An insightful hour on the economic impact of COVID-19 in Indonesia

“The impact [today] also hits small, micro and medium enterprises [MSMEs]. In the 1998 crisis, [these remained] the backbone of our economy – the informal sector. And consumption was still maintained, but we can see now it’s already different.”

Nunung Nuryartono, Dean of Economics and Management, IPB University

Professor Nunung joined a young environmental economist, a Australian lifetime student of Indonesian economics and governance, a former ABC Indonesia correspondent, and over 200 viewers on Tuesday 7 April for The Australia-Indonesia Centre’s first live webinar.

The discussion covered impacts and responses to COVID-19 in Indonesia, from street level to finance markets, comparisons with previous crises, the role of overseas partners, projections for when a new normal might take hold, and more.

“Poorer friends and relatives,” shared Kevin Evans, AIC Indonesia Director, “are now beginning to ask for a bit of help, so I think the traditional social safety net that people have relied on through family and friends is beginning to kick in.”

Economist Andhyta Utami reported that “for the general public in Indonesia, there is a sense of being on our own, and uncertainty and inaction from the government’s side.”

Afu, as she’s known, is co-founder of the Think Policy Society and co-host of YouTube channel Frames and Sentences.

Citizens, she added, are “trying to take some of the matters to their own hands.” This has included making donations through online platforms, where Gojek, for example, has raised its tipping limit and an online campaign has encouraged people to even order GoFood but then tell the driver to keep the food rather than deliver it.

“Statistics show that around three to five percent of millennials are now used to making donations,” she said.

The discussion then focussed on economic recovery measures taken by governments.

The central government, noted Professor Nunung, recently committed an extra Rp.405 trillion (USD 24.65 billion) including Rp.110 trillion (USD 6.75 billion) to helping informal workers and poorer families. Professor Nunung said the government will be judged foremost on “its ability to help Indonesia’s most vulnerable, through not only health care and reliable supply chains, but social welfare [payments].”

Here, Kevin Evans noted, there was some good news:

“In 2005… as I say, they gave birth to Indonesia’s social welfare system. It was a dramatic transformation of using public funds to actually support individual poor people. So the programs they are targeting [today] are actually pre-existing social safety net programs. So that’s a really important administrative piece of architecture that exists and can easily be ramped up.”

Professor Nunung adds: “The question is whether the people that need to have this kind of assistance [actually] receive the certain figure that the government has planned.”

Watch the full webinar here:

Ensuring the money is correctly targeted is also a challenge in an economy that has seen the rise of a lower middle class who have benefitted from jobs in industries such as tourism and services and are now seeing their livelihoods diminished.

Afu called this group the “new poor”.

“These are vulnerable communities who previously were in the aspiring middle-class position who had enough income. And they are not the beneficiaries of the existing government programs, but are now vulnerable because the tourism sector is really affected.”

People in marginalised communities, such as sexual minorities, she added, were also at risk of missing out.

“They don’t have an ID card to access some of this assistance because they don’t belong in a family, maybe because they’re a sexual minority. So there is this additional layer of a vulnerable group in the community that might [struggle to] access the system.

More from the webinar:

On markets: What’s left of my $100 after the crisis is over? (Kevin Evans)

‘A sense of uncertainty’: COVID-19 update from economist Andhyta F. Utami