FKP 2014 05 14 Matthew Wai POI Indonesia Middle Class

The Indonesian Middle Class:
Evolution and Impact
World Bank
May 2014
1
There has been a surge of interest in the Indonesian
middle class in recent years…
2
…but little agreement on who or how many they are
While there are many definitions of middle class, this special chapter of Key Indicators
2010 uses an absolute definition of per capita daily consumption of $2–$20…
The consuming class (annual net income of more than $3,600 in 2005 PPP) could
increase to 135 million by 2030 from 45 million in 2010. This jump of 90 million
would be the largest increase expected in any country apart from China and India.
Currently, middle-class and affluent consumers (IDR2-7.5 million monthly

household expenditure) represent about 30% of the Indonesian population, or 74
million people, and…and by 2020, this group will reach a total of 141 million
people, or 53 % of the population.
…AC Nielsen claims that someone can be called middle-class is only around 30
million, and that it would double by 2015. The ADB calculated that 81 million
Indonesians are part of this middle-income class.
Nomura, a Japanese bank, reckons Indonesia is creating a middle class (defined as one with
disposable household income of over $3,000 per year) helter-skelter. The country's bourgeoisie,
1.6m in 2004, now numbers about 50m (2011). On Nomura's measure, that is more than India
and bigger than elsewhere in the region. The number could reach almost 150m by 2014
3
The Middle Class is a loaded term, and can represent
different interest in different functions
 Economic and market influence
– How big is the consuming class and where do they live?
– What contribution do they make to economic growth?
 Socio-economic behaviours
– How big is the socio-economically secure class?
– How much education do they have, and where do they work?
– What do they spend their income on?
– What are their attitudes and behaviours?
• Leisure, entertainment and travel; health and fitness; family and friends; social issues
 Policy influence
– Which class of people may play a role in influencing clean governance?
– Which class of people may play a role in improving public service delivery?
• Education and health
In the West, the same people have
• Housing, water and sanitation
traditionally played all of these roles, but
this may not be the case in Indonesia
4
We first consider different the economic dimensions
 Who are the Indonesian consumption classes?

– How should we define the consumption classes?
 How has household consumption evolved over time?
– How large is the consumer market base in Indonesia?
– How much income does it have?
 What has been the role of the consumer in economic growth?
5
How should we define consumption
classes?
6
A vulnerability-based definition of the consumer
classes is preferred to other definitions
1. Arbitrary
 Based on arbitrary values in absolute or relative terms
2. Global Benchmark
 Measured by looking at the cross-country distribution of income or consumption
3. Behavior
 Based on household socioeconomic profile: consumption behavior, leisure activity,
saving and investment, employment, asset ownership, housing status, education
and health utilization, use of social media, and so forth.
4. Vulnerability
 Vulnerability as economic insecurity: the consumer class as those who are safe from
falling into poverty and vulnerability
Advantages of a “Vulnerability” approach:

 Conceptually grounded in the notion of economic security (not arbitrary)
 Economic security is developed in the Indonesian country context (unlike global)
 Allows behaviour of the middle class to be explored empirically (unlike behavioural)
 Definition can be hold constant in conceptual terms over time
 Consistent framework to middle class analysis in LAC and ECA
7
We can calculate the probability of falling into
poverty or vulnerability
Probability Curve for Being Below Probability Curve for Being Below
Poverty Line Next Year Vulnerability Line Next Year
poor
poor
Vulnerable Consumer Class
10% chance of
10% chance of
falling below
non-poor
falling below PL
vulnerability
0 500000 1000000 1500000 2000000 0 500000 1000000 1500000 2000000
Monthly per capita Consumption (Rp) Monthly per capita Consumption (Rp)
Vulnerable are those who have Consumer Class are those who
>10 percent chance of being poor have <10 percent chance of being
next year Vulnerable next year
8
A vulnerability-based definition for Indonesia
Range as PL Per-capita consumption(2013)

Class Households are: Multiple Rp, monthly $PPP, daily
Poor Below: official poverty line (PL) < 1.0 *PL < Rp270,000 < $1.3
Above: PL
Rp270,000-
Vulnerable Below: < 10 percent chance below PL 1.0–1.5 *PL 410,000
$1.3-1.9
in t+1
Above: < 10 percent chance below PL

Emerging in t+1 Rp410,000-
Consumer 1.5–3.5 *PL 950,000
$1.9-4.5
Below: < 10 percent chance below
Class (ECC) vulnerability line in t+1
Consumer Above: < 10 percent chance below

vulnerability line in t+1 > 3.5 *PL > Rp950,000 > $4.5
Class (CC)
9
How have consumption classes
evolved over time?
10
There are 45 million people in the consumer class,
with another 107 million emerging
Population Distribution
Vulnerable * % of total population (2013)
(PL-1.5*PL)
68 mil (27.4%*)
Poor ECC Consumer Class
(<PL) (1.5*PL-3.5*PL) (3.5*PL+) Breakdown of CC
28 mil (11.4%*) 107 mil (43.1%*) 45 mil (18.1%*)
.00006
100% 3% $20+: 1.3m

15% $10-20: 7m
80%
.00004
60%
Density
40% 82% $4.5-10: 37m

.00002
20%
0
0 50000 100000 150000 ~

0% 200000
PL 3.5*PL
$4.5-10PPP $10-20PPP
1.5*PL Per capita per capita daily consumption (Rp)
daily consumption (Rp) $20PPP-
(≈10% prob of falling (≈10% prob of falling
back into poverty) back into vulnerable)
Source: Susenas (2013) and World Bank calculations
11
The upper end of the consumer class is
underestimated in the survey data
Susenas Estimates of Higher Incomes  Non-response in wealthy
neighbourhoods is a known problem in
 >$10 a day (~Rp.2.1m/month) Susenas
— Only 8 million people  A comparison of administrative data on

car ownerships indicates that around
— 3 percent of population half (4m) are missing from the Susenas
 Other consumer credit data also
 >$20 a day (~Rp.4.2m/month) suggest many more wealthier
households than appear in Susenas
— Only 1.3 million people
— 0.5 percent of population
 A second research project is underway
to estimate the true number at the
upper end of the distribution
– Personal income tax data
– Credit card, car sales and credit,
mortgages and property taxes
12
At 11 percent per annum, the consumer class is the
fastest growing segment of population
Population by Class
02-13
CAGR*
100%
7.0% 7.4% 8.4% 8.9% 10.1% 10.4% 10.6% 10.6% 14.8% 17.0% 17.0% 18.1% 11.1%
80%
41.2% 43.1%
46.2% 46.1% 43.4% 44.2% 46.2% 46.8%
45.9% 2.2%
60% 44.7% 44.5% 43.1%
40%
33.7% 32.1% 28.7% 29.2% 28.8% 29.0% 27.7% 28.5% 26.1% 25.9% 26.5% 27.4% -0.1%
20%
18.1% 17.4% 16.7% 15.8% 17.7% 16.5% 15.4% 14.1% 13.3% -2.4%
12.5% 12.0% 11.4%
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Poor Vulnerable ECC Consumer Class
*CAGR = Compound Average Growth Rate (%). Calculated based on the actual population number changes for 2002-2013
Source: Susenas (2002-2013) and World Bank calculations
13
The consumer class are largely an urban phenomenon…
2002 2013
Urban Rural Urban Rural
Consumer Class 10.6 3.5 33.6 11.2
ECC 41.1 42.3 49.9 56.6
Vulnerable 25.3 43.0 29.3 38.4
Poor 13.0 23.7 10.3 17.7
# of people (million) 80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80
% by class Urban Rural Urban Rural

