reducing poverty which shown by the decline in poverty
rate in recent years. However, there are still many challenges to eradicate poverty and reducing
inequality. Multidimensional poverty has gain recognition and addressed in Sustainable
Development Goals. It implies that cash transfer, which lifting people up from poverty, is not
adequate to address multidimensional poverty and inequality. Todays workshop theme will
address issues on Goal 1 and Goal 10 of SDG. It will discuss on how we can use index of income
poverty and multidimensional poverty to eradicate poverty, from the process of identify the issues,
reporting, and take corrective action.

1ST Presentation:

Dimensional Poverty Measurement: What and how it differs from expenditure based
poverty index? From planning to evaluation. (Speaker: Dr Sabina Alkire)

Motivation

Poverty is dimensional. Aim of development is to expand the freedom of people. SDG first
goal is to end poverty, the context of poverty here is multidimensional poverty, it includes
monetary and non-monetary aspects. Multidimensional Poverty Index (MPI) provides an
integrated information of multidimensional poverty. Many countries are reporting their national
MPIs or the global MPI if they do not yet have national MPI. In October 2016, Atkinson
Commission report endorsed the use of monetary and multidimensional measures to address
poverty issue. It also called for a global Multidimensional Poverty Index and the regularized
reporting of non-monetary indicators of poverty.
Why a multidimensional measure?

The MPI requires high resolution disaggregation by vulnerable groups over time, so the
measurement leave no one behind. The MPI not only identifies who is poor, it also shows how
they are poor so it informs policy design. Some study case:

- India NFHS data 2005-6 shows education of parents closely linked with child mortality
(higher educated parents know how to take care of their children). Furthermore, when
different dimensions are overlapped, it is show different number from the general
poverty rate.
- Chiles national income poverty and national MPI: it shows only 5.5 percent of
Chileans is poor by both measure.

How it Counted

The MPI aggregate deprivations by person. The general counting method do not show
inequality. Steps to construct MPI:

1. Choose indicators (eg. nutrition, education, child mortality)

2. Build a deprivation score for each person, to identify whether they are deprived or
not deprived.
3. Identify who is poor.

How MPIs can be Utilized

National MPIs could be utilized as a tailor made for national policy. It could reflect national
priorities and computed as official national statistics. The MPI also comparable over time, groups,
provinces, and countries. The Global MPI is comparable across countries, it was developed in
2009 by OPHI in collaboration with UNDPs Human Development Report Office. The Global
MPI shows that across 102 countries and 5.2 billion people, 30 percent of them are MPI poor.

Policy makers are using their national MPIs to:

1. Complement monetary poverty measure. Example:

a. Chile: there is mismatch between monetary poverty measure and MPIs.

b. Costa Rica: the two measurements complement each other.
 2. Track poverty over time.

3. Allocate resources by sector and by region. Example:

a. Costa Rica: The president of Costa Rica asks for national budget to address each
indicator in MPI. Before MPI, it has high social expenditure, and found some
indicators in MPI with zero budget on it.

b. Pakistan: Pakistans MPI is being used for allocation and pilot new policies.

4. Target Marginalized regions, groups, or households.

5. Coordinate policy across sectors and subnational level.

6. Adjust policies by what works.

7. Evaluate Policy.

8. Be transparent so all stakeholders engage.

Income Poverty Index and Multidimensional Poverty Index: How can They Complement?
Experiences from Colombia

President of Columbia use MPIs as indicators to target poverty reduction. In 2011, when
MPI was launched, President Santos announced the target to reduce the incidence of MPI from
38% to 22% by 2014. Columbia chooses 5 indicators to calculate MPI: education, childhood and
youth, employment, health, and access to public services and household conditions. In the last five
years, multidimensional poverty in Columbia has decreased significantly in every Columbian
region. The variables with the best results to reduce deprivation are health insurance, educational
achievement, and formal employment.

Columbian government made three crucial changes that underpin the use of the Multidimensional
Poverty Index in social policy, there are:

1. Creation of the Social Inclusion Sector: it responsible for coordinating all policies and programs
to eradicate poverty, held poverty roundtable meeting.

