How Indonesia Improves Its Economic Prospects Amidst COVID-19 Pandemic: Why Is It Still A Good Country to Invest In 2021? thumbnail

How Indonesia Improves Its Economic Prospects Amidst COVID-19 Pandemic: Why Is It Still A Good Country to Invest In 2021?

Indonesia is the world’s fourth most populous country made of thousands of islands, which currently still battles against the COVID-19 pandemic in 2021. According to research, although Indonesia is classified as a middle-income country, the COVID-19 pandemic has caused serious issues in the country; such as increased poverty rate and economic downturn. Quoting Channel News Asia, “due to COVID-19 pandemic, five million Indonesian people dropped below the poverty line in September 2020, and the number has likely increased since then.” Shockingly, after years of improvement, poverty has been on the rise since the pandemic first struck the country (The SMERU Research Institute, 2021).

Responding to the crises, the Indonesian government has, since then, introduced a massive fiscal stimulus package through the National Economic Recovery (PEN) program. In terms of the total amount devoted to fighting off COVID-19, the country itself ranks among the top five countries in the Asia Pacific region, as it allocated IDR 695.2 trillion (approximately US$ 49 billion) to the program, in 2020. In February 2021, the government announced an increased budget of IDR 699.43 trillion (approximately US$ 49.3 billion) for the PEN program’s continuation (KEMENKEU, 2021).

Further, Indonesia currently focuses on investing in strengthening its social protection programs, as a response to the COVID-19 crisis. These programs have been expanded to protect today’s poor against major shocks caused by the pandemic, as well as a growing number of low- and middle-income earners who have become more vulnerable and are at risk of becoming tomorrow’s poor. Small businesses, too, are receiving assistance as they continue to contend with a contracting economy and public health restrictions such as the previously implemented Large-scale Social Restrictions in numerous cities in the country.

The following measures have been executed by the Indonesian government, in order to boost the country’s economic recovery and improve its economic prospects amidst the COVID-19 pandemic:

  1. Accelerate the vaccine rollout, and improve testing-tracing-isolation, as well as other non-pharmaceutical interventions such as adequate mobility restrictions to get ahead in the race against infections.
  2. With at least 181,688,388 doses of COVID vaccines so far, Indonesia is slowly opening up Bali for international flights. Currently, Bali has officially reopened its borders on October 14, 2021, with its travel bubble scheme, coordinating with 19 countries. China, India, Japan, South Korea, and New Zealand are among them, as are other countries from Western Europe and the Gulf.
  3. Maintain an accommodative monetary policy stance and stimulate private credit to support the real sector.

In addition, the Indonesian government has, as well, been boosting higher productivity middle-class jobs and women economic participation amidst the pandemic through the following measures:

  1. Equip the workforce with the skills needed for higher productivity jobs by improving learning and workforce development systems.
  2. Bring more women into the labor force and reduce earning gaps between men and women, including by developing child and elderly care services.
  3. Mitigate job losses during the crisis by maintaining adequate jobs retention programs until the recovery is stronger as well as social assistance, training, and reskilling programs for affected workers

The emergence of COVID-19 has created major challenges for the world. In Indonesia itself, the coronavirus has infected more than a million people since the first confirmed cases back in March 2020 and tens of thousands have died. The impact of COVID-19 will undoubtedly continue throughout the rest of the year, and perhaps, beyond. However, the quick pace of support must continue to boost people’s wellbeing. Various public and private efforts are helping to alleviate the crises caused by the pandemic. 

With these continued measures, Indonesia is still believed to be the right destination to invest in, despite the challenges that COVID-19 has caused. Based on research, new small and smart business or Small and medium-sized enterprises related to clean, disinfection, digital health, teleworking, transportation, teleconference tools and apps have bigger opportunities during the pandemic (IPSOS, 2021).

The pandemic has undoubtedly given birth to digital innovations in the country. Nowadays, more people have been able to access services that combine online and offline to limit social interactions. Currently, there are numerous digital businesses in Indonesia; such as digital marketing agencies, SEO consulting agencies, specialized retailers, and many more. In Bali alone, digitalization has been helping Bali’s small businesses to survive the pandemic, while the tourism sector is dormant.

In conclusion, Indonesia can remain optimistic, as market fundamentals and regional positions remain strong. The market is more stable, the domestic market is strong, even looking differently because it is necessary to take into account the diversity of incomes and cultures (IPSOS, 2021).