CC 11.7% 3.1% 27.3% 9.0%
ECC 45.7% 37.6% 40.5% 45.7%
Vulnerable 28.1% 38.2% 23.8% 31.0%
Poor 14.5% 21.1% 8.4% 14.3%
Total 100.0% 100.0% 100.0% 100.0%
Source: Susenas (2002, 2013) and World Bank calculations

14
…around a quarter of which live in greater Jakarta
Consumer Class Urban Province Locations

Percent of
(Thousands)
Population
10,000 35.0
9,000
30.0
8,000
7,000 25.0
6,000 20.0
5,000
4,000 15.0
3,000 10.0
2,000
5.0
1,000
0 0.0
Kep. Riau
Riau
Kalimantan Timur
Jambi
Sulawesi Tengah
Papua
Sulawesi Tenggara
Bengkulu
Sulawesi Barat
Jawa Barat*
Bali
Nusa Tenggara Barat

Sumatera Selatan
Greater Jakarta*
Jawa Tengah
Sumatera Utara
Kalimantan Selatan
Papua Barat
N Aceh Darussalam
Gorontalo
Kalimantan Barat
Maluku
Jawa Timur
Sulawesi Selatan
Lampung
Sumatera Barat
Kalimantan Tengah
DI Yogyakarta
Sulawesi Utara
Banten*
Nusa Tenggara Timur
Kep. Bangka Belitung
Maluku Utara
# of CC ('000) % of province population (RHS)
Note: Greater Jakarta includes DKI Jakarta, Bogor, Depok, Bekasi, Tangeran and Tangeran Selatan. Jawa Barat doesn’t include Bogor, Depok and
Bekasi. Banten doesn’t include Tangeran and Tangeran Selatan.
15
What has been the role of the
consumer class in economic growth?
16
Consumer class consumption has grown at 21 percent each
year, and is represents nearly half of all consumption
Total Susenas Consumption Percent of Susenas Consumption
2,250
100%
CAGR* (02 -13)
2,000
 Poor: 6% 90% 22% 23% 25%
 Vulnerable: 8% 26% 27% 30% 30% 29%
1,750  ECC: 11% 37%
80%
44% 44% 46%
 Consumer Class: 21%
1,500 70%
Trillion Rupiah
1,250 60%
48% 49%
50% 51% 50% 48%
1,000 47% 49% 49%
40% 45%
750 40% 40% 37%
30%
500
20% 22% 21%
18% 18% 18% 17% 16% 17%
250 13% 12% 13% 13%
10%
8% 7% 7% 6% 7% 6% 6% 5% 5%
0 0% 4% 4% 4%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Poor Vulnerable ECC Consumer Class Poor Vulnerable ECC Consumer Class
Source: Susenas (2002-2013) and World Bank calculations Source: Susenas (2002-2013) and World Bank calculations
*CAGR = Compound Average Growth Rate, ECC=Emerging Consumer Class
17
The consumer class accounts for a quarter of GDP
growth in the last decade
Breakdown of GDP Growth (02-13)
6%
 This is a conservative estimate
5.7%
– Non-response means high income
households are missing from the survey data
4%
2.7% – Household consumption over time is
nominal.
• Consumption still needs to be deflated
over time for consumer prices
1.6%
2%
• Poorer households have faced higher
inflation than richer households over
1.0%
the decade
0.3% 0.1%
0%
• In real terms richer households have
GDP Growth Rate Breakdown contributed more than shown here
Poor Vulnerable ECC Consumer Class GDP Non Private
Consumption
 Further analysis is being conducted to
address each of these
Source: Susenas (2002-2013), BPS and World Bank calculations
Note: Around 60 percent of private consumption in the national accounts is not accounted for in Susenas. Estimate 1 assumes that this
missing consumption is distributed in the same manner as the observed consumption. Estimate 2 assumes that 50 percent of the missing
consumption is by the consumer class, and 50 percent by the missing upper class
18
Are all of the consumer class socio-
economically secure?
19
Nearly half of all consumer class households are
poor on at least one non-monetary dimension
The Economically Secure and the Socio-
Non-monetary Poverty by Class
economically Secure
Rp5m+ 0.4%
100
100% SES-CC (Socio-Economically Secure
90 Consumer Class) 8.8%
80 ES-CC (Economically Secure Consumer
Class) 9.0%
70 80%
60
Percent
50
60% ECC (Emerging Consumer Class)
40 43.1%
30
20 40%
10
0 Vulnerable 27.4%
Water Sanitation Housing Poor on at 20%
poverty poverty poverty least one
dimension
Poor 11.4%
Poor Vulnerable ECC Consumer Class 0%
Source: Susenas 2013 and World Bank calculations

Note: Water poverty means household does not have access to clean drinking water (bottled, piped or protected well/spring); sanitation poverty
means no access to toilet with septic tank; housing poor means poor quality roof (not concrete or tile), floor (dirt) or walls (not brick or concrete)
20
How do these different classes behave in Indonesia?
What are the implications for social policy?
 What are the human capital and labour market outcomes of each class?
– How much education do they have, and where do they work?
 What are the consumption patterns of each class?
– What do they spend their income on?
 How else do they differ on behaviour and opinions?
– Leisure, entertainment and travel
– Health and fitness
– Family and friends
– Social issues
 What are their development needs?
21
How educated are they and where do
they work?
22
On average, both consumer classes are completing at
least high school…
Average Household Head and Spouse Schooling
20
SD SM SMA S1
P 15.7
15
13.1
Schooling years
11.7
10 9.1 Years of education

7.7  SD: 6 years
6.8
 SMP: 9 years
5
 SMA: 12 years
 Bachelor: 16 years
0
Poor Vulnerable ECC ES-CC SES-CC Rp5m+

23
…and consequently working less in agriculture and
more in value-added sectors
Working Sector of Household Head
100 2 3 4
1 1 5 5 7
7 2
8 2 5 6
4 3 1 2 9
6 12 2 4 Others*
80 8 3 3
4
6 18 3 Education
9 12
21 Telecom
7 10 16 6 21 Hotel & Restaurant
60
Percent
8 6 Finance
9 20 4
Public & Gov
11 21
40 19 Transportations
7
62 Trade
12 6
50 7 Constructions
20 37 16 12 Manufacturing
22 Agriculture
9 10
0
* Others include Mining, Electricity & Gas, and Health services ** The number less than 1 (percent) is not displayed
24
Much of the consumer classes work in salaried jobs,
or are business owners with paid employees
Occupational Status of Household Head
100 1 1 1 1 1
1 1 6 4
13
19
23
80 Family or non-paid worker
25 34 50 58 Casual labor
17 57
60
Percent
2 Worker/employee
3
5
Self-owned business with
40 33 28 8 permanent/paid worker
22
11 17 Self-owned business with non-
14 permanent/non-paid worker
20 10 Self-owned business
8
23 24 26 22
17 16
0

