November 2011

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Introduction1. Declining fertility & infant mortality have changed Indonesian

demographic structure, which are :A. Reducing in the proportion of young unproductive ages (< 15 years).B. Increasing in number of infants who survive to older ages.

2. This increases number working age population which are potential to increase productivity through the declining age dependency ratio substantially.

3. This condition leads to economic bonus of demography called “demographic dividend”. Which is the road to the opening of window of opportunity (an opportunity for human capital development).

4. Based on history, Indonesia’s window of opportunity had predicted open in 2020-2030, and

5. To prepare that time, Indonesian government have planned some policies, especially to improve the human resources.

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Outline

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1.Back ground“Family Planning and Demographic Bonus”2.Indonesian Government Fiscal Measures:

a. Health, b. Schooling, &c. Community Development

“The social and economic investments made by the Government of Indonesia (GOI) since the 1970s to improve the welfare of its population, particularly

in health, schooling, nutrition, and community development”

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Family Planning and Demographic Bonus

“Family Planning Indonesia leads to demographic transition which contributes to Demographic

Dividend and economic growth”(Arsyad et.al., Tribute to Widjojo Nitisastro)

8.6

18.3

31.226.8

38.5

47.749.7

54.757.4

60.3 61.4

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The introduction of new contraceptive methods, expands method choice and raises contraceptive prevalence.

Contraceptive use increases from virtually zero in 1960s to 57 per cent in 2007. Now one among two couples are using contraceptives.

Source : Harjono Sujono

The impact of contraceptive use on the reduction of Fertility, but Mortality Rate

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• The use of contraceptive has reduced the fertility, • The reduction of fertility leads to the decreasing in infant mortality rate.• The use of contraceptive prevents unwanted pregnancy, give women a portion to

control the pregnancy, increase women’s health and avoid maternal mortality..• Besides investing in family planning program is beneficial for the future

generations through better education and health for the children, because of small family size.

Source : Worldbank; 2011

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The impact of contraceptive use on the reduction of fertility and lead to demographic transition

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1.00

2.00

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5.00

6.00

Num

ber i

n m

illio

n,

% in

crea

se

Year

Projected annual number of births, death and rate of increase, Indonesia, 1950-2050

births

death

rate of increase

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1.00

2.00

3.00

4.00

5.00

6.00

Rate

s

Year

Trends in TFR and NRR, Indonesia, 1950-2050

Average number of children per woman

Number of girls replacing mother

• Average number of children per woman decreases, so does the number of girls replacing mother (replacement level).

• At the same period, the rate of increase and the birth decreasing too, on the contrary the mortality number (death) is increasing due to ageing population.

Source : Prof. Sri Moertiningsih Adioetomo PhD Head of Masters Program on Population and Labor University of Indonesia; 2011

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0

50

100

150

200

250

Popu

latio

n in

mill

ions

Year

Trend in number of children, working-age and older persons, Indonesia, 1950-2050

children 0-14

older persons 65+

working-age

Demographic Transition leads to explosion of working age which will bring the Windows of Opportunity in 2020-2030

• Age Dependency Ratio at its lowest level 44 young population compared to 100 workers

• The decline in proportion of children and increase in expectancy of life leads to explosion of workers especially the youth an opportunity to facilitate economic growth

• Increases again after 2030 due to the rapid increase of older population.Source : Prof. Sri Moertiningsih Adioetomo SE MA PhD Head of Masters Program on Population and Labor University of Indonesia; 2011

1971 2000 2010 2020-2030

>2030

86

Children per 100

workers

54children per

100 workers

51 children per 100 workers

44 children per 100 workers

>50

Increases again due to rapid increase of older people.

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Age dependency ratio and Demographic Bonus

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1.00

2.00

3.00

4.00

5.00

Gro

wth

Pe

rce

nta

ge

Year

Working Age & Below 15 Year Old Citizen Growth Rate (Year on Year)

working-age

<15

• Growth of workers exceeds growth of children, Indonesia, an opportunity to boost up economic growth 1950-2050.

• Abundant workers with productive employment will increase income per capita• Increase in household savings lead to productive investment to open employment• Small family value provides opportunity for women to enter labor market increase

household income.• Large numbers of good quality human capital is an asset to economic growth

Source : Prof. Sri Moertiningsih Adioetomo SE MA PhD Head of Masters Program on Population and Labor University of Indonesia; 2011

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Health

“Health, the greatest of all we count as blessings.”(Ariphron)

Indonesian Government Fiscal Measures :

Fiscal Policy in Health

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• Indonesia has raised health budget year by year in concern to improve the health of it citizen. It is indicated by the decreasing of Neonatal and Under 5 Mortality

• Since 2001 natural disaster has given Indonesia a lot of challenge, but still the percentage of malnutrition in recent years below the 1998 (crisis period) percentage.

