News Focus

Endeavoring for a balance between COVID-19 handling, economy recovery

Endeavoring for a balance between COVID-19 handling, economy recovery

Wisma Atlet Emergency Hospital for COVID-19 in Kemayoran, Jakarta. (ANTARA/HO/Humas Waskita Karya)

In managing this crisis, the brake and gas pedal should be maneuvered in a way to really strike a balance
President Joko Widodo (Jokowi) opined that handling of the coronavirus disease (COVID-19) pandemic must be conducted concurrently with endeavors to facilitate recovery of the country's economy hard hit by the impacts of the outbreak.

The economy is bound to bear the brunt when the focus is chiefly on health through the application of restrictions, while on the other hand, prioritizing measures to bring about an economic rebound by relaxing COVID-19 restrictions will further fuel the spread of the coronavirus disease.  

Hence, Jokowi has offered a midpoint strategy through his “brake and gas pedal” analogy at the right time for fine-tuning efforts to strike a delicate balance between handling the COVID-19 pandemic and economic recovery.

"In managing this crisis, the brake and gas pedal should be maneuvered in a way to really strike a balance. We cannot mainly use gas for economic interests but then our health gets neglected in the process. However, we cannot also concentrate fully on health aspects since the economy is collapsing," he pointed out.
To materialize his concept, Jokowi signed Presidential Regulation No. 82 of 2020 on the Committee for COVID-19 Handling and National Economic Recovery on July 20, 2020.

The regulation is a manifestation of the "brake and gas pedal" concept voiced by President Jokowi to balance, coordinate, synergize, and integrate the COVID-19 handling and economic recovery efforts.

"This committee is intended to integrate health and economic policies that are often described by the president as (the vehicles’) gas and brake pedals, and both must be handled in a balanced manner," Minister of State Secretary Pratikno remarked.

Pratikno highlighted the government's undeterred focus on handling COVID-19 in the health sector in spite of attempting to strike a balance along with economic recovery.

"Of course, health will continue to be an important priority. Now, we are in the stage of soon preparing the vaccines," Pratikno noted.

Minister of State-Owned Enterprises Erick Thohir has been appointed as executor of the committee and to coordinate with the chair of the Economic Task Force and the chair of the COVID-19 Task Force.

National Disaster Mitigation Agency (BPBN) Chief Doni Monardo will continue to handle the COVID-19 Task Force, while SOE Deputy Minister Budi Gunawan Sadikin will handle the Economic Task Force.

The head of state also assigned Coordinating Minister for Economic Affairs Airlangga Hartarto the task to coordinate with the Policy Committee to supervise the Task Force for Acceleration of COVID-19 Handling and Task Force for National Economic Recovery (PEN).

Hartarto is supported by deputy chairmen: the coordinating minister for maritime affairs and investment, coordinating minister for political, legal and security affairs, coordinating minister for human development, finance minister, home affairs minister, and health minister.

Erick Thohir, as executive chairman of the Economic Recovery and COVID-19 Response Committee, called for the pace of economic recovery and the handling of COVID-19 to go hand-in-hand in the current scenario.

The minister cautioned to not misinterpret the new normal terminology in which people would go about their activities without restrictions and defy necessary adherence to health protocols to safeguard against the virus transmission.

Thohir believes that in the absence of discipline, the national economy would yet again be impacted if a second wave of the COVID-19 pandemic were to strike Indonesia.

He immediately called for a meeting with Monardo, the COVID-19 Response Task Force head, and Budi Gunardi Sadikin, the Economic Recovery Task Force head, to discuss the targets to be met through coordination for the application of their programs.

The economic turmoil caused by the COVID-19 pandemic has hit Indonesia akin to a perfect storm that has at least three major impacts on the economy, according to Suryo Utomo, Director General of Tax of the Ministry of Finance.

Related news: Macroeconomic assumptions in 2021 draft state budget remain optimistic

Related news: Government to expand 2021 budget deficit to 5.2% of GDP

The first impact of the pandemic has been a steep decline in household consumption, or purchasing power, which accounts for 60 percent of the nation’s gross domestic product (GDP).

This is apparent from the Central Statistics Agency (BPS) data that shows a drop in household consumption, from 5.02 percent in the first quarter of 2019 to 2.84 percent in the first quarter of this year.

The second impact of the pandemic has been prolonged uncertainty that has weakened investment and has had implications on business continuity.

The third impact has been the global economic slowdown that has led to a slide in the commodity prices and a halt in Indonesia's exports to several countries.

Moreover, the economic pressure has also had implications on tax revenue, which, until the first half of 2020 reached Rp513.65 trillion, or 44.02 percent of the targeted Rp1,198.8 trillion set by Presidential Decree (Perpres) 72 of 2020. Tax revenue contracted 12.01 percent (yoy), from Rp604.3 trillion collected during the corresponding period of last year.

"The weakening of businesses and slowing of economic growth in the second quarter of 2020 occurred deep enough, so it also (had an) impact on our tax revenues," he stated.

Meanwhile, Finance Minister Sri Mulyani accentuated that the nation’s economic recovery was increasingly dependent on the handling of the COVID-19 pandemic and economic activities in the second semester.

The minister opined that if COVID-19 handling measures were effective and went hand-in-hand with the opening of economic activities, the economy would recover in the third quarter, with a positive growth of 0.4 percent, and it would accelerate to three percent in the fourth quarter.

"Thus, in the third quarter, the economy would continue to move in the positive zone at 0-0.4 percent and touch two to three percent in the fourth quarter. Hence, our economy, as a whole, can continue to grow positively in 2020," she explained.

According to the minister, the draft of the 2021 State Budget (APBN) also hinted at the speed of handling COVID-19 influencing the pace of economic recovery.

Despites those challenges, President Jokowi recently reminded all government officials to work hard and to not allow the enthusiasm to overcome the crisis arising from the COVID-19 pandemic to dampen.

The enthusiasm to deal with the crisis cannot go down. Uphold the spirit to tackle the crisis until vaccines become available and can be utilized effectually, he affirmed.

Related news: Indonesia's economy has huge potency to recover from COVID-19: AIIB

Related news: MSMEs shift to digital transformation amid COVID-19 pandemic