25
What does each class spend their
money on?
26
The majority of consumer class spending is on non-food, and
starting to be on entertainment and durables
Consumption Composition (Excluding Vehicle)
0 0
1 1 1
100 0 1 1 3
1 1 1 2 5
8 9 2 4 3 16
10 3 3
4 4 3
1 1 Entertainment
80 4 12 12 5
2
18 18 4 8 Taxes & Insurance
5 5 3
20 4 Durables (w/o Vehicles)
12
60 Clothing
22
24 5
Good & Service
Percent
11
40 Education
67 65 Health care
59 22
46 Housing & Facility
20 40
Food
19
0
27
Many of the consumer classes are starting to have
home amenities
Home Amenities
% Refrigerator % AC % Gas >12kg

100 80 78 86 83 100 100
80 65 66 68 80 80 61 56
56 58 51 46
60 40 44 60 60 43 40
40 31 27 40 26 22 40 27 24 27
20 19 25
15 8 12 14 10 16 136 9
20 5 20 000 000 302 3 5 20 111 423
0 0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
% Water Heater % Bottled water % PLN > 1,300 Watts
100 100 100
80 80 61 80 64 58
54
60 60 39 35 60
41 36
40 40 22 40 31
20 18 15 14 23 23
15
20 100 111 222 344 857 9 20 100 311 925 2
9
20 312 8 2 4 143 8 7
0 0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
28
They also increasingly have more sophisticated
access to technology and information
Technology and Information

Cable TV Computer* Access to Internet by
% % % Cellphone
100 100 100
80 80 73 68 80
55 51
60 60 60
39 40 27 41 38
40 27 25 40 32 31 40 22 29 27
14 18 12 18 12 18
20 734 544 6 5 6 111111 713 13 20 7 20 6 2 4 126 9
17
111 513 212
0 0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Source: Susenas (2013) and World Bank calculations * Own a desktop or laptop PC
29
The consumer classes are starting to switch from
motorcycles to cars
Vehicle Ownership
% Motorcycle % Car
100 8689 87 86 100
77 78 75 77 74 76
80 69 73 80
62 57 59 62 61
60 44 40 60 49
38
40 40 32 31
25
1713 16
20 20 645
000 111
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
30
What are the development needs of
different socio-economic classes?
31
Water, sanitation and housing remain a problem for
all but the socio-economically secure…
Water, Sanitation and Housing
100
Percent of Households
80
60
40
20
0
Clean Water Proper Sanitation Quality Housing
Poor Vulnerable ECC ES-CC SES-CC

Note: Water poverty means household does not have access to clean drinking water (bottled, piped or protected well/spring); sanitation poverty
means no access to toilet with septic tank; housing poor means poor quality roof (not concrete or tile), floor (dirt) or walls (not brick or concrete)
32
…but transportation is more accessible
Transportation and Infrastructure
100
80
60
40
20
0
Main road asphalted or Additional bridges Public Transport to
graveled surface required Regent/Mayor's office
Source: Susenas 2012, Podes 2011 and World Bank calculations
33
Education access is reasonable…
Education Access
100
80
60
40
20
0
ECED within 1 SMP within 6 SD with at SD with SD with water
km km least 2-S1 electricity
teachers
34
…as well as access to health care service, although
quality for both is known to be highly variable
Health Access
100
80
60
40
20
0
Access to Access to Access to Puskesmas Puskesmas Puskesmas
any primary secondary delivery with doctor with water with
care care facilities electricity
35
Expansion of social security to the emerging and
consumer classes will be important but difficult
Health Insurance and Pension SJSN and Universal Coverage
60
 Civil servants and the wealthy have access to
Percent
40
health and employment insurance and
20 pensions
0
Pension
 The government will cover health insurance
for the poor and vulnerable
60
 However, coverage of the emerging,
40 consuming and middle classes remains low
Percent
20  Coverage of these households with SJSN will

depend upon their contributions
0
Health insurance  With many ECC and some CC being informal,
Poor Vulnerable ECC ES-CC SES-CC expansion in coverage to these households
may be years away
36
Who might play a role in influencing
policy and public service delivery?
37
We are also interested in who may play a role
influencing policy, governance and service delivery
 Policy influence
– Which class of people may play a role in influencing clean governance?
– Which class of people may play a role in improving public service delivery?
• Education and health
• Housing, water and sanitation
38
All classes move straight to private vehicles rather
than use public transport
Transportation to Work
% Poor Vulnerable ECC ES-CC SES-CC Rp5m+
5 3 6 3 71 3 6 2 11 2 1
28
9 37 7 27
14 27
25
2013
48
5
38 1
72 60 45 5 39
5 1 51
4
Transportation to School
%
2 2 3 3 3 30 5 3
6 6 10 14 18 15 15
47 18 4
2013
8 13 17
7 16
11 26
77 64 5 49 44
8
10 42

39
Wealthier classes are seeking higher quality and private
health care
Choice of Health Care Facility
%

3 56 2 3
5 5 3 3 36 4 12 2 2 3 6 9
Outpatient
8 8
3 8 15 12
15 18 12 22
30
29 32 18 7
13
28
35 34 41
40 27 18 48
1 1 0 1 0 1 1 1 1 1 1
4 4 4 3 3 2 36
Inpatient
12 58 11 56 3 42
16 65 51
13 28 41 57
25
58
Choice of Birth Assistance Facility

%
Birth Assistance
5 1 8 2 1 10 2 1
7
2 1 2 0 0 1
13 16
21 38
27 32
46 52
67 68 59 61
59
Source: Susenas (2013) and World Bank calculations *Puskesmas/Pustu are government-mandated community health clinics
40
The consumer classes have fewer children…
Average Children at Home (< aged 15)

3
Av # of Children
2.2 2.3 2.2

1.9 1.8 1.8
2 1.5 1.3 1.4
1.1 1.1 1.1 1.1 1.1 1.1 1.1
0.9 1.1
1
0
Dependency Ratio
Urban Rural National
80% 80% 80%
60% 60% 60%
40% 40% 40%
20% 20% 20%
0% 0% 0%
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+

41
…who start school earlier and stay in school longer…
School Enrollment of Children by Parents' class

Pre school education School education
% %
100 100
80 80
60 60
40 40
20 20
0 0
Aged Aged Aged Aged Aged Aged
3-4 5-6 7-12 13-15 16-18 19-22
Parents’ class : Poor Vulnerable ECC ES-CC SES-CC Rp5m+

42
…and are beginning to use exclusive private schools,
although to a lesser extent than private health care
School type by Parents' class
%

