Indonesia Gambles on Reopening Economy

Ongoing outbreaks pose potential for disaster

By: Ainur Rohmah

Facing a severe economic dilemma from rising poverty and unemployment and stalled infrastructure projects, the Indonesian government, over the objection of epidemiologists on a second wave before the first one is finished, plans to open up business and social activity starting June 1 despite the rising number of positive cases and deaths from Covid-19.

The government also faces a crisis from the return of anywhere from 1.3 million to 2.1 million people from their villages following mudik, the Eid al Fitr celebration at the end of Ramadan, on May 24, over concerns that they will be bringing the virus back with them.

As of May 12, Indonesia had reported 14,749 cases, with another 484 cases confirmed in the past 24 hours from 119,728 people tested. Some 3,063 people have recovered but 1,007 have died after 16 new fatalities overnight.

The Ministry of Economy’s gradual opening begins on June 1 with a first phase in which industry and business-to-business (B2B) services open but will continue to require social distancing. The second to fourth phases will take place from June 8 to July 6 with the gradual opening of shops, markets, malls, museums and schools, as well as places of worship and restaurants. All economic activities are targeted to return to normal by the end of July or early August.

COVID-19 task force chief Doni Monardo said the government would allow those under age 45 to resume their activities as usual to prevent them from losing their livelihoods. Data from the Ministry of Manpower shows unemployment has jumped more than 2 million people in the month and a half since the pandemic officially appeared on March 2 although it had been in the country far longer. The Finance Minister Sri Mulyani Indrawati recently predicted unemployed and poverty-stricken in a very heavy pandemic would increase to 5.23 million and 3.78 million respectively.

Only 15 percent of those who contract the virus are under the age of 45, Doni said, adding that "the young group under 45 is physically healthy, has high mobility, and if exposed to a virus, are not necessarily sick because there are no symptoms. “As long as people in this age group wear masks, he said, don’t touch their faces and practice social distancing, they might not get infected and thus infect others.

Some 45 percent of deaths occur among those 65 years and over, while the other 40 percent aged 46-59 years have congenital diseases, such as hypertension, diabetes, and heart disease. 

An epidemiologist from Padjajaran University, Panji Fortuna Hadisoemarto said Indonesia is not ready to reopen its economy because many active cases have not been detected. In addition, corona-positive people have been detected who show no symptoms.

"If it (the economy is opened), it means that activities are running normally as before the pandemic. This is not safe until the number of active cases is very small," said Panji. "It's still very risky to restore activity to normal levels," he said.

He warned that the fight against COVID-19 is far from over, as the delayed results of polymerase chain reaction (PCR) tests and the nation’s low testing capacity have made it difficult to capture the true scale of the epidemic.

Authorities have declared 251,861 people as under surveillance (ODP) — those who have traveled to virus-hit regions or having been in contact with positive cases but do not show any symptoms — while some 32,147 people are patients under treatment (PDP) — who have symptoms and are in medical care but still need their status confirmed through a test.

The country of 270 million people has previously been criticized for having one of the lowest testing rates in the world, raising many concerns that the real number of cases across the country could be higher than official tallies.

Government data show that Indonesia had conducted polymerase chain reaction (PCR) tests on 119,728 people by Tuesday, a rate of about 552 people out of one million population, one of the lowest in the world.

Iqbal Elyazar, the Geospatial Epidemiology Program Manager at Eijkman-Oxford Clinical Research Unit in Jakarta, said the government had not announced the number of PDP and ODP deaths so it is difficult to identify the real situation of the virus spread country. The number of deaths so far has only been counted from positive patients.

"The more suspects died, indicating the more severe the pandemic," said Iqbal. The number of deaths due to Covid-19 is estimated to be up to three times the official number reported by the government.

Delayed Infrastructure Projects

The coronavirus pandemic has had a major impact on infrastructure development in Indonesia, including delays in the construction of its new capital city in Kalimantan, which was to begin this year. However, President Joko Widodo recently signed a Presidential Regulation (Perpres) concerning the spatial design of the Jakarta conurbation that designates Jakarta as the center of government and diplomatic center at least until 2039.

Minister of the National Development Planning Agency (Bappenas) Suharso Monoarfa said the government won’t start physical construction of the new capital city even though various studies related to its construction continue to be carried out.

"In this condition we have no thought to start physical development (of the new capital city),” he said. “However, development studies continue to be carried out with consideration that physical development can be directly carried out when the economy improves," Suharso said.

Indonesia’s annual GDP growth slowed more than expected, to 2.97 percent in the first quarter of this year, the weakest in 19 years and lower than the government’s projection of 4 percent-plus growth. 

The spread of the coronavirus has also delayed investment projects, especially from China because part of the workforce comes from that country. In 2019, China became the second largest investor (16.8 percent) in Indonesia after Singapore (23.1 percent). Some projects were hampered by a lack of Chinese workers after the Indonesian government stopped flights to and from the Chinese mainland on February 5. 

The Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Panjaitan said Chinese-backed projects such as steel and nickel processing were hampered. The projects are located in Morowali, Konawe, and Weba Bay with an investment of US$11 billion. 

On the island of Sumatra, work at the Batang Toru hydroelectric power station was halted because the contractor working on the project came directly from China. The construction of the US$6 billion Jakarta-Bandung high-speed railroad project has also been delayed even though the project should be completed and begin operations in December 2021.

On May 12, the House of Representatives increased the budget to Rp405.1 trillion (US$27.22 billion) including Rp75 trillion for health, Rp110 trillion for social security, Rp70 trillion in intensive tax cuts and stimulus for people's business credit, and a national economic recovery program of Rp150 trillion.

However, some activists and politicians criticized the new law because it is designed to provide immunity to government officials and absolute power for the president in using state funds. The government denies this interpretation and says any government apparatus that violates the law can be prosecuted legally. It ensures that the funds are included in the state budget so that they can be audited by the Financial Supervisory Board (BPK), and accounted to the house of representatives.