t The macro-economic environment

Developing the Business Case for Investing in Inclusive Business in Indonesia: A Market Scoping Study 35 The economic environment in Eastern Indonesia The provinces of Eastern Indonesia are considered to be the least developed and the most challenging both in terms of business environment and development activities. In Eastern Indonesia, natural population growth exceeds the national average and increases exponentially as you travel further east. Although the unemployment rate is below the national average except in three districts East Kalimantan, Maluku and Papua Barat 2 there is a higher tendency towards informal labour and underemployment is higher. Immigration has been low since the Suharto regime, which contributes to the egio s sta ilit . A e eptio is in the Malukas where there has been violence originating from ethnical andor religious differences as well Papua where that has also been ongoing tensions. There is considerable disparity and diversity of social, natural and built environments between regions and economic development trends Key indicators clearly show the challenges in Eastern Indonesia.. National statistics indicate that 14.7 of people in Eastern Indonesia are below the poverty line compared to 12.0 nationally. Eastern Indonesia scores lowest on the Human Development Index HDI with a score of 70.1 compared to the national score of 72.0. Its population is also spread out over a wide area, indicating that services may be more difficult to access, despite the general trend towards urbanization. The region however scores better than the Indonesian average for the Gini-coefficient the most commonly used measure of inequality, which may be due to not having so many of the super wealthy as in Bali or Jakarta. Surprisingly, Eastern Indonesia has a higher average wage than the national figure. This may be skewed by who is captured in the data. For example, Maluku and Papua, generally considered among the poorest areas with 23 of people living below but an average monthly wage of IDR 2,061,500 far greater than the national average Indonesia socio-economic indicators Land a re

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o Indone si an tot al P opul at ion, thous and 2010 H D I 2010 G ini Inde x of poo r p e opl e 2012 M ini m u m wag e m th, ID R 2012 A v e rag e wag e m th, ID R 2012 H ous e h ol d e x pe ndi tur e m th ID R 2012 D om e st ic P rodu ct t ri ll ion R p., 2011 G ros s R e g ional D om e st ic P rodu ct ex cl . oi l g as tri ll ion R p. 201 1 Sumatera 25.1 50.631,00 73.50 0.35 11.5 1,131,80 1.611,00 682,20 1,417.20 1,175.70 Jawa 6.8 136,610,60 73.50 0.40 10.9 929,17 1.583,50 745,69 3,470.20 3,366.40 Bali 0.3 3,890,80 72.00 0.43 4.2 967,00 1.602,00 885,90 73.50 73.50 Eastern Indonesia 67.8 46,508,90 70.10 0.37 14.7 1,100,040 1.725,67 590,63 1,060.20 889.50 TOTAL Indonesia 100 237,641,30

72.00 0.41