3 5 2 6 0 7
3 2 11 13
5 2 26
6 5 7
4 2
SD
4 58
12
74 2
86 86 85 81
3
15 15 16 13 15 3
16
0 0 3
3 2 3 1 3
9
6
SMP
15 9 4
14 12 4
67 69 69 5 66
72 70
19 10
25 27 24 24
12
5 2
SMA
2 2 1
2 1 8
2 62 2 62
7 66 65 6
7 68 3
8 76
3
Source: Susenas (2012 Sep) and World Bank calculations *Exclusive private schools are those in top 10 percent of tuition expenses
43
Conclusions and next steps
44
An growing consumer class is helping drive growth,
but development needs remain for most Indonesians
 Indonesia has experienced strong economic growth in the last decade, driven in part by a
rapidly growing consumer class
 It is important to distinguish in Indonesia between the aspirational consumer class and the
emerging consumer class
– The consumer class are economically secure from poverty, while the ECC are not
– The consumer class are starting to display different behaviours
• They are starting to spend disposable income on consumer goods and durables, as well as
entertainment and leisure
• They are starting to demand higher quality health and educational services
 Only half of the consumer class are not only economically secure but also free from non-
monetary poverty
 It may be that the emerging consumer class who provides the strongest voice for public
service quality improvements
– The consumer class are increasingly opting out public health and education services, as well as public
transportation and utilities such as clean water and sanitation through kota mandiri
– The emerging consumer class, who cannot yet afford private services, have the greatest incentive to
advocate for public service improvements
No single group we might call the middle class?

45
Next Steps: thinking about the political implications
 Are there differences in attitudes and opinions between

the different classes?
– Attitudes and opinions from Roy Morgan survey data
 Health and Fitness
 Social issues
 Specific products and shopping
 Holiday, family and home
 What roles might the different classes play in social,

political and public life?
– Will it be the ECC or the CC who are more vocal and influential?
– Can they influence policies and spending?
 E.g. Is there a relationship between growth in ECC or CC at a district level
and district spending on health and education?
– Can they play a role in addressing corruption?
46
Questions for discussion
 What do you think of the various class definitions we

have used?
 What do you think of the economic versus social and
political distinction in analysis?
 What else would you like to see included in the
analysis?
47
Appendices
48
Definitions of middle class from precedent studies
Source Original Range $ PPP Range Income/ Rationale
(daily per capita) Expenditure
Absolute definitions - Global
Kharas and $10-$100 PPP $10-$100 PPP Expenditure Global benchmark: The lower band reflects the
Gertz (2010) (daily) average poverty line in Portugal and Italy, while
upper band is chosen as twice of median income
of Luxemburg
Milanovic and $4,000-$17,000 $11-$47 PPP Income Global benchmark: Range between the average
Yitzhaki (2002) PPP (annual) annual income in Brazil and Italy in 2000 PPP.
Brazilian average income ($11) is almost equal
to the poverty line of US & Germany
Absolute definitions – Developing Countries
ADB (2010) $2-$20 PPP (daily) $2-$20 PPP Expenditure Semi-arbitrary: $4-$10 is living above
(1) Lower MC: $2-4, subsistence and able to save and consume
(2) Middle MC: $4-10 nonessential goods. $10-$20 is roughly poverty
(3) Upper MC: $10-20 lines of Brazil and Italy, respectively
Ravallion $2-$13 PPP (daily) $2-$13 PPP Expenditure Global benchmark: Range between the median
(2009) poverty line ($2) from a sample of 70 developing
countries to the US poverty line ($13) in 2005
Banerjee and (1) $2-$4 PPP and (1) $2-$4 PPP and Expenditure Semi-arbitrary: Based on their estimates of a
Duflo (2007) (2) $6-$10 PPP (2) $6-$10 PPP lower and upper middle class from 13
(daily) developing countries. Those living on more than
$2 have a base amount of consumption that can
contribute economically to growth
49
Definitions of middle class (cont’d)
Source Original Range $ PPP Range Income/ Rationale
(daily per capita) Expenditure
Absolute definitions – Indonesia
BCG (2007) (1) Emerging MC: (1) Emerging MC Expenditure Semi-arbitrary + Behavioural: Based on BCG
Rp1.5-2 mil $1.9-2.5 excluding consumption survey and middle class definitions
(2) MC: Rp 2-3 mil, (2) MC $2.5-3.8 discretionar from precedent works
(3) Upper MC :Rp 3- (3) Upper MC $3.8- y spending
5 mil (monthly HH) 6.3 PPP*
McKinsey > $3,600 PPP > $10 PPP Income Arbitrary
(2012) (annual)
Tempo (2012) $2 -20 PPP (daily) $2-$20 PPP Income Arbitrary
Relative definitions
Easterly (2001) 20th & 80th $1.32-$3.77 PPP Expenditure Arbitrary in relative terms
percentile (Susenas 2011)
Birdsall et al 0.75 to 1.25 times $1.58-$2.64 PPP Income Arbitrary in relative terms
(2000) of the median per (Consumption base-
capita income Susenas 2011)
Hybrid definition (Absolute + Relative definition)

Birdsall (2007) $ 10 per capita N/M Expenditure Arbitrary: Exclude people who are too poor to
consumption - 90th (90thpercentile of & Income be middle class in any society and some people
percentile in the consumption=$5.31 who are, at least in their own society, “rich”
income distribution PPP in Susenas 2011)
* Using average household size is 4 people and $1 = IDR6,600

50
Definitions of middle class (cont’d)
Behavior Definitions (Middle class characteristics)
BCG (2013) Middle class & affluent consumers have greater ownership rates of homes, vehicles and white
goods, and increased adoption of services (financial consulting, education etc.)
Tempo (2012) Middle class can be seen at shopping centers, beauty clinics, organic food restaurants, foreign
boutiques & websites. Exchange information via internet/social media networks
Kharas (2010) Middle class spend more money on higher quality food, entertainment, higher standards of
living , and better education for their children
Banerjee and Duflo Middle class consume more expensive foods, are more likely to own TV, are more likely to live
(2007) in bigger houses and to have tap water, latrines and electricity in homes, and more invest in
human capital (e.g. education, health care)
51
There are 44 million people in the consumer class,
with another 107 million emerging
Population by Class (2013) Consumer Class by Definition
Size (percent
Vulnerable
(Data of
(PL-1.5*PL)
68 mil (27.4%*)
period) $ PPP daily per capita population)
McKinsey >$10 PPP (income) 45 mil (19%)
Poor ECC Consumer Class (2010)
Rp5m+(>17*PL)
(<PL) (1.5*PL-3.5*PL) (3.5*PL-17*PL)
1 mil (0.4%*)
28 mil (11.4%*) 107 mil (43.1%*) 44 mil (17.7%*) BCG $2.5-9.5 PPP** 74 mil (30%)
(2012) (=Rp 2-7.5 mil monthly
HH expenditure excl.
.4
discretionary spending)
ADB $2-20 PPP 146 mil (59%)
(2013) (consumption)
.3
Kharas $10-100 PPP 8 mil (3%)

Density
.2
Ravallion $2-13 PPP 143 mil (58%)

