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Govt plans to reopen economy by Q3 as experts caution against COVID-19 'second wave'
May 12, 2020 | Dzulfiqar Fathur Rahman & Adrian Wail Akhlas/J

The Indonesian government is mulling over a plan to start easing the COVID-19 social restrictions in June to allow businesses to resume operations gradually.

Raden Pardede, the special adviser to the Coordinating Economic Minister, said on Monday that economic recovery was expected to begin in the third quarter of 2020 under the government's five-stage draft framework on the resumption of economic activities.

The plan, which is still under development, aims to restore "business as usual" by the end of July.

According to the plan, grocery stores and shopping malls will be allowed to resume limited operations on June 8. In mid-June, museums may reopen with social distancing for visitors, schools with staggered schedules and exercising outdoors will be permitted also.

On July 6, restaurants, bars, cafes and gyms may start opening with tight health protocols in place, followed by lifting restrictions on travel and public worship.

But the framework's architect, Raden, stressed that the plan was contingent on fulfilling the public health metrics first, including flattening the curve of new cases per day. If the government fails to meet the metrics, it would likely need to extend the COVID-19 restrictions for an additional two-week period, he said.

“We do not yet know when the outbreak will end and a vaccine will become widely available and affordable,” Raden told The Jakarta Post via text message on Monday.

“But the most important thing is to prevent hunger among informal and formal workers who have lost their source of income. They have limited savings,” he said.

The draft framework was widely circulated after the latest data showed that Indonesia's economy grew just 2.97 percent in the first quarter, the weakest growth since 2001 and nearly half the growth recorded in the first quarter of 2019.

The slowdown in growth was partly due to people spending much less than usual since the government announced the first confirmed cases in early March.

During a phone interview with the Post on Monday, deputy chairwoman Shinta Kamdani of the Indonesian Employers Association (Apindo) said that businesses were supportive of the framework to prevent further economic losses. But the government must first bring the epidemic under control to restore consumer confidence.

“There is no point if businesses are ready, but consumers do not want to go out and start shopping again,” said Shinta, who is also the CEO of diversified conglomerate Sintesa Group.

According to Our World In Data, an open access publication on global socioeconomic data, the Indonesian government has not tested enough people at only 8.3 tests per confirmed case, far lower than neighboring Malaysia’s rate of 37.1 tests per confirmed case.

Some believe that reopening the economy would be premature, as Indonesia had yet to flatten the epidemic curve. The national COVID-19 task force reported the highest daily increase on Saturday with 533 new cases, bringing the cumulative total to above 14,000.

Chief economist David Sumual of Bank Central Asia (BCA), the country’s largest private bank by market value, warned that reopening the economy too soon might trigger a second wave of infections, and that the government must be “extra careful” in easing social restrictions.

“However, prolonged social restrictions would take a greater toll on the economy,” David told the Post by phone on Monday. “We might see temporary layoffs become permanent layoffs and more people falling into poverty if the partial lockdown continues [for much longer].”

Around 2 million people are now jobless, as businesses were temporarily closed to prevent the spread of the virus.

The SMERU Research Institute, which specializes in poverty research, projected a 12.37 percent increase in Indonesia's poverty rate this year, from an increase of 9.22 percent last year.

“We cannot choke the economy for much longer,” University of Indonesia rector and economist Ari Kuncoro told the Post on Monday. Prolonging the social restrictions to curb COVID-19 transmission could aggravate the economic and social crises, he stressed.

“The virus will be around for some time and thus, we need to adapt and implement very strict health measures to resume [economic] activities,” said Ari.

The American Chamber of Commerce in Indonesia (AmCham Indonesia) said that its members, who represent more than 250 companies, were keen to help the country recover from the epidemic and the attendant economic crisis.

“Our first concern, of course, is the health of our employees and communities, but we are also anxious to work with the government to increase economic activity when the time is right,” AmCham Indonesia managing director Lin Neumann told the Post via text message on Monday.

Chairwoman Corine Tap of the European Business Chamber of Commerce in Indonesia (EuroCham Indonesia) said that its over 230 member companies were preparing a business plan to navigate the post-COVID-19 economy. It was anticipating market downturn, stagnant investment and distribution disruption due to the epidemic.

“I think the question is not about whether we are willing and ready,” Tap told the Post via text message on Monday. “For businesses, it is imperative to follow the lead of the government to enable coordinated action and proper procedures for reopening the economy, to ensure that the highest safety and health protocols are in place.”



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