Strengthening Economic Policies to Increase the Economic Capacity of the Poor and Vulnerable Communities

The poor are still excluded from the formal financial sector, which limits their ability to engage in entrepreneurship and increase their income. For this reason, efforts to empower the poor are essential to increase the effectiveness and sustainability of poverty reduction so that the poor can make their own efforts to move out of poverty and not fall back into poverty. 

Empowering the poor is essentially trying to improve the living standards of the poor without making them dependent on assistance programmes. The concept of empowerment itself consists of access to resources, the form of business entity or intermediary that carries out empowerment, and the achievement of the results of empowerment. 

Creating access to employment and business opportunities will enable the poor to increase their income. Increased income in turn will make the poor less dependent on social assistance.
Improving access to financial services is related to poverty reduction. So far, access to financial services in Indonesia is still relatively small. In fact, inclusive finance, through access to financial services, such as savings, credit, insurance, payments, and pension funds, will help vulnerable and low-income groups to increase their income, obtain capital, manage risks, and find a way out of poverty.

Poverty reduction programmes based on the empowerment of micro and small economic enterprises are programmes that aim to accelerate community economic development based on local resources. The beneficiaries of the poverty reduction programme based on the empowerment of micro and small enterprises are groups of near-poor people whose business activities are on a micro and small scale and who are considered eligible for programme assistance.

The programme characteristics in the poverty reduction programme group based on the empowerment of micro and small economic enterprises is the provision of People's Business Credit to provide access to capital for small communities. The scope of the poverty reduction programme group based on the empowerment of small and micro enterprises is the expansion of credit distribution and institutional strengthening. 

The expansion of credit distribution in the form of Kredit Untuk Rakyat is an effort to increase the amount of credit and debtors of micro and small enterprises in the poverty reduction programme group based on the empowerment of micro and small economic enterprises. Meanwhile, the government conducts data collection of non-bank and non-cooperative Micro and Small Financial Institutions (MFIs), assistance to Micro Financial Institutions (MFIs) that have not been incorporated, guidance and supervision of Micro Financial Institutions (MFIs), as an effort to increase non-bank and non-cooperative micro institutions in the poverty reduction programme group based on empowering micro and small economic enterprises.