.1
World $4.5-22 PPP 44 million

Bank (consumption) (18%)
0
0 5 10 15 20 25 ~ (2013)
PL 3.5*PL Per capita daily consumptions ($ PPP)
Per capita daily consumption ($ PPP) 17*PL
1.5*PL
**Using average household size is 4 people and $1 PPP= IDR6,600
* % of total population (2013)
52
Consumption Trend (2002 – 2013)
Consumption: GDP vs Susenas Susenas Consumption Coverage

CAGR* (% GDP Private Consumption)
6,000 (02-13)
50%
13.7%
5,000 41% 42% 42% 41% 41%
39% 40% 39% 39%
40% 38%
36%
4,000 35%
Trillion of Rupiah
30%
3,000
2,000 13.7%
20%
4.7%
1,000 6.1%
10%
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0%
GDP Private Consumption: Nominal Real
Susenas Total Expenditure: Nominal Real**
Source: Susenas (2002-2013) and World Bank calculations Source: Susenas (2002-2013), BPS and World Bank calculations
*CAGR = Compound Average Growth Rate (%)
** Deflated by CPI (2000=100)
53
Attributing GDP growth by income class is difficult
due to differences in measurement
Contribution to Susenas and GDP Growth (02-13)
100%
80%
47%
54% 59%
60%
40% 31%
34% 22%
20%
12%
14% 4%
10% 7% 2%
0% 2% 1% 0%
∆ Susenas ∆ GDP Private Consumption ∆ GDP Total
Poor Vulnerable ECC Consumer Class GDP Private Cons GDP Non Private
Others Consumption
Source: Susenas (2002-2013), BPS and World Bank calculations
54
The size of the upper class is underestimated due to
non-response in the survey data…
Susenas Estimates of Higher Incomes
 >$10 a day (~Rp.2.1m/month)

— Only 8 million people These estimates are clearly too
— 3 percent of population low, and most likely due to
non-response at the upper end
of the distribution
 >$20 a day (~Rp.4.2m/month)
— Only 1.3 million people
— 0.5 percent of population
55
…and this can also be seen by comparing car
ownership with administrative data
Cars (2011)  Even accounting for commercial
passenger cars and multiple car
15
households, the number of cars in
Susenas is only around half of the
registered cars in Indonesia
9.5

10
A second research project is
Millions
underway to estimate the true

4.6 number at the upper end of the
5
distribution
– Personal income tax data
0
– Credit card, car sales and credit,
Susenas Registered mortgages and property taxes
Cars
Notes: Registered vehicles by category are from State Police data (reported by BPS). Includes commercial
vehicles. Susenas households are households reporting owning a motorcycle or car. Number owned is not
reported; some households may own multiple vehicles.
Source: Susenas, BPS, State Police and World Bank calculations
56
About half of consumer class has been socio-
economically unsecured
Population by Class (02-13)
02-13
CAGR*
0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.4% 0.4% 0.4% 43.2%
100% 3.8% 3.9% 3.4%
4.7% 4.5% 5.6% 5.6% 5.8% 7.3% 8.4% 8.5% 8.8%
3.1% 3.4% 3.6% 4.3% 3.7% 9.7%
4.7% 4.9% 4.7%
7.2% 8.3% 8.1% 9.0% 12.1%
80%
41.2% 43.1% 41.4%
46.2% 46.1% 44.2% 46.2% 46.8%
45.9% 2.2%
60% 44.7% 44.5% 43.1%
40%
33.7% 32.1% 33.8%
28.7% 29.2% 29.0% 27.7% 28.5% 26.1% 25.9% 26.5% 27.4% -0.1%
20%
18.1% 17.4% 16.7% 15.8% 17.7% 16.5% 15.4% 14.1% 13.3% -2.4%
12.5% 12.0% 11.4%
0%

*CAGR = Compound Average Growth Rate (%). Calculated based on the actual population number changes for 2002-2013
Note: For 2006, used 2006 July data because of socio-economic data availability
Source: Susenas (2002-2013) and World Bank calculations
57
The consumer class living in the rural area tend to be
more socio-economically unsecured…
2002 2013
Urban Rural Urban Rural
Rp5m+ 0.0 0.0 0.9 0.1
SES-CC 6.9 0.9 18.2 3.4
ES-CC 3.7 2.6 14.5 7.6
ECC 41.1 42.3 49.9 56.6
Vulnerable 25.3 43.0 29.3 38.4
Poor 13.0 23.7 10.3 17.7
# of people (million) 80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80
% by class Urban Rural Urban Rural
Rp5m+ 0.0% 0.0% 0.7% 0.1%
SES-CC 7.6% 0.8% 14.8% 2.8%
SES-CC 4.1% 2.3% 11.8% 6.1%
ECC 45.7% 37.6% 40.5% 45.7%
Vulnerable 28.1% 38.2% 23.8% 31.0%
Poor 14.5% 21.1% 8.4% 14.3%
Total 100.0% 100.0% 100.0% 100.0%
Source: Susenas (2002, 2013) and World Bank calculations
58
SES-Consumer Class Urban Province Locations (2011)
Percent of
(Thousands)
Population
7,000 25.0
6,000
20.0
5,000
4,000 15.0
3,000 10.0
2,000
5.0
1,000
0 0.0
Sulawesi Tengah
Kep. Riau
Kalimantan Timur
Jambi
Riau
Papua
Sulawesi Tenggara
Bengkulu
Sulawesi Barat
Jawa Barat*
Bali
Nusa Tenggara Barat
Kalimantan Selatan
Sumatera Selatan
Greater Jakarta*
Jawa Tengah
Sumatera Utara
Papua Barat
N Aceh Darussalam
Gorontalo
Kalimantan Tengah
Maluku
Jawa Timur
DI Yogyakarta
Lampung
Sulawesi Selatan
Sumatera Barat
Kalimantan Barat
Sulawesi Utara
Banten*
Kep. Bangka Belitung
Nusa Tenggara Timur
Maluku Utara
# of SES-CC ('000) % of province population (RHS)
Note: Greater Jakarta includes DKI Jakarta, Bogor, Depok, Bekasi, Tangeran and Tangeran Selatan. Jawa Barat doesn’t include Bogor, Depok and
Bekasi. Banten doesn’t include Tangeran and Tangeran Selatan.
59
Schooling years of parents and adults
(i) Average of highest schooling years of parents (2013)

20
16.5 15.7
15 13.6 13.1
# of schooling years
12.4 11.7 10.9 11.1

10.1 10.1
10 8.4 8.2 9.1
7.2 6.6 6.8 7.1 7.7
(ii) Average of highest schooling years of adults ( > aged 18, 2013)
20
17.3 16.7
15.1 14.7
13.8
# of schooling years
15 13.0 12.7 13.4

11.8 11.5
10.2 10.7
9.8
10 9.3
8.3 8.7 8.9 9.5
0
60
…but significant variation exists
Average schooling years of household Education attainment of household

head and spouse (urban and rural) head and spouse (aged 20-30)
20 100%
30 percent
16.5 do not enter
15 SMA
13.6 80%
12.4
10.9 11.1
Schooling years
10.1 10.1
10 8.4 8.2 60%
7.2 7.1
6.6
5
40% 37 percent
go on to
tertiary
0
20%
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
0%
Urban Rural 1 2 3 4 5 6 7 8 9 10 11 12 >12
Years of schooling

