Indonesian: A (5x) Wealthier Generation

Posted on October 19th, 2010 at 4:45 pm by Akhyari


For some people who don’t think deeply, this news might not be the most heartwarming news, but to me it is. The rising number of rich people , to me, always mean the rise of income of people around them. A new townhouse in the west of Surabaya called Puri Safira is inhabited by newly-rich families, and hundreds of them makes the once-empty-land a new spot of economic growth. Imagine of millions of newly rich people. Now, let’s see this..

Credit Suisse, a financial services company which offers clients financial advice in all aspects of private banking, investment banking and asset management has release a report titled “Global Wealth Report” that measures and analyzes trends in wealth across nations, from the very bottom of the “wealth pyramid” to the ultra high net worth individuals.

The report is prepared by Professors Anthony Shorrocks, Director of the World Institute for Development Economics Research of the UN University (UNU-WIDER) in Helsinki from 2001 to 2009 and Jim Davies, Professor in the Department of Economics at the University of Western Ontario in Canada, and the architects and principal authors of “Personal Wealth from a Global Perspective,” released by Oxford University Press in 2008.

Credit Suisse defined wealth as the household net worth or value of financial assets plus non-financial assets (such as housing) owned by individuals less their debts. The figures are obtained by applying techniques to data derived from a great variety of sources.

The total world wealth is close to USD 200 trillion. To be among the wealthiest half of the world, you only needs USD 4,000 in assets, once debts have been subtracted. However, you need more than USD 72,000 to belong to the top 10% of global wealth holders and more than USD 588,000 to be a member of the top 1%.

The bottom half of the global population together possess less than 2% of global wealth, although wealth is growing fast for some members of this segment. In sharp contrast, the richest 10% own 83% of the world’s wealth, with the top 1% alone accounting for 43% of global assets.

The Global Pyramid of Wealth breaks down the number of people in each wealth brackets. More than 3 billion people or 64% of the world population has wealth of less than USD 10,000. A little bit more than a billion people or 23.5% has wealth ranging from over USD 10,000 up to USD 100,000. 334 million people or 7.5% has wealth of over USD 100,000. While only 24 million or 0.5% at the top of the pyramid with wealth of over USD 1 million.

In high income countries, the threshold of USD 100,000 is well within the reach of middle-class adults once their careers have been established. In contrast, residents from low-income countries would need to belong to the top percentile of wealth holders, so only the exceptionally successful, well endowed or well connected can qualify.

Indonesia is defined as a “Frontier Wealth” which means transition nations outside the European Union with majority of their wealth ranging from USD 5,000 to USD 25,000. In this category are also countries such as Thailand, most of Latin America (Colombia, Ecuador, Peru, and El Salvador). A number of African nations (South Africa, Botswana, and Namibia) and the Mediterranean coast countries (Morocco, Algeria, Tunisia, and Egypt).

The rise of personal wealth in Indonesia has been spectacular during the past decade, with average wealth growing by a factor of five. The comparison between Indonesia and India is interesting as they had very similar wealth per adult at the start of the decade, but the figure for Indonesia is now more than double that for India. India now along with all of South Asia, including Pakistan, Bangladesh and Nepal, and almost all of Central and West Africa are in the less than USD 5,000 bracket. Noted that India population is more than 1.1 billion while Indonesia only has 240 million people which may affect the overall wealth of the country.

Indonesia has 25% of its population with wealth less than USD 1,000 and only 2% of its people have wealth over USD 100,000. The average wealth in Indonesia is USD 12,112 which means that if all wealth in Indonesia is combined and distributed equally to everyone, each person will have USD 12,112.

While the report shows an encouraging sign for Indonesia, because of the nature of the analysis, this doesn’t necessarily mean that the quality of life have improved in Indonesia. It does mean that at least some people in Indonesia are getting richer.

Source: Jakarta Updates

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