Economy: Moody’s Investors Services assessed that the handling of Covid-19 pandemic in Indonesia was slower than other Southeast Asian countries, although the economic and financial policies are well coordinated. According to Moody’s, Indonesia’s response to the corona virus outbreak is slower compared with several other countries in Southeast Asia. However, government policies to reduce the impact of the outbreak on the economy are well coordinated. Moody’s said that increasing the deficit ceiling would provide wider fiscal space, although the effectiveness of the use of additional budget in supporting domestic consumption depends on the way the government uses it.
Moody’s projects that Indonesia’s economic growth will slow to 3 percent this year, the lowest since the Asian financial crisis in 1998, and is expected to rise to 4.3 percent by 2021. Although growth in the first quarter will only slow down slightly, social restriction in Jakarta and several other cities on Java — which are the centers of economic activity in Indonesia — suggest that further slowdown will occur quickly. Meanwhile, the decline in the value of the rupiah against the dollar which has reached 20 percent since February and the increase in bond yields will have a broad impact, especially if the trend continues.
Business: State-Owned Enterprises (SOEs) Minister remains committed to safeguarding the resilience of SOEs in facing the economic impact of the COVID-19 pandemic. The minister did not dismiss the ramifications of the COVID-19 crisis, as it would also affect the performance of the state-owned companies. “We also need to ensure how to prioritize workers, combine other businesses, prioritize efficiency, and strengthen cash flow,” minister Erick Thohir noted in a statement. AT the same time, the minister is optimistic about the mapping and some efficiency measures being undertaken by SOEs to help safeguarding the Indonesian economy against the pandemic.
Since early 2020, the SOE ministry has been preparing the mapping of business portfolios for all Indonesia’ SOEs and its subsidiaries. As an initial step, the ministry streamlined 51 subsidiary businesses from Pertamina, Telkom, and Garuda Indonesia. The ministry will continue the downsizing and the mapping of SOEs is based on business portfolios. The mapping is carried out after taking into account parameters of the economic value of public services. It will define the steps and strategies for the Ministry of SOEs to take a decision on maintaining, transforming, consolidating, or divesting or releasing the companies.
Industry: The Minister of Industry revealed that the Covid-19 pandemic has affected several industrial sectors and caused problems, including delayed payment contracts. There are several payment contracts that are delayed and some even have canceled orders. The next effect is a decrease in utilization due to the drop in demand and sales in some industries. Then, layoffs would occur due to decrease in production capacity and the increase in prices of raw material and intermediary goods.
Almost all industrial sectors are affected by the spread of Covid-19. Among sectors suffering hard hits are automotive, steel, aircraft, railroad and shipyards, cement, ceramics, glass, regulator, electrical equipment and cables, electronics and telecommunications equipment, textile industry , machinery and heavy equipment, as well as furniture and handicraft. Meanwhile, those affected moderately including petrochemical rubber. Industries with high demand include food and, pharmaceutical and Phyto pharmacy, personal protective equipment, medical devices and ethanol, masks and gloves. Domestic Some manufacturing industries are the backbone to support the pandemic alleviation. Those industries includes Personal Protective Equipment (PPE) industry have a production capacity of 18.3 million pcs per month, pharmaceutical and drug industries can produce chloroquine drugs with a capacity of 2.9 million tablets per month, vitamin C 18 million tablets per month, and natural ingredient supplements 72 million capsules per month. Mask industry currently has a production capacity of 318 thousand pcs per month, rubber gloves industry with a capacity of 8.6 billion pcs per month, and other industries such as ethanol and hand sanitizer.
Trade: The Indonesian Trade Ministry has decided to postpone the Trade Expo Indonesia (TEI) 2020, scheduled in September, to avoid further transmission of COVID-19. Trade Minister Agus Suparmanto noted in a statement today that the decision to postpone the exhibition is part of the endeavors to contain the further spread of COVID-19 and to protect public health. “We extend our apologies and gratitude for the support of stakeholders, including ministries, local governments, Indonesian representatives abroad, business operators and association, small and medium-scale enterprises, and the media. We hope that everybody would understand this decision for the safety of all,” said trade minister
The 35th TEI is organized by trade ministry in cooperation with a private event organizer company. It was earlier scheduled to be held from 30 September 30 to 4 October 2020 at the Indonesia Convention Exhibition (ICE) BSD in Tangerang, Banten. The 35th was planned as showcase of a plethora of Indonesia’ domestic products. In addition to the exhibition, the organizer will organize the Trade, Tourism and Investment (TTI) Forum; regional discussion; talk show; business matching; integrated business forum; and several other business events.