61
Consumption Behavior:
Main components of consumption categories
Main components of consumption categories
Food  Cereals, fish, egg & milk, vegetables, legumes, fruits, oils, spices, prepared foods &
beverages, tobacco, other foods
Housing & Facility  Monthly rent (estimated monthly rent for owned house), maintenance cost, electricity,
water, LPG, gas, gasoline, generator, firewood and other fuel cost, phone bills, post stuff,
internet cost
Health care  Health care, drug cost, and health preventive cost
Education  School fee, school contribution/admission fee, text books, stationery and non-formal
education cost
Good & Service  Soap, bathing, cosmetic and sanitary goods, newspapers & magazines, motor vehicle's
fuel, light service, and motor maintenance, transport expenses, financial service charges
Clothing  Ready-made clothes, clothing materials, wages sewing, footwear, hat, scarf etc.
Durable goods  Furniture, household furnishings & equipment, home appliances, kitchen utensils,
decoration stuff, furniture and utensils repairs, hand phone and other accessories,
watch, clock, camera, glasses, umbrella, bag, jewelry, toys, electronics, sports
equipment, vehicles, domestic animal and plant maintenance
Taxes & Insurance  Buildings and land taxes, motor and non-motor vehicle taxes, health insurance, live
insurance and general insurance
Entertainment  Parties & ceremonies, hotel, cinema, theater, sports, other recreations, domestic
servant, security & driver
Source: Susenas (2013)
62
Consumption Behavior by Class (2013)
- Consumption without housing rent
Consumption Composition by Class (2013)
0 0
1 1 1
100 0 1 1 4
1 1 2 2 6 Entertainment
9 10 2 2.7 11
11 9 7 4
4 1 4 Taxes & Insurance
1 3 3
80 10 4
10 2 13 14
10 Durable Goods
4
Percent
5 6 43
60 5 Clothing
10
12
Good & Service
40 2
73 71 9
66 Education
4
51 45 8
20 Health care
7
13 Maintenance &
0 Facility
Poor Vulnerable ECC ES-CC SES-CC Rp5m+ Food
63
- Consumption without durables
0 0
1 1 1
100 1 4
1 1 2 2 5
8 9 3 2.7 17 Entertainment
10 3
4 1 4 12
1 4 13
18 4 3
18 5 6
20 4 13
Percent
Clothing
60 23 6
25
12 Good & Service
40
67 66 Education
60 23
48
20 41 Health care
20
Housing & Facility
0
64
- Consumption without housing rent & durables
0 0
1 1 1
100 1 4
1 1 2 2 6 Entertainment
9 10 3 2.7
12 3 19
4 1 4
80 10 2 15
10 7
10 4 3
5 6 Clothing
Percent
11 5 15
60
13 7 Good & Service
40 14
74 Education
72 67
55 12
48 Health care
20
23 Maintenance &
Facility
0
65
- Urban vs Rural: Consumption without vehicles
Urban Rural
% %
1 1 1
100 1 1 1 100 1 1
1 1 3 2 5 1 1 2 4 5
1 2
8 10 1 11
2 4 3
3 3 15 8 8 1
10 2 5 5
2
4 3 4 3 1 3 3 22
1 4 1 3 2
80 1 4 12 12 6 80 11 11
2 16 15 3
20 4 7 3
20 4 6 3 17 6 4 8
22 4 7
12 4
60 60 18
23 6 17 13
25 2
11
40 40 13
64 69 69
61 22 62
56 17
45 50 46
20 39 20
19 19
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
66
Housing status by Class (2013)
- National
%
0 0 0 0 0
100 1 0
0 2 4 1 5
10 11 11 8
3 11 11
5 7 12
80
13
21
60
86 83
40 79 78
71
64
20
0
Owned Lease & Rent Free lease Company house Others

67
- Urban vs Rural
Urban Rural
% %
0 0 0 0 0 0 0 0 0 0
100 0 0 100
0 1 4 1 4 0 1 2 5 1
2 9 9 9 9 6 10
13 15 14 12 11 1 10 3
1 2
7 14 3 11
80 11 80 3
14 14
30
60 60
90 90 87 89
40 79 76 40 82 77
73 70 70
55
20 20
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+

68
Consumption range by household head’s workplace
and occupational status (2013)
By workplace By occupational status
3,500,000 3,500,000
Monthly consumption per capita (IDR)
3,000,000 3,000,000
2,500,000 2,500,000
2,000,000 2,000,000
1,500,000 1,500,000
1,000,000 1,000,000
500,000 500,000
0 0
(500,000) (500,000)
Agriculture
Manufacturing
Constructions
Trade
Transportations
Public & Gov
Finance
Hotel & Restaurant
Telecom
Education
Others*
Self-owned business
with non-permanent
Self-owned business
Worker/employee
Casual labor
non-paid worker
Self-owned business
/non-paid worker
with permanent
/paid worker
Family /
Note: The bars represent one standard deviation. * Others include Mining, Electricity & Gas, and Health services
69
Distribution of Household head's workplace by Class (2013)
- Urban vs Rural
Urban Rural
% %
100 3 1 4 4 5 100 2 2 3 5
6 7 4 2 1 5 10
2 3 4 6 2 5 5 7
13 3 1 2 2 8 5 3 7 1 1
13 4 4 7 4
3 3 6 11 13
80 9 17 4 4 80 7 14
4 5 12 5 1
11 22 6 6
13 23 6
9 7 14 12
60 24 60 7
19 6 5 20
15 6 6 12
21
3 1
40 11 14 23 40 10
22 75
11 20 68 10
12 8 56
6 48
20 16 8 20
35 17 35
23 18 12 29
14
7 5 6
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
* Others include Mining, Electricity & Gas, and Health services ** The number less than 1 (percent) is not displayed
70
Occupational status of Household head by Class (2013)
- Urban vs Rural
Urban Rural
% %
100 1 1 1 1 3 1 1 0 100 2 1 1 1 1 3
10 5 8 9 3
19 20 15
21
29
80 80 31
32
12 17 23 35
48 62 63 2
36 60
60 60 3 5
27 9 14
14
40 2 3 40 43 38 30
4 23
14 13 29
12 8 10 21
17
20 8 20
8
28 4
28 26 26 28
19 21 22 20 20
16 15
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
71
Female labor participation (2013)
Adult Female Labor Participation

Spouse Labor Participation (>aged 15 but no longer at school)
% %
100 100
80 80
66
62 61
59 57
60 56 55 56 54 60 55
50 52
40 40
20 20
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
72
Female labor participation (2013)
Adult Female Labor Participation

Spouse Labor Participation (>aged 15 but no longer at school)
% %
100 100
80 63 80 67
56 52 52 59 57
60 46 47 50 60 44 48
Urban
Urban
40 40
20 20
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
% %
100 100
80 62 60 61 64 63 80 58 63 62 60
55 53 55
60 60
40 40
Rural
Rural
20 20
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+

