Economy: The Covid-19 pandemic has worsened the global economy, making investors prefer holding the greenback as a safe haven, and this condition has raised pressures on the emerging market’s currencies, including the Indonesian currency. The value of rupiah continues to depreciate at least since Indonesian President Joko Widodo on 2 March announced that two Indonesians tested positive for Covid-19. On that date, the value of the rupiah was recorded at 14,318 per US dollar. The rupiah has since then been fluctuating although the central bank has intervened in the financial market to back up the Indonesian currency. If the rate of rupiah continues to drop, it might affect the psychology of Indonesian people, especially Muslims, who will face the fasting month that will take place from April 23 to May 23 during which prices of basic commodities usually soar.
The discouraging economic trends reflected in the central bank’s current foreign exchange reserves which dropped US$9.4 billion to US$121 billion in March 2020 as the central bank has intensified intervention in the financial market to strengthen the Indonesian rupiah. According to Bank Indonesia, the decline in the reserves in March 2020 was caused by the payment of foreign debts and an effort to stabilize rupiah amid an extraordinary situation due to the panic in the financial market because of the Covid-19 pandemic.
Trade: The European Commission has imposed provisional anti-dumping duties on some stainless-steel products from China, Indonesia, and Taiwan nearly eight months after launching a probe into low-priced imports. The duties on hot-rolled stainless steel sheets and coils include a rate of 17% on shipments from two Indonesian subsidiaries of Chinese stainless steel maker Tsingshan Holding Group, whose rapid expansion and low production costs in the southeast Asian country have left EU producers fretting over market share. Tsingshan’s Chinese rival Shanxi Taigang Stainless Steel Co Ltd and three affiliates were hit with the highest rate of 18.9%, while other mainland China firms saw rates of 14.5% and 17.4%. The Taiwan duties were lower, ranging from 6% to 7.5%.
It is expected the duties will restore fair trading conditions, end the down pressure on price and allow the EU industry to recover, said the regulation dated April 7, noting price pressure had had a serious impact on profitability. The investigation began last August after a dumping complaint lodged by the European Steel Association, known as Eurofer, on behalf of four EU producers. That came in the wake of a surge in imports after Washington’s 25% steel import tariffs effectively closed off the U.S. market.
Business: Jakarta starts enforcing the Large-scale Social Restriction (PSBB) today, Friday, April 10, following the coronavirus pandemic. One of the industries now regulated by the PSBB policy is the food and beverage (F&B industry). Jakarta Governor Anies Baswedan has stipulated food and beverage practitioners, such as restaurant owners, restaurateurs, or owners of other similar businesses, to strictly limit their service only to takeout. This regulation is contained in Governor Regulation No. 33 of 2020 concerning the Implementation of the Large-Scale Social Restriction in Handling COVID-19 in Jakarta. Including the aforementioned ‘takeaway’ regulation, there are a total of nine regulations stipulated in the PSBB related to the food and beverage industry.
Strictly limit service to takeaways; through online ordering, and/ or by telephone or delivery service; Maintain a distance of one meter between customers when standing or sitting in a queue; Applying the hygienic principle of food sanitation in the process of handling food in accordance with (government) regulations; Provide equipment such as gloves and/ or food tongs to minimize direct contact with meals in the preparation, processing and serving; Ensuring adequate heating in accordance with the standards of food preparation; Cleaning work areas, facilities and equipment, especially surfaces that are in direct contact with food; Provide hand washing area equipped with soap for customers and employees; Prohibit employees to work if they are sick or have a body temperature above normal, are coughing, have runny nose, a diarrhea or easily out of breath; Requiring food handlers to use gloves, head masks and work clothes in accordance with occupational safety and health guidelines.
Tourism: The COVID-19 pandemic has hit hard the tourism industry in major Indonesia’s tourist destinations. In Bali, the number of domestic and international tourist arrivals having plunged sharply since March as some countries have imposed travel restrictions due to the pandemic. Meanwhile, 50.3 percent of economic activities in Bali is related to travel and tourism businesses. Many hotels in the resort island have been undergoing extremely low occupancy rates and has also made local tourist guides lose jobs. Bali is at present receiving no foreign tourists. In normal time, the number of foreign tourist arrivals was at least 10,000 per day, mainly from China and Australia. Flights from China alone have been closed since February 5, 2020, and this has the potential of losing 100,000 foreign tourists, according to the local office of the Indonesian central bank. In February this year, there were 363,937 foreign travelers to Bali, a decline by 31.19 percent compared to the number in January.
At the same time, fifteen companies mostly engaged in the tourism sector in Bintan, Riau Islands Province, have stopped operating due to the COVID-19 pandemic. Since the COVID-19 pandemic began, few tourists had visited Bintan. Singapore has been the biggest source of tourist arrivals in Bintan, but it is now imposing restrictions on travelers coming into the city state. The companies that stop operating include Bintan On Base Resort, Starjet Grup, Arty Bintan Hotel, Bintan SPA Villa, Bakri Karya Sarana, Bali Holiday, Pulau Cempedak, Pulau Nicoi, Bintan Pulau Indah, Bukit Bintan Raya, Tanah Merah Seafood Restoran, Bintan Alumni Indonesia, Serumpun Padi Mas, Langit Asta Perkasa CB, and Alam Indah Bintan. The number of employees laid off and forced to take unpaid leave will potentially increase if the COVID-19 pandemic cannot be handled in one or two months. To lessen financial burden of low-income people, Bintan administration will provide them with Rp300,000 in cash assistance each for four months.