2. Design of Columbias MPI based on the Alkire and Foster Methodology in 2010.

3. The inclusion of MPI as a main target in the National Development Plan (2014-2018).
 The MPI has allowed the Columbian Government to make agreements regarding
institutional coordination, identify investment needs of the municipalities and to improve the
coordination between different levels of government.

Keynote Speech:

Multidimensional Poverty Measurement Workshop

The Indonesian Government targeted poverty reduction from 10.7 percent in 2010 to 7-8
percent in 2019. In recent years, the poverty reduction in Indonesia is in moderate level, there is
no significant reduction on poverty rate. Indonesias poverty characteristic is complex and
multidimensional, and it faces tough challenges in reducing inequality among income groups.
Various parties have developed numerous poverty measurements with aimed to serve as
intervention instrument for dealing with poverty. However, measuring poverty based solely on
income has its limitation as it does not illustrate the complex nature of poverty. In Indonesia, the
poverty line established by BPS consists of food and non-food groups. Household expenditures on
non-food groups may more or less illustrate non-food aspects of welfare such as health and
education. Meanwhile, the Unified Database have been developed which contains household or
individual data which incorporates several characteristics such as assets, residence, type of
business, education, occupation of head of household, and others. Such data can be categorized as
a multidimensional poverty index, for targeting household-based or individual programs. Each
measurement on poverty should not compete each other, but complement each other.

PANEL DISCUSSION: 1ST SESSION

Measuring and Addressing Poverty (Ministry of Social Services of Republic of Indonesia)

One of SDGs main goal is to end poverty in all its forms everywhere and eradicate extreme
poverty by 2030. Indonesia committed to end poverty by targeting poverty reduction to 7-8 percent
by 2019. The President of Indonesia, Mr. Joko Widodo, pointed to focus on allocating state budget
to meet development goals, one of which is to reduce poverty rate so it become single digit.
Development of Unified Data (Basis Data Terpadu) is one of Social Services Ministry of
Indonesias efforts to address poverty issue. Currently, the Ministry of Social Services is trying to
improve the data so it covers all poverty aid recipients.

In response to MPI, the Social Ministry proposes to add accessibility to political aspiration
as another dimension aside from education, health, and life standard. Basically, Unified Data is
sufficient to calculate MPI as it incorporates various aspects, such as: education, health, residency,
asset ownership, employment, and participation in poverty programs Therefore, there is no need
to collect new data as it is costly and time consuming.

Multidimensional Poverty Index (Statistics Indonesia)

Indonesia has calculated poverty rate with monetary approach since 1981. However,
Statistics Indonesia has incorporated the concept of multidimensional poverty on its studies. One
of the study utilizes agricultural census to examine the welfare level of Indonesian farmer. The
study shows significant difference between poverty rate calculated using the existing poverty line
and the census. In consideration of MPI, there is significant difference between monetary poverty
rate and MPI poverty rate. From Statistics Indonesias perspective, it is almost impossible to
release two poverty rates with high number of difference between the two. The difference is high
on provincial level, not to mention on district level. Poverty rate is a sensitive political issue, each
party will use measurement that is beneficial for their interest. Furthermore, these two
measurements are hard to comprehend for public. To publish new measurement, it is important for
Statistics Indonesia to ensure that public already have good understanding on the measurement.
Hence, every new measurement need to be accompanied by vigorous socialization on the matter
so everyone has the same perception. On the matter of the MPIs calculation, there is possible
difficulty in collecting health data. Even though Statistics Indonesia could not officially publish
the MPI, utilization of the MPI for studies on poverty is strongly encouraged.

Response: We make sure the final index is robust, usually it calculated to accommodate political
interest, but with robust measurement. The MPI could be used to reflect political commitment
regarding poverty alleviation goals. In introduction of new measurement such as the MPI, an active
communication strategy does needed.

National Development Planning Agency

 Poverty is a multidimensional problem which involves several aspects such as education
and health. Policies regarding poverty alleviation goal are adjusted with the condition of each
specific region. The regional policy usually addressing sector with the highest rate of deprivation.
One of challenge on using MPI as poverty measurement is the distribution of General Allocation
Grant from central to local government. Poverty rate is one of factors taken into consideration in
determining the amount of General Allocation Grant, there will be potential conflict if the MPI
measurement introduced. The MPI could be used in targeting program such as determine the
priority sectors in order to reduce poverty.

