LGBT Exclusion in Indonesia and Its Economic Effects

March 2017

This study reviews existing research as well as documentation from governments and intergovernmental and non-government organizations to examine the evidence of discrimination against LGBT people and estimate the impact of it on Indonesia’s economy.

The cost of discrimination to the Indonesian economy could range from nearly 900 million to 12 billion US dollars.
Waria (an Indonesian term for transgender women and effeminate men) face many barriers due to their violation of cultural rules about gender.
LGBT people report high levels of harassment in school, which may reduce educational attainment and reduce economic productivity later in life.

Executive Summary

Global concern about human rights violations against sexual and gender minorities, often referred to by the acronym LGBT (lesbian, gay, bisexual, and transgender), has expanded to include concern about connections between human rights, social exclusion, and economic development. This study analyzes the treatment of LGBT people in Indonesia and shows how that treatment may be detrimental to the Indonesian economy. The report finds evidence from a wide range of research-based sources, including published academic studies of many datasets and studies by NGOs, that document the forms of exclusion that harm LGBT Indonesians’ well-being and that would reduce their ability to contribute to the Indonesian economy.

Context: Indonesians use many different terms to describe sexual orientations and gender identities, and the term LGBT is also commonly used in Indonesia to refer to sexual and gender minorities. Indonesian national laws are largely silent with respect to LGBT people, neither explicitly criminalizing them, nor intentionally protecting them. However, at the local level, there are provinces, cities, and regencies that explicitly criminalize LGBT people. Public opinion studies show that acceptance of LGBT people is very low and has changed little over the last decade, and that media coverage is generally negative.

Education: Education is an important source of “human capital” for individuals, enhancing the skills and knowledge of workers and expanding their productivity. Young LGBT Indonesians who seek to continue their education face barriers in accessing the educational system, such as the ability to use family resources, access to needed documents from their families, and access to identity cards that reflect their gender identity. In educational settings, harassment, bullying, and discrimination are common against those who violate gender norms, such as waria (an Indonesian term for some transgender women), effeminate boys and men, or masculine girls and women, and others who are perceived as LGBT. These barriers are likely to result in LGBT people accumulating less education and skills than they are capable of and reducing Indonesia’s human capital.

Employment: Evidence shows that Indonesian LGBT people face discrimination in required job qualifications and hiring, and they experience workplace harassment and other forms of discrimination. LGBT people rarely disclose their sexual orientation or gender identity at work for fear of discrimination and harassment. Employment discrimination on account of being LGBT would reduce economic productivity for several reasons: people with skills are not hired at all; people end up in jobs that do not fully use their skills and knowledge, and harassment and discrimination in the workplace are likely to reduce people’s output.

Violence: Indonesian LGBT people face physical, psychological, sexual, economic and cultural violence. Rates of such experiences are high in Indonesian surveys. In addition, people who are perceived as LGBT also face such violence. The psychological and physical harms from violence will reduce LGBT Indonesians’ ability to participate in society and the economy.

Health: Health is a form of human capital. People in good physical and mental health are not only better off individually, but they can generate more economic output at home and in the workplace. Studies in Indonesia (and elsewhere) show that stigma related to being LGBT reduces access to condoms, testing, and treatment of HIV. Studies also show high rates of HIV prevalence, suicidal ideation, and risky health practices for LGBT people, which are linked to stigma and minority stress. Barriers to accessing health care include difficulties with ID cards, fear of having their sexual orientation or gender identity disclosed, fear of harassment by health care providers, and lack of funding for LGBT-related care. These health challenges mean that LGBT Indonesians may not be able to contribute their full potential productivity to the workforce.

Projected estimate: In order to estimate the economic cost of LGBT exclusion in Indonesia, we would need high quality, reliable data from representative samples of the Indonesian population on the health, education, and employment of LGBT people and non-LGBT people. However, we know of no data such data for Indonesia. One way to get a more quantitative sense of the potential cost of LGBT exclusion in Indonesia is to draw on results from an estimate in India, where the cost of LGBT exclusion ranged from 0.1% to 1.4% of Gross Domestic Product (GDP). Understanding that there are differences in the size and experiences of LGBT people in India and Indonesia, as well as larger relevant differences in workforce participation and the provision of health care and education, applying those percentages to the Indonesian GDP implies that the loss would range from almost $900 million to $12 billion.

All of these links between LGBT exclusion and the economy create barriers to the Indonesian economy’s achieving its full potential. Promoting LGBT inclusion rather than condoning or enforcing exclusion is likely to improve economic output shared by all Indonesians, as well as realize the economic well-being and human rights of LGBT Indonesians.

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LGBT Exclusion in Indonesia and Its Economic Effects