Recent developments in the poverty rate reflect a paradoxical phenomenon between urban and rural poverty. The general assumption is that poverty in the villages increases and people move to the cities. However, the reverse is now true: rural poverty is declining and urban poverty is increasing.

The Central Statistics Agency (BPS), which finally released data on the poverty rate as of March 2025 on Friday (25/7/2025), said that the overall percentage of Indonesia's poor population as of March 2025 was recorded to have dropped to 8.47%. This figure fell slightly by 0.1 percent compared to September 2024. This is the lowest figure in the last two decades.

BPS Deputy for Social Statistics, Ateng Hartono, in a press conference on Friday (25/7/2025), announced that the number of poor people fell slightly, by only around 200,000 people, to 23.85 million, or 8.47% of the total population.

Although only down 0.1 percentage points from September 2024, this is the lowest poverty rate in the last two decades. "This is good news, although small, because it still shows a consistent downward trend," said Ateng Hartono.

It's different in the village, different in the city

However, behind the national figures, there are two contrasting stories: optimism in the villages, and alarm bells in the cities.

In rural areas, the good news comes through the data: the poverty rate has fallen more sharply, from 11.34% in September 2024 to 11.03% in March 2025. Meanwhile, in cities, poverty actually rose slightly, from 6.66% in September 2024 to 6.73% in March 2024. 

"Rural poverty is still higher than urban poverty, but urban income inequality is higher: The urban Gini ratio is 0.395, while the rural ratio is 0.299," said Ateng.

The Gini ratio is an index that describes income inequality with a range of 0 to 1. An index position close to 0 indicates that wealth is evenly distributed, while 1 indicates high inequality.

This difference is not just a matter of statistics. What makes villages more resilient, and what makes cities more vulnerable?

Ateng explained that one of the factors driving down the rural poverty rate was the increase in the farmer exchange rate (NTP). The NTP figure in March 2025 reached 123.72. This March 2025 NTP position is higher than the last time the poverty rate was released, namely the September 2024 NTP of 120.30. This means that the selling price of farm produce is higher than the production and consumption costs of farmers. Purchasing power increases, and poverty decreases. 

In addition, the number of workers in the agriculture and trade sectors has also increased. In villages, these sectors are still the backbone, not just a last resort. When crop prices improve, incomes increase, and more families can cross the poverty line.

Behind that, there is a fact that is often forgotten: villages are not just "poor areas" that passively wait for assistance. Many villages have made local innovations, from farmer cooperatives, savings and loans, to tourism village programs that drive the economy. The slow decline in poverty is not only the result of government intervention, but also the initiative of residents who try to survive in the midst of challenges.

In cities, on the other hand, the slight rise in numbers is a signal that cannot be ignored. While the numbers may seem small, the impact is real for millions of people living barely below the poverty line. 

Ateng explained that there are two big pressures: rising food prices and the increase in underemployment, people who have jobs but work few hours or don't earn enough. "In urban areas, the number of underemployed rose by 0.46 million in February 2025 compared to August 2024," he said.

BPS data showed that the number of underemployed people rose by around 460,000. Meanwhile, the prices of several important commodities, such as cayenne pepper, cooking oil, and onions continue to soar.

For the urban poor living on daily wages, the difference of one or two thousand rupiah per kilogram is not a small number. It could mean one less meal. "The price increases of a number of food commodities, such as cayenne pepper, cooking oil, and garlic," said Ateng.

Cities also have a deeper problem: inequality. The Gini ratio in urban areas is 0.395, much higher than the 0.299 in rural areas. The source is clear: income variation in cities is much wider. There is a small group with very high incomes; while below them, the majority of informal workers struggle to maintain an uncertain income.

"Poverty in villages is higher than in cities, but inequality is higher in cities," he said.

There is also the story of extreme poverty, which this year was reported at 0.85%. At first glance, this appears to be an increase from last year's 0.83 percent. However, this is not a true increase. Ateng Hartono explained that BPS uses a new method: instead of using PPP(Purchasing Power Parity) USD 1.9 (2011), it now uses PPP USD 2.15 (2017) and adds a spatial deflator to better suit regional conditions. 

If last year was calculated using the new method, the figure was 1.26 percent. This means that extreme poverty is actually declining.