Q & A Session

Question 1 : Is it appropriate to use equal weight for each indicator?

Answer : Weighting not only reflect statistic robustness, but also nations priority of the
issues. Deciding weight is difficult decision, many of previous cases is ended with using equal
weight so none of any sectors left behind.

Question 2 : How can institution like NGO refer to the MPI if it is not officially released by
Statistics Indonesia?

Answer : Even without the MPI, we can observe many characteristics of poverty such as
observe poverty by gender. Furthermore, there is existing poverty line which already incorporate
non-monetary aspects of poverty.

Question 3 : How is the development of the Unified Data?

Answer : We want to add the scope of the data and updating it every six months, and also
to ensure all the poverty aid recipients listed in the Unified Data. The availability of unified
database will facilitate the government to design poverty eradication program.

Question 4 : How can we utilize the MPI to see the effectiveness of current zakat distribution?

Answer : The method of MPIs calculation can be used to measure the effectiveness, with
adjustment in indicators based on the availability of data and purpose of measurement.

Question 5 : Does the MPI incorporate dimension of religion and ethnicity on its calculation?
Does the MPI depend on political interest? But political power will change every election.
Answer : Statistics Indonesia does have data on religion and ethnicity, however, as we know
religion and ethnicity are sensitive issues in Indonesia, we do not publish the data. It also applied
to the MPI, we do not incorporate religion and ethnicity in the calculation. As for political
fluctuation, poverty in Indonesia does depend on who holds the authority. Apart from that, we
need to make measurement that could survive political changes.

SUMMARY REPORT SESSION II

Opening Session II

- Opened by MC Introducing the speakers of session II

Moderator: Sipprianus UNDP

- Session II will be held in Bahasa. This session will discuss about to know the cases from
other countries that implement MPI before we decide the best way from Indonesia about
implementation of MPI in Indonesia.
- This session will be held by our distinguished speakers, these are:
o Teguh Dartanto, Ph.D
o Sabina Alkire, Ph.D
o A.H. Maftuchan Executive Director Perkumpulan Prakarsa
o Widjajanti Isdidjoso SMERU Research Institute

1st Part

Speaker: Teguh Dartanto, Ph.D

Title: Multidimensional Poverty Index in Indonesia: Measurement and Policy Relevance