Source : World Bank

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Schooling

“A human life is a schooling for eternity.”

(Gottfried Keller)

Indonesian Government Fiscal Measures :

Fiscal Policy in Education

• Government's efforts in raise the education budget (20% allocation of total expenditure as 2010 constitution mandate)  has resulted the decline of illiterate people in productive age, thus increase the Human Development Index.

• Indonesia gradually improving their education budgets in it’s budget spending.

13Source : BPS & MOF

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A 9-year compulsory education and out of school programs (Package of Study Group) are two elements that mutually supportive to the achievement of equal opportunities for education programs. These programs has proved a success story shown by the graph above.a.9-years Compulsory Education started in 1994. This program requires that every citizen of Indonesia to attend school for 9 (nine) years old at the basic education level, ie from the first class level of Elementary School (SD) or Madrasah Ibtidaiyah (MI) up to 9 th class level of Junior High School (SMP) or Madrasah Tsanawiyah(MTs ).

Government Education Program…1

Source : BPS

Government Education Program…2

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b. The Packed Study Group started in 1994, implemented in various institutions. It’s purpose is to improve knowledge, attitudes, and basic skills for the community including school-age children who are lacking in access to formal. In 2004 National Education System Rule, Study Group is included in non-formal education category. 

Thanks to both program,s the literacy rate of Indonesian citizen has increased against the Illiterate rate.

Source : Worldbank

Oil Price;2005

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Community Development

“Community Development is a long–term value based process which aims to address imbalances in power and bring about change founded on social

justice, equality and inclusion.”(National Occupational Standards for Community Development)

Indonesian Government Fiscal Measures :

Fiscal Policy in Community Development

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HighIncrease

in Oil Price6.1%

8.1%

9.1%9.5%

9.9%

11.2%

10.3%

9.1%8.4%

7.9%

7.1%

6.6%

0%

2%

4%

6%

8%

10%

12%

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rp Triliun

Infrastructure Budget vs Unemployment Rate

Infrastructure Budget (LHS)

Unemployment Rate (RHS)

• Indonesia continues to fight againts poverty and unemployment. This could be seen on Indonesia budget spending for those problem, which always tend to go up year by year.

• The impact of Indonesia’s effort in enhancing the poverty elimination budget and unemployment is seen in the decreasing of percentage of poor citizens and unemployment rate .

Source : BPS & MOF

HighIncrease in

Oil Price

18.0 25

.0

21.5 24

.5 28.0

23.0

42.1

51.2

60.6

71.0

66.0

50.0

10

12

14

16

18

20

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%Rp TrillionPoverty Budget & Poor Citizen Percentage

Poverty Budget (LHS)

% Poor Citizen Forecast Lower Limit

% Poor Citizen Forecast Upper Limit

% Actual Poor Citizen

Strong & Sustainable Economic Growth

18Source : Worldbank

• Indonesia’s Strong & Sustainable Economic Growth and population reduction result increasing in GDP per capita

• Indonesia GDP has risen since monetary crisis period, even with natural disaster in every region in Indonesia. Exp : Tsunami 2000-2001 & Earth Quake 2004 & 2009.

• Even the global crisis happens in 2008, Indonesia growth rate didn’t affect too much.• This is an evidence that Indonesia’s economic has gotten stronger.

Glob

alCri

sis

Mone

tary C

risis P

eriod

364

.57

432.1

1 510.2

353

9.35

706.5

6

-15

-10

-5

0

5

10

15

0

100

200

300

400

500

600

700

800

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

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1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

%US$

Billio

ns

GDP Current & Growth

GDP (current US$) [LHS]

GDP growth (annual %) [RHS]

Mon

etary

Crisi

s Per

iod

599

600

529

532

520

467

434

499 560 621 684 730 81

6 900

1,014 1,

124

1,052

459 66

5 773

742 89

31,

058

1,143 1,2

581,

586 1,

859 2,

172

2,272

2,946

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Curre

nt US

$

GDP per capita

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Conclusion

Conclusion

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• Indonesia’s investment in family planning helps to promote economic growth which is sustainable even in the era of global financial crisis.

•This sustainable economic growth is largely due to the increasing purchasing power because of small family size have been achieved.

•Therefore, social and economic programs which are supported by relevant and appropriate fiscal policy, that is the current Government Fiscal Policy, Indonesia would be ready to welcome and use the window of opportunity.

Source : Worldbank

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Thank You Dankie