President Joko Widodo (second right) symbolically delivers assistance to vendors as he visits Pasar Minggu Market in South Jakarta on April 13, 2023, ahead of Idul Fitri. - Antara Download The Jakarta Post app for easier and faster news access: Android: http://bit.ly/tjp-android iOS: http://bit.ly/tjp-ios
JAKARTA (The Jakarta Post/Asia News Network): Indonesian businesses have lauded the government’s decision to end the national Covid-19 state of emergency, saying the move will expedite the economic recovery from the pandemic, but some experts predict little change, noting that most of the economically significant restrictions were relaxed months ago.
Indonesian Chamber of Commerce and Industry (Kadin) chairman Arsjad Rasjid told The Jakarta Post on Thursday (June 21) that the decision would encourage many businesses to expand further, which would boost the economy as a whole.
The tourism, accommodation and food and beverage industries stood to benefit the most from the decision, Arsjad said, noting that foreign and domestic tourists were now able to travel freely in the country.
“[Covid-19’s new endemic status] is an opportunity for the business sector to optimise the Indonesian economy, increase competitiveness and scale up [micro, small and medium enterprises (MSMEs)].
"This will make the country the right destination for global investors,” Arsjad said.
Shinta Widjaja Kamdani, the newly appointed chair of the Indonesian Employers Association (Apindo), said on Thursday that the decision would stimulate mobility and lead to increased domestic consumption.
It would benefit the financial sector as well, she added, as investors would view the policy change positively.
President Joko “Jokowi” Widodo’s declaration of the end of the country’s Covid-19 emergency status on Wednesday came after Indonesia had eased many of its pandemic-related restrictions in the preceding months, following a decline in Covid-19 cases and increased vaccine coverage.
Over the last three years, the government has walked a tightrope between containing Covid-19 and keeping the economy running, often making significant policy changes with little notice and in short succession, causing confusion among businesses and the general public.
“Public policy during the pandemic was poor and Indonesia was hit by the deadly Delta wave," Institute for Development of Economics and Finance (INDEF) researcher Nailul Huda told the Post on Thursday.
"Poor communication made the public increasingly negative about the government's handling of Covid-19," he continued.
Businesses have urged the government to ensure it handles Covid-19 properly in the long run, noting that the recent announcement does not mean the virus has been eradicated.
Apindo’s Shinta said the country should maintain health protocols and continue with its vaccination drive.
Despite the general optimism, some experts say the recent government announcement will not provide a significant boost to the economy, as Indonesia relaxed many of the most economically trying restrictions months ago.
With macroeconomic conditions gradually improving and investment on target for 2023 even before the pandemic emergency status was lifted, analysts have suggested businesses may not need any more fiscal or monetary stimulus to keep the economic recovery on track.
Indef’s Nailul said the government should phase out pandemic-era incentives for businesses. "Business incentives are [...] a loss of our tax revenue, so it could be a burden for our state budget,” he continued, noting that the government was no longer enjoying a commodity windfall to fund its stimulus.
David Sumual, chief economist at private lender BCA told the Post on Thursday that instead of increasing economic recovery stimulus funds, the government should ensure state funds were spent fully as intended, which could provide a boost for the economy as well.
He said he hoped the government could realize its investment target of Rp 1.4 quadrillion this year, in preparation for next year’s Rp 1.6 quadrillion target.