- Poverty is not only income dimension, but poverty also can be measured by the other
indicators
- MPI is not only talking about SDG but MPI is talking about inclusive growth that consist
of participation, contribution and benefit sharing.
- Three aspects that relevant with MPI because these aspects capture the limitation of poverty
measurement from Income that only focused on benefit sharing.
- Many studies that established to measure MPI from Alkire almost all the studies are
talking about 3 aspects these are education, health and living standard. The measurements
are using different indicators that start from 2010.
- Research Gap: This study measure MPI with relevant indicators form SDG and the goals
of the government. In health aspect include health protection that provided by Indonesian
government called Jaminan Kesehatan Nasional (protection from society health coverage
and finance). In standard of living aspect include housing ownership and phone ownership.
In employment aspect include the unemployment rate from formal and informal sector,
working hour and working hour below 35 hours per week (insufficient working hour).
There are logical reasons that mentioned in slide 5-6. Almost all the reason is the
availability of the data because of this research is using the National Socio-Economic
Survey (Susenas). In Indonesia, the step about MPI is to build arguments about the using
of MPI to measure poverty in Indonesia. The different condition happens in global level,
the goal of MPI is comparing the other poverty measurements.
- This research uses the poverty cut off, it means that the people are deprived below can
be categorized as poor people because the measurement of MPI use multiplied operation
from headcount index and intensity of the indicators that included to MPI.
- This research is arising issue of poverty condition in Indonesia. There is declining poverty
rate amount around 15% in 7 years if the povertys measurement uses the income
headcount poverty. But from the intensity or the number of poor people in Indonesia that
cannot be fulfill the indicators shows that the declining rate only 4% instead of 15%. We
can say that the number of people that quit from the poverty condition is slowdown.
Understanding MPI is more complex and difficult that income poverty (monetary poverty).
- The evaluation of development in Indonesia the quality of drinking water in Indonesia
is quietly not improved. In 7 years, still around 26% of total number of poor people dont
have access to the proper drinking water. Then, the years of schooling in informal sectors
is quietly declining in low rate.
- The main reason of the condition is the program of poverty alleviation from the Indonesian
government only focus on the reduction of poor peoples percentage. The government
should address the policies about the access of the poor people to the main public goods
 such as drinking water and education to alleviate the poverty or to reduce the number of
poor people.
- The weight of each indicators when calculate MPI can be seen form the main aspects that
government must focus. From Indonesias case: education, the availability of jobs
opportunity for informal workers.
- The relationship between headcount and MPI is positive. It means that MPI is not the
substitution of monetary headcount poverty but it complements each other. MPI and
monetary headcount poverty is not conflicting because from the value is similar. The
comparison between MPI for 5 provinces shows that the results are similar but in east
Indonesia is not similar but it is quietly small difference.
- The trend of MPI in 5 provinces the provinces that have large MPI, the fluctuations of
the economic is quietly more fluctuating because of the number of poor people is larger
than before.
- East Nusa Tenggara had the slowdown trend of MPI in 7 years but the number of poor
people had the declining trend faster that the slowdown of MPI. It means that there is more
poor people that not poor any more.
- DKI Jakarta from the monetary poverty headcount had slowdown trend faster than East
Nusa Tenggara, but the slowdown of number of poor people slower than in NTT.
- There are many policy recommendations for the Indonesian government. One of the policy
recommendations is to help the poor people quit from the poor condition and not only keep
the people near the poverty line to lie below the poverty line.
- The pattern of the measurement of MPI in every province in Indonesia is different from
each other because the sources of poverty in every province is different such as in Bali the
aspect that must address is the availability of job. It means that the indicator of the
availability of jobs must be included to the measurement of MPI.
- Sensitivity analysis: the simulation of the measurement of MPI in this research use the
replacement the indicator of education from 9 years compulsory education to 12 years
compulsory education to make robust measurement of MPI.
- Case study: South Sumatera (the progress of slowdown MPI is quietly well) and East Nusa
Tenggara (the progress of slowdown MPI is quietly worse than Bali). In South Sumatera,
the slowdown of MPI because of the number of poor people is much smaller than before.
 In East Nusa Tenggara, the slowdown of the number of poor people slower than in South
Sumatera because the government focus on to keep the people near the poverty line to not
lie in below the poverty line. The different condition in South Sumatera and east Nusa
Tenggara is cause by the different of the local government policies. In East Nusa Tenggara,
the birth mortality is lower than before because there is policy from the local government
to encourage that. Difference from the South Sumatera, the health insurance is quietly well
because there is health protection called Jaminan Kesehatan Semesta that improved the life
expectancy. So, we must use different indicators to measure MPI for each province depends
on the local government goals and policies.
- Conclusion: MPI is not substitution for measuring poverty but it is a complement. When
the monetary headcount poverty near to the 10%, so the different issue can come. It is very
difficult to reduce the monetary headcount poverty but the reducing process is very slow.
The implication from this condition is we must consider the other measurement for poverty.
MPI is better alternative to address this issue. From 7 years period, MPI is slowdown very
well in Indonesia. The most issues that must addressed by the Indonesian government are
health insurance, formal jobs availability and years of schooling. From the case of South
Sumatera and East Nusa Tenggara, we must address different issues because of the
different condition of the poverty. MPI is not only a value that show the poverty but MPI
can be consider as guidance to the government for arrange the policies and evaluate the
policies.