73
Migration (2012)
Adults (25-65) living in a different Adults (25-65) living in a different

place from the birthplace place from the location 5-year ago
% %
50 10
40 38 8 7
30 28 6
22
20 4
13 3
2
10 8 2
6 1
1 1
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Source: Susenas (2012 Sep) and World Bank calculations
74
Migration (2012)
Adults (25-65) living in a different Adults (25-65) living in a different

place from the birthplace place from the location 5-year ago
% %
50 41 10 8
40 31 8
30 26 6
16
Urban
Urban
20 11 4 3 2
7 1 1 1
10 2
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
% %
50 10
40 8
30 6
20 16 16 4 3
2
Rural
Rural
5 6 9 9 1 1 1 1
10 2
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+

75
Asset Ownership (2013)
Asset Ownership by Class* (2013)

% Mobile phone % Landline phone
93 88 96 93 979596 989397
100 87 84 87 100
79 7781
80 6570 80
60 60 42 37
40 40 27 24
20 20 13 10
1 1 1 2 2 2 6 2 4 3 6 6
0 0
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
Poor
Vulnerable
ECC
ES-CC
SES-CC
Rp5m+
76
Choice of health care facility by outpatient
Choice of health care facility by outpatient

%

3 56 2 3
5 5 3 3 36 4 12 8
2 2
8 3 6 9
3 8 15 12
15 18 12 22
30
29 32 18
2013
7
13
28
35 34 41
40 27 18 48
4
53 1 3
4 42 2
4 5 4
3
4 11 1 3 8 2 3 4
12 11 11 14 27
20 16 9
24 4
2007
26 26
30 12
37 54 45
48 31 19
42
1 1 2 2 2 5 5 2 8 5 1 5
4 17 3
8 24 6 2 18
10 13
13
2002
29 26 21 34 9
13
39 35 27 19 44 50
Source: Susenas (2013, 2007, 2002) and World Bank calculations *Puskesmas/Pustu are government-mandated community health clinics
77
Choice of health care facility by inpatient
Choice of health care facility by inpatient

%

1 1 0 1 0 1 1 1 1 1 1
4 4 4 3 3 2 36
12 58 11 56 3 42
16 65 51
2013
13 28 41 57
25
58
2 2 2 1 1 2 1 1 1 2 0 1 1
7 5 3 53 3 1 35 23
7
61 62
15 12 52
2007
17 42
13 34 75
62
8 16 4 2 1 23 0 0
5 7 52 11 25 100
64 2 55
8
2002
8
16
35 74
19 65
78
Choice of birth assistance facility
Choice of birth assistance facility

%
5 1 8 21 10 2 1
7
2 1 2 0 0 1
13 16
21 38
27 32
2013
46 52
67 68 59 61
59
61 4 3 1 7 2 1 10 2 2 34 30 1
41 16
5
20 52
58 43
2007
35 38
47
54 62
53
32 10
3 0 2 3 1 2 1
13
11 1
30
33 5
27
2002
45 69
61
45 57 56
79
Choice of health care service: Urban vs Rural
%
4 5 7
3 4 6 63 3 3 8
5 2
12 8 10 2 2 8
9
6 4 9
19 10
Urban
12 24
22 20 22 24 12 14 7
Outpatient
35 41 51 41
39 35 27 15
24 5 2 3 4 3 33 4 12 73 2 1 6 8
2 3 4 8 12
11 13
Rural
21 22 33 35
35 41 39
29 38
42 35 27 23 12
4 42
5 1 1 5 0 1 4 0 1 2 1 1 2 2 1 1 1
8 9
Urban
12 1 34
58 48 41
12 28 30 47
Inpatient
69 56 58
61
3 1 2 2 0 1 5 0 1 5 1 1 2 0 1 0
58 13 6 48
Rural
18 7
22 58 55 42
21 25 29 52
58 48
15
17 1 0 1 1 1 1 1 1 38
12 14 6 22 3 1 0 0 1
13
Urban
Birth Assistance
55 35
43 65
69 72 71 57
7 1 6 3 0 7 3 1 15 2 1 7 0 1
11 38
27 20 19
Rural
31 62
33 53
61
62 66
63
Source: Susenas (2013) and World Bank calculations *Puskesmas/Pustu are government-mandated community health clinics
80
Greater investment in education
Monthly Av Tuition Spending per child by Class (2012) *

‘000 Rp 1,029 542
400
300
239
220
200 172 174
118 124
94 101 98 89
100 61 70
65 48 53 49
45
40 26 34 32 42
7 7 8 9
21
7 11 21 10 12 17 20
0
Public school Private school Public school Private school Public school Private school
SD SMP SMA
Source: Susenas (2012 Sep) and World Bank calculations, *Public schools include religious and other public schools
81
School type by class (2012)
-SD
%
3 5 2 6 0 7
3 2 11 13
5 2 26
6 5 7
National
4 2
4 58
12
74 2
86 86 85 81
3
3 6 3 8 4 10 14 14
28
5 5 2 3 8
Urban
4 2
4 53
4
72 13
86 84 81 77 2
3
2 5 2 5 2 5 3 5 1 6 12
6 6 6 5 3
Rural
87 87 88 87 90 88
82
-SMP
%
15 15 16 13 15 3
16
0 0 3
3 2 3 1 3
National
9
6
15 9 4
14 12 4
67 69 69 5 66
72 70
13 15 4
19 19 18
19
2 2 4 3 11
Urban
4 7
63 6
15 13 65 9 67 65 0
72 5 70
12 2 11 14 13 18
4 2 2
28
6
Rural
15 14
14 14
5
70 72 70 71 71 72
83
-SMA
%
19 10
25 27 24 24
National
12
5 2
2 2 1
2 1 8
2 62 2 62
7 66 65 6
7 68 3
8 76
3
21 11
24 13
32 29
35
Urban
9
9 2
54 3 2
1 59 60 0
2 63 62
26 2 6 23
36 6 75
18 18 19 16 7
28 6
2 1 1
1
Rural
10 6
8 7 4
61
70 4
71 72 76 3
87
84
School type by class
- National
%
Poor Vulnerable ECC CC Rp5m+

10.2 12.3 16.8
2.7 2.3 26.6 40.0
7.6 2.7
7.9
2012
6.6
3.1 54.2
73.9 4.4 65.9
79.5 77.5
4.1 1.7
10.2 13.3
4.1 77.2 74.4 68.3
3.9 20.2 37.2 51.6
48.6 42.7
8.5
2009
8.4 4.5
7.0
6.1
5.1 2.5 6.1
15.6 84.4 16.7 83.3 22.6 60.6 22.8

77.4
39.4 77.2
2006
Source: Susenas (2012, 2009, 2006) and World Bank calculations

85
School types by class
Urban vs Rural
%
Poor Vulnerable ECC CC Rp5m+

13.2 2.6 16.3 21.3
2.9 29.5
2012
7.2 7.2 3.6 42.9

5.4 3.1 51.6
76.7 73.9 69.7 63.4
4.0 4.5 1.1
15.1 19.1
4.5 25.7
Urban
63.3 47.7 41.3

