JAKARTA – Despite recording the highest number of cases in a single day, the Indonesian government is planning a five-phase return to post Covid-19 normalcy, starting with the freeing up of transport services on June 1 and the opening up of all economic activities by the end of July.
“Until the discovery of an effective vaccine, we must live in peace with the coronavirus for some time to come,” said President Joko Widodo, whose chief concern all along has been the danger of a collapsing economy triggering an outbreak of social unrest.
In his May 8 statement, he noted that after avoiding a nationwide lockdown he now wants the “wheels of the economy to keep rolling” while intensifying efforts to rein in a slow-burn pandemic in which 9,640 of the 14,000 confirmed cases so far have been on populous Java island.
The president is annoyed that the 50 laboratories capable of the task have so far conducted only half the 10,000 swab tests-a-day target he set a month ago, largely blamed on a shortage of medical staff and flaws in the distribution of reagents.
Still, officials appear encouraged by the fact that 3,287 of the 15,438 patients with confirmed cases of the virus have recovered and that hospital occupancy rates are now 70% nationwide and as low as 53% in Jakarta, the epicenter of Indonesia’s outbreak.
As modest as the new daily infections have been compared with other countries, there is no avoiding the fact that the 689 cases recorded on May 13 was the highest since Widodo declared the coronavirus a national disaster on April 13.
The government’s phased recovery plan was conceived by Economic Coordinating Minister Airlangga Hartarto and, according to government sources, is firm at this point. “It is based more on economic calculations than on the health aspect,” one senior official told the Asia Times.
Parliament passed a long-awaited regulation in lieu of law (Perppu) on May 13, allowing the government to extend the state budget deficit beyond the mandated 3% of gross domestic product (GDP) in disbursing an initial US$24.6 billion for Covid-19 relief measures.
As much as $21 billion is for an economic recovery program, but in a reflection of the dominant position they have come to hold in the economy under the Widodo administration about half of that has been allocated to state-owned enterprises.
“The president has to keep the country together,” points out an Indonesian economist, answering critics who have accused Widodo of paying more attention to the economy than to the health crisis itself. “It is going to get very messy if the lockdown continues.”
“In an emerging market situation, you don’t have the safety net of more advanced countries, but I don’t think Jokowi (Widodo) has much choice,” he says. “How you do it is the tricky part because inevitably more people are going to get sick.”
During a weekend Cabinet meeting, Widodo is said to have expressed alarm over economic growth slowing to 2.97% in the first quarter of this year, well below the median 4% predicted by most analysts. That suggests the second quarter will end up deep in the red.
The first phase of the government plan will see the resumption of air, rail and bus services, which were cancelled last month to prevent a flood of people from returning to their hometowns before and after the Ramadan fasting month, which ends on May 23.
Phase two of the government’s plan envisages the opening of malls and markets on June 8, followed by a third phase on June 15 that allows for the limited re-opening of schools. Phase four, timed for July 6, proposes the gradual return to business of restaurants, cafes, bars and gyms.
Critics say with infections still on the rise, the government hasn’t done nearly enough testing to justify a relaxation of the restrictions that have left the economy barely ticking over and millions either out of work or plunging ever-deeper into poverty.
But as with other countries, it is a decision that has to be made sooner or later. The president has been worried all along at the impact of unemployment on the country’s social fabric and particularly the informal sector, which accounts for half the workforce.
Finance Minister Sri Mulyani Indrawati says first quarter data showed consumption across the country declined by 9,000 trillion rupiah ($599 billion) last year to 4,000 trillion rupiah ($266.5 billion) this year.
She told Parliament’s finance commission that the second quarter would see an even greater slump, particularly without the surge in spending that usually comes with the post-Ramadan holiday and delays in paying out traditional bonuses.
Widodo has been clinging to the hope of a full blown recovery in the third quarter, but in a country where domestic consumption is the main driver of the economy the scale of the contraction is such that analysts are now predicting full year GDP growth as low as 1.3%.
A recent report by the Indonesian Employers’ Association (Apindo) says most companies will have only enough funds to last them until the end of June before they have to make hard decisions about retaining staff. Larger firms can hold out until the fourth quarter.
Businessmen worry that re-opening the economy too soon could trigger a second wave of infections, but while there has been a significant up-tick in the past week, the coronavirus in Indonesia has not come in a wave, certainly not in the same way as in Europe and the United States.