2nd Part:

Speaker: Sabina Alkire, Ph. D

- The Process of Developing Multidimensional Poverty Measures Talk about the step
Indonesia to go through for MPI.
- The key is not to measure poverty but also to eradicate poverty.
- MPI use for policy by analyze the fluctuation of MPI combine with other indicators
such as inequality
- The government role: Monitor reductions in each indicator (Recognizes Sectoral National
Success)
 - MPI provides the all of aspect in development indicators that can local governor take to
improve the region. MPI helps the government the fast of reducing poverty not only
regional, subnational but groups.
- Case of other countries slowdown of MPI in Kenya is very fast, in India is slower
progress in reduction poverty within Moslem and ST.
- In India, there is polarization and for policy purpose use MPI to more detail what shoul
govt do.
- Building MPI for policy: Slide 13-14 robustness check for each indicator
- Ecuador was launching of using MPI (February 2016)
- We should make corporation (Bappenas and BPS) to reduce the poverty in Indonesia.
- Technical Part for Indonesia Use Susenas
- In every country use difference indicators depend on the measurement and purpose, then
test the different deprivation cut offs. Even use same indicator, the proportion of the index
can be different.
- The Steps See slides
- MPI must be communicate to the government and make sure the government understand
with consider the presence of other issue or political interest.
- Indonesia is not member of multidimensional poverty peer networks. Indonesia is invited.
This network consists of 55 countries. The benefit is make the communication for using
MPI easier to the government. The explanation of its playground.

3rd Part: Discussion

Speaker: Widjajanti Istidjoso

- Main point of the discussion is the challenges on the implementation of MPI in Indonesia
- The measurement of poverty in Indonesia is only focus on monetary or income poverty,
therefore we must include the measurement of social welfare in many dimensions. This is
because of sometimes the measurement that focus on monetary approach can address the
main issue of social welfare. There is a linkage between the measurement of poverty and
the policy for poverty alleviation, therefore the measurement and policy must straight
forward. If the Indonesian government use only poverty from monetary approach, there is
large probability of the failure in the policies. One of the issue in the measurement of
 poverty is there is legal rule such as UU Desa that make more difficult to measure the
poverty if we measure only from income or monetary approach. We need a
multidimensional measurement of poverty to address this issue.
- The main issues or challenge about the measurement of poverty use MPI:
o The availability of the data the international or global level had different
measurement from the national level. It can cause wrong measurement if we use
MPI as measurement because the different measurement. Such as Global MPI use
DHS but national MPI use Susenas.
o The representativeness of the data still doubtful until village level because of there
is a legal rule such as UU Desa
o The collecting data methods still doubtful in its reliability
o The unit level in aggregation must be considered
o There is a question to the measurement of MPI, is this pure measurement of poverty
or can suit the government interest in a certain country? (political independent)
o The non-technical challenge in the measurement of MPI is how to spread and make
the all of the stakeholders understand about this measurement. Too many local
government dont understand about the measurement of poverty even monetary or
income poverty we must educate the local government to aware and understand
about MPI in spite of the challenges, we also have an opportunity that nowadays
the local government increase the awareness to get more knowledge and
information.
- The research of MPI from SMERU:
o Instead of MPI, SMERU use MODA (Multiple Overlapping Deprivation Analysis)
to measure child poverty in Indonesia that more suitable with the availability of the
data in Indonesia
o Also use the qualitative approach that held in West Nusa Tenggara.
- The usage of MODA has advantage from the display because we can know the overlap
indicators directly and easier than MPI.
- About the MPI The discussion from the local government is many indicators in MPI is
still confusing and overlap, can the indicators replace and make more suitable with the
availability of the data in Indonesia?
4th Part

Speaker: A. H. Maftuchan

Explanation from Perkumpulan Prakasa that count the MPI for Indonesia. There is no power
point.

There is a study about the measurement of MPI that conducted by Perkumpulan Prakarsa in
2015. Perkumpulan Prakarsa urgent the adoption of MPI as a measurement of the poverty in
Indonesia and published legally from the government (BPS). The reasons from the Indonesian
government dont implement this because political and nonpolitical reasons. There are many
political groups can use wrong interpretation about MPI, therefore MPI is very difficult to be
adopted by the Indonesian government. Perkumpulan Prakarsa advocate the implementation
of MPI as a legal measurement of poverty intensively.

Recommendations:

1. Strengthen the all of societys efforts to encourage the Indonesian government for
implement MPI as a poverty measurement legally.
2. Communicate the important of implementation MPI to the local governments in Indonesia.
3. MPI can be consider as a tool that measured poverty more comprehensive, MPI is not only
about measure poverty but about fighting poverty.
4. Encourage the increase of research aid for BPS because the aid is not sufficient.
5. Optimist MPI can be adopted by Indonesian government next year in order to make
Indonesia can be trend setter about poverty alleviation.

