A race against time: Restoring the health of the people and the economy

Ninasapti Triaswati, S.E., M.Sc., Ph.D. University of Indonesia teaching staff

IO – The availability of vaccination greatly increases the hope that our economic growth will recover soon. Statistics Indonesia (Badan Pusat Statistik – “BPS”) data shows that the recession caused by the COVID-19 pandemic has crashed Indonesia’s economic growth to negative territory, at -2.07% in 2020.

The biggest contributors to negative economic growth are: transportation and warehousing (-0.64%); processing industry (-0.61%); wholesale and retail trading (? ); motorcycle and automobile repairs (-0.49%), construction (-0.33%); accommodation, food, and beverage supplies (-0.31%); mining and delving (-0.14%); and corporate services (-0.10%). The prima donnas of economic growth positive contributors are: Communications (0.57%); farming, forestry, and fishery (0.22%); health and social services (0.13%); financial and insurance services (0.13%); educational services (0.08%); real estate (0.07%).

In terms of economic growth from expenditures, the first negative contributor is investments (I) or gross capital formation at -1.63%, followed by exports (X) at -1.6%, household consumption (C) at -1.43%, and Non-profit Agencies Serving Households (Lembaga Non-profit yang Melayani Rumah Tangga – “LNPRT”) consumption (C) at -0.05%. With the formula Y = C + I + G + X – M, the factors that contribute to positive economic growth are Government consumption (G) at 0.15% and negative imports at -2.74%.

In view of the Bloomberg and John Hopkins University data projecting that Indonesia will need more than 10 years to complete its vaccination program with 2 doses per person and assumed vaccination speed at 60,443 doses a day, we can imagine just how long it will be for our national economy to recover. Naturally, this estimate will change if the Government can drastically increase its vaccination rate. For example, a ten-fold increase of 604,000 doses a day will linearly allow Indonesia to complete its vaccination program within a year.

The University of Indonesia’s Faculty of Community Health (Fakultas Kesehatan Masyarakat Universitas Indonesia – “FKM UI”) estimates that the plague will start to get under control by September 2021 if vaccination for the common people starts on 1 March 2021, with 31,000 vaccinators vaccinating 30 people a day (or 930,000 doses administered daily). In other words, we need to drastically increase our vaccine supply and update our demographic data accurately to ensure proper vaccination. Minister of Health Budi Sadikin admits that data accuracy is a great weakness in Indonesia. Even though it’s hard, it can be resolved by combining demographic data obtained from the recent Regional Elections with data from the latest Census. What’s harder is to ensure that the vaccine is supplied properly and adequately to all vaccinating health facilities across Indonesia.

What we need to remember is that the vaccination program is not the only strategy that must be implemented to recover the people’s health and encourage economic growth. The people’s health is strongly affected by their own adherence to the 5M (memakai masker with benar, mencuci tangan, menjaga jarak, menjauhi kerumunan, dan mengurangi mobilitas – wearing masks properly, washing hands frequently, maintaining physical distance, avoiding crowds, and restricting mobility) protocol and the Government’s implementation of the 3T (testing, tracing, and treatment) program.

Experience of various countries show that properly implementing 5M is efficacious in restricting the spread of the pandemic. This is also the reason why President Jokowi expressed his disappointment that both the Large-Scaled Social Restriction (Pembatasan Sosial Berskala Besar – “PSBB”) and Restriction of Community Activity (Pemberlakuan Pembatasan Kegiatan Masyarakat – “PPKM”) programs have hitherto failed to change people’s behavior – which in turn causes the failure to rapidly restrict COVID-19 infection among the masses.

Therefore, both Central and Regional Governments need to effectively monitor the implementation of the 3T program. Minister of Health Budi Sadikin warned us that the implementation of the program Government is very weak. The holding of the 2020 Regional Elections followed by the year-end holidays have greatly increased the number of people positively infected by COVID-19 at the start of 2021.

On the other side of the equation, the speed of our national economy’s recovery is highly dependent on Government’s political will and administrative abilities, the sufficient availability of vaccines, sufficient allocation of funds for programs that will increase the people’s buying power, and most importantly, national discipline in enforcing health protocols. The people may expect the promises of quick and accurate economic recovery – but they, in turn, must contribute properly as well.

One of the ways to spur economic growth is by increasing investments in the real sector. The Investment Management Agency (Lembaga Pengelola Investasi “LPI”) has been established for the purpose of increasing and regulating foreign investments to Indonesia, and a Bank Syariah Indonesia (BSI) has also been established to support domestic shari’a business. Minister of State-Owned Enterprises and Chairman of the Shari’a Economic Society, Erick Thohir, is optimistic about the entry of foreign investment with the establishment of LPI and BSI – especially from the Middle East. We are still waiting to see the positive impact of this flow of investments after the necessary administrative processes through LPI and BSI.

In terms of Micro, Small, and Medium-sized Businesses (Usaha Mikro, Kecil, dan Menengah “UMKM”) and the creation of job opportunities, it is crucial that UMKMs that crashed because of the COVID-19 pandemic be saved. The necessary strategies of PSBB and PPMK have caused working, shopping, and learning and teaching to be mostly performed at home, and to all but paralyze tourism. The crash of GDP growth hit the UMKM hardest. This is obvious in the drop in growth in wholesale and retail trade, automobile and motorcycle repair (-3.72%), and accommodation, food, and beverages (-10.22%).

Merely providing funds from the State Budget is not sufficient to resolve the UMKM problem, because what matters is the accuracy of the programs meant for UMKM. They really need numerous guidance programs that can help them evolve their business into becoming part of the digital economy. And these UMKM guidance programs need to be expanded fast. This will necessitate the participation of various non-Government organizations that are competent and experienced in this matter.