Bitter Reality of The New Normal
MEDICALLY and scientifically, it is clear that Indonesia has not fulfilled the requirements to relax the large-scale social restrictions because of the Covid-19 pandemic. The conditions to reactivate the economy and to increase physical interactions have not been met whatsoever.
Most importantly, there is still no concrete evidence that the spread of Covid-19 is already under control. Moreover, in terms of data, Indonesia does not have a reliable one since the number of tests is still very few compared to the sheer size of its population. This is far from ideal.
The current data even does not support the argument for relaxation either. The trend is still rising. The number of confirmed cases for Covid-19 has doubled in less than a month, from 10,551 in early May to 24,358 as of May 28. Many pandemic experts are convinced that the actual number is even larger.
On the other hand, there is a clear signal that the economy will crash deeper if public activity is restricted longer. Making the condition worse, there is no time frame for how long the wheels of the economy will be hampered.
Even now, there is already a massive wave of new unemployment. The Indonesian Chamber of Commerce and Industry (Kadin) has reported six million layoffs due to the pandemic. The sudden loss of income for six million people will certainly affect the economy dearly. According to the Kadin’s projections, economic growth would collapse to negative four percent at the end of Q2-2020.
The banking sector also reported a bleak circumstance. Financial Services Authority (OJK) data shows, as of May 18, 4.9 million micro, small and medium enterprises (MSMEs) debtors are unable to pay their debt. They have requested debt restructuring. That encapsulates Rp458 trillion of credit from 95 banks, and that number will keep growing.
That is only from the MSME sector. If the crisis continues to afflict large corporations and throw a wrench in jumbo-sized loans, this pandemic can explode into a banking crisis. It is difficult to imagine how Indonesia’s economy could withstand such a crisis.
The choices must be more realistic. Despite inadequate scientific and medical justification, the government is taking the risk of loosening economic activity. Unfortunately, government’s communication regarding the policy has made public confused. Government officials are making various statements and decisions that contradicting each other. Many international media, which are referred to by foreign investors, call Indonesia’s policy inconsistency, flip-floppy, and clearly ineffective.
Even worse, the government has started off by demonstrating its intent to use repressive way by deploying 340,000 military personnel as if they are preparing for war against its own people. Ultimately, the message that Indonesia’s economy can be ruined if these conditions persist is not conveyed.
Relaxing the economic activities to the new normal protocol, or whatever it is called, will not immediately speed up the economy. This step is crucial, but it only prevents the economy from falling into the abyss. The government would be better off with transparency and honestly conveying this bitter reality instead of signaling the nearly impossible hope that the economy can immediately take off.
Certainly, merely adopting transparent approach is not enough. The government also must come clean to correct the mistakes of current policies in mitigating the pandemic. For instance, there are still plenty rooms for improvement in social aid program and economic stimulus.
A quick attempt at self-correction can still bring improvements. More importantly, the government can win the hearts of people and secure their support in earnest. This is the vital component for a successful reopening—not intimidation by mobilizing the armed forces.
Indonesia is clearly not alone, as many other countries are in an even greater mess in the fight against Covid-19. There is no shame in admitting weakness in the face of a new plague that has caught all of humanity by surprise. Yopie Hidayat (Contributor)