2009
4.5 41.5 49.5

7.6 69.4
72.8 7.1 5.1
6.0
6.3 4.6 2.6 6.7
20.9 22.1 81.9 18.1
26.8
2006
56.8
73.2 43.2
79.1 77.9
2.6 8.2 2.0 9.0 12.2 18.0 11.5

7.8 8.4 1.9 8.3
2012
7.8 3.1
81.4 5.6
80.5 73.2 80.2
78.2
3.9 8.0 3.5 9.5 12.3 19.0
8.9 3.8 40.5
75.4
Rural
2009
9.3 8.5 5.2 68.3 56.6

79.2 77.7 7.5
1.9
1.0
14.1 14.1 17.1 22.0
2006
35.9 64.1
85.9 85.9 82.9 78.0

86
[Slide for Discussion Purpose only]
Private School: Tuition cost distribution
Monthly tuition for Private SD Monthly tuition for Private SMP
Tuition for Private SD Decile Upper cut-off Tuition for Private SMP Decile Upper cut-off
.000015
.00002
1 0 1 0
2 0 2 0
.000015
3 0 3 0
.00001
kdensity montuition
4 0 4 21,667
5 20,000 5 28,000
.00001
6 33,000 6 40,000
5.000e-06
7 50,000 7 59,000
8 100,000 8 78,000
9 200,000 9 150,000
0
10 1,416,667 10 1,666,667
0
0 100000 200000 300000 400000 500000 0 100000 200000 300000 400000 500000
Monthly tuition(Rp) Monthly tuition(Rp)
Monthly tuition for Private SMA

Decile Upper cut-off
Tuition for Private SMA
1 0
2 21,667
3 33,333
4 50,000
5 65,000
6 87,500
7 110,000
8 150,000
9 200,000
0
0 200000 400000 600000 800000 1000000

10 1,500,000
Monthly tuition(Rp)

87
Light Calorie deficiency
Light Calorie Deficiencies for Children by Parents‘ Class

100 94 93 94
88 90
88
83 85 84
82 82 81
80 74
71 70
60 61 60 62
59 59
60
50 51 50
49 49
Percent
46 44 4646
41 42 42 43
40 40 41
40 36 37 37
33 32 32 33
30
25 23
20 22
19 18
20 16 14
6
0
Aged Aged Aged Aged Aged Aged Aged Aged Aged
0-2 0-5 6-14 0-2 0-5 6-14 0-2 0-5 6-14
2008 2011 2013

88
Moderate Calorie deficiency
Moderate Calorie Deficiencies for Children by Parents‘ Class

100 96 96 96 97 98 98 9996
95 94 95 94
91
89 88
85 84
82 81 81 80
80 77
73 72 72
68 68 69 68
64 63 65 65
61 62
57 58 59 58 59
60 56
54
49 49 51
Percent
43 42
40 37 36
32
30 30
25
19
20
0
Aged Aged Aged Aged Aged Aged Aged Aged Aged
0-2 0-5 6-14 0-2 0-5 6-14 0-2 0-5 6-14
2008 2011 2013

89
Contribution to Increase in GDP (02-12) by Sector
Contribution to ∆ GDP (02-12)

Real GDP by Sector (2002 / 2012)
by Sector
(Trillion of Rupiah) (%)
CAGR(02-12)
3,000 100
Others 7.6% 8.0 Others
Total CAGR(02-12) 2,618
90 7.4
5.7% Public & Gov 5.5% Public & Gov
2,500
80 5.0
Finance 5.9% Finance
12.9
2,000 Communication 21.6% 70 Communication
4.1
Transportations 6.4% 60 3.0 Transportations
1,505
1,500 Hotel & Rest 5.8% Hotel & Rest
50 17.6
Trade
Trade 7.1% 40
7.9
1,000 Constructions
Constructions 7.4% 0.9
30
Electricity & Gas
Electricity & Gas 7.4%
20 22.5
500 Manufacturing
Manufacturing 4.8%
10 2.0 Mining & quarrying
Mining & quarrying 1.3%
0 8.6 Agriculture
0
2002 2012 Agriculture 3.5%
∆02-12
Source: BPS and World Bank calculations
90

FKP 2014 05 14 Matthew Wai POI Indonesia Middle Class

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The Indonesian Middle Class:

Evolution and Impact

Currently, middle-class and affluent consumers (IDR2-7.5 million monthly

 Who are the Indonesian consumption classes?

Advantages of a “Vulnerability” approach:

Range as PL Per-capita consumption(2013)

Above: < 10 percent chance below PL

Consumer Above: < 10 percent chance below

100% 3% $20+: 1.3m

40% 82% $4.5-10: 37m

0 50000 100000 150000 ~

— Only 8 million people  A comparison of administrative data on

Poor Vulnerable ECC Consumer Class

Consumer Class 10.6 3.5 33.6 11.2

ECC 41.1 42.3 49.9 56.6

Vulnerable 25.3 43.0 29.3 38.4

Poor 13.0 23.7 10.3 17.7

% by class Urban Rural Urban Rural

Source: Susenas (2002, 2013) and World Bank calculations

Consumer Class Urban Province Locations

Nusa Tenggara Barat

Nusa Tenggara Timur

Kep. Bangka Belitung

Source: Susenas 2013 and World Bank calculations

10 9.1 Years of education

Source: Susenas (2013) and World Bank calculations

Source: Susenas (2013) and World Bank calculations

Source: Susenas (2013) and World Bank calculations

% Refrigerator % AC % Gas >12kg

Technology and Information

Poor Vulnerable ECC ES-CC SES-CC

Source: Susenas 2013 and World Bank calculations

Transportation and Infrastructure

Poor Vulnerable ECC ES-CC SES-CC

Source: Susenas 2012, Podes 2011 and World Bank calculations

Source: Susenas 2012, Podes 2011 and World Bank calculations

Source: Susenas 2012, Podes 2011 and World Bank calculations

20  Coverage of these households with SJSN will

Source: Susenas (2013) and World Bank calculations

Poor Vulnerable ECC ES-CC SES-CC Rp5m+

Choice of Birth Assistance Facility

Average Children at Home (< aged 15)

2.2 2.3 2.2

60% 60% 60%

40% 40% 40%

20% 20% 20%

Source: Susenas (2013) and World Bank calculations

School Enrollment of Children by Parents' class

Parents’ class : Poor Vulnerable ECC ES-CC SES-CC Rp5m+

Source: Susenas (2013) and World Bank calculations

Poor Vulnerable ECC ES-CC SES-CC Rp5m+

No single group we might call the middle class?

 Are there differences in attitudes and opinions between

 What roles might the different classes play in social,

 What do you think of the various class definitions we

Tempo (2012) $2 -20 PPP (daily) $2-$20 PPP Income Arbitrary

Hybrid definition (Absolute + Relative definition)

* Using average household size is 4 people and $1 = IDR6,600

Kharas $10-100 PPP 8 mil (3%)

Ravallion $2-13 PPP 143 mil (58%)

World $4.5-22 PPP 44 million

Consumption: GDP vs Susenas Susenas Consumption Coverage

Source: Susenas (2002-2013), BPS and World Bank calculations

Susenas Estimates of Higher Incomes