Q & A Session

1. Nani Zulminarni PEKA (Pemberdayaan Perempuan Kepala Keluarga)

The measurement of poverty is not including the gender variable. Although, we find that
in 2012 there is a fact that women as main breadwinner has more probability to be a poor
household. Is there any facts from other countries that include the gender variable? How
about in Indonesia?
Answer:
 o Teguh Dartanto Gender issue is very important to the poverty. Yet, we didny
including this variable to the measurement. But, I will consider it to include this
variable in the research and aggregation to the household level will be adopted in
the research form LPEM.
2. Misi Institut Kapal Perempuan
Many studies about poverty forget about the issue of gender. If we use the explanation
about gender, we can get the key figures that can show in geographical and governance
condition. Does genders disparity find in the studies about MPI?
To Sabina, does feminism phenomena address in studies of poverty in other countries
because it is very important?
Answer:
o Sabina Alkire: Mexico had included the gender as an indicator in measuring MPI.
We had gender parity index at household level and include the demographic
structure to the global MPI index. India is increasing the women in poverty.
o Widjajanti Istidjoso: if we are using monetary poverty index, we cannot see the
difference of poverty in household that has different gender in breadwinner. From
111 villages, census with CBMS model finds that the phenomena of women as
breadwinner has higher probability to become poor household. But, there is bias
because many of women breadwinners are living with the household with men
breadwinners. To address this issue, we must consider the unit of analysis become
household instead of individual level. Using MPI and the individual unit analysis
indeed there is evidence that women have higher probability to be deprived because
they work in informal sector.
3. Shicaki Jaica Consultant
MPI is powerful instrument to determine poverty. How I can find policy intervention to
implement the program? How should be intervention produce? Do you have any policy
suggestion from MPI?
o Sabina Alkire: Policy is complicated analysis even in Costa Rica and China. There
are correlations between MPI and public spending. Pakistan is the example case of
reduction MPI by using public spending. In every country, there must be different
program needed and added the econometrics and regression analysis.
 o Widjajanti: we have to identify where is the gap while selecting the program.
4. Andi BPS
Comments about the statements for BPS, BPS have done to calculate MPI but it still
exercises in the internal level but BPS didnt release and still discuss with the related
ministry. Every time, if the government wants to use MPI as the indicator of poverty and
BPS always ready to release it.
Second point, have the research about the positive correlation between MPI and monetary
poverty established?
What is the implication of the research that can make sure the Indonesian government to
implement MPI as a legal measurement of poverty and reduce the poverty in Indonesia?
Example, there is evidence that from MPI we know if years of schooling is still under
maintained so from MPI we can know and address this issue?
Last comment, the program of poverty alleviation had a blue print therefore if there is new
index that still doubtful to be implemented in Indonesia.
Answer:
o Teguh Dartanto: Indeed, there is correlation between MPI and monetary poverty
then the value quietly similar. MPI takes into account about the difference of
program and impact. Example if we are talking about water sanitation and health
but if the measurement is only use expenditure, it may be irrelevant therefore MPI
is more relevant because the indicator includes in the measurement of MPI.
5. Pramudya Ajeng BPS
In the future, we plan to conduct an index about the behavior of environment aspects. Does
MPI possible to measure this index? In 2012, we have conducted the indicators of this
index these are air, water and garbage management with unit of analysis is household. What
is the strength of each indicators if they are including to conduct this index? Because this
index is new, how about the test that make strong evidence about the validity of the cut
offs?
Answer:
o Sabina Alkire: I do not claim that MPI is environmental indicators but pollution is
critical problem for human being. You must make your clearly standard to measure
the environment in every region. If you are looking environmental behavior from
 plantation is not appropriate yet but you must consider the appropriate indicators.
So, may be deprivation is connected to the environmental behaviors although MPI
is not discuss about that.
6. Hazbi Baznas
We are from Baznaz is still making Zakats village for assessment and evaluation or zakat
with social empowerment basis. In this index, we are using MPI as the composite index for
formulating zakats index.
Answer:
o Widjajanti: the level of unit analysis is village. It can be a problem in aggregating
because the data is not available and the insecurities of the datas validity