Learning from successful city UMKM : Nasrafa's story

In the midst of the fluctuating economy and the tough challenges of doing business in a big city, Yani Nasrafa's story can be an example of how UMKM can survive and even grow. The owner of the Nasrafa batik business believes that the most important step is to consistently maintain product quality and continue to be creative. 

"Continue to consistently create quality products, manage solid human resources and look for potential markets abroad," said Yani.

In addition, she is also active in opening networks to various lines. For the export market, Yani directly contacts Indonesian trade representatives abroad, such as the Indonesian Trade Promotion Center (ITPC), Trade Attaches, and the Indonesian Embassy. While domestically, she approaches organizations such as the Indonesian Medical Association, the Indonesian Notary Association, lecturers, officials, artists, and other professionals who fit Nasrafa's target market.

According to Yani, the success of UMKM is also inseparable from the support of many parties. Assistance from related agencies and ministries, banking institutions, and organizations such as KADIN all play an important role. This cooperation helps overcome common obstacles for the city's UMKM , such as access to capital, promotion, and market expansion.

However, he emphasized the importance of training that is not just a formality. "The training must be sustainable and measurable, not just once in a while or to spend the budget," said Yani. 

For him, it is also important to separate the classes or segmentation of business actors, so that the training materials, curriculum, and teachers are in accordance with the needs. "If the class is A, then the teacher must also be A, the curriculum A, and the facilities must support it," he added.

Nasrafa's experience shows that the progress of urban UMKM is not only about the hard work of business actors, but also about proper and sustainable support. In the midst of urban poverty data that is sometimes not fully recorded, stories like Nasrafa's prove that solutions exist, provided there is synergy between business actors, the government, and the supporting ecosystem.

Poverty is not just a number on paper

Behind the good news of the decline in national poverty, Executive Director of the Center of Economic and Law Studies (CELIOS) Bhima Yudhistira warned that there are fundamental problems that need to be addressed immediately.

According to him, this figure is not enough to capture the reality on the ground. He assessed that the BPS poverty calculation approach, which is almost five decades old, is too narrow and no longer relevant to the economic reality and consumption patterns of today's society.

Therefore, although statistically there has been a decline, the impact on policy and public welfare has not been significant. "The poverty rate using this old method will never really answer the reality on the ground," said Bhima.

Instead of just how much we spend, Bhima suggested BPS also look at welfare from how much we can actually set aside after paying for all basic needs.

Furthermore, the gap between official government data and that of international organizations is eye-opening: The World Bank estimates that around 68.2% of Indonesia's population lives below the international poverty line, a figure far greater than BPS records.

In cities, the challenges are even more complex. Rapid urbanization, the shift of young people to the city, and the increase in the cost of living faster than wages have pushed many city dwellers into new poverty. According to CELIOS, many of them live in rented or boarding houses, which are not administratively recorded in the Integrated Social Welfare Data (DTKS).

CELIOS research says that efforts to reduce poverty, especially in cities, require concrete steps that directly touch the community. One thing that can be strengthened is short-term social assistance programs such as electricity discounts, public transportation subsidies, and scholarships for children of underprivileged families.

In the long term, he also suggests subsidizing rent and housing for vulnerable groups in the city. The cost of housing is one of the heaviest burdens of the urban poor, which is often not recorded in official data. 

In addition, CELIOS emphasizes the importance of involving local communities, such as RT, RW, cooperatives, and community organizations, as the spearhead to record and distribute aid.

However, CELIOS highlights the obstacle that many policies and programs are still very centralized in the hands of the central government. This makes the space for innovation at the urban village, sub-district, city and village levels narrow. According to him, it is necessary to review the operational and technical guidelines so that local governments can be more free to innovate according to the needs of their respective regions.

Furthermore, he also sees the potential of cooperatives in the city as one of the solutions to reduce the cost of living, stabilize the price of staples, and open access to low-interest or interest-free finance. However, many cooperatives are dying out due to lack of support and incentives. 

Urban farming is considered a promising opportunity, not only in big cities, but also in peripheral cities close to rural areas. But challenges remain: infrastructure, supply chains, and limited affordable business land are still major obstacles. Not to mention classic problems such as expensive rent and thuggery that often arise in many cities in Indonesia.