Living in a Pandemic

KOMPAS/HERU SRI KUMORO

President Joko Widodo (left) said that two Indonesian citizens were positively infected with the new type of coronavirus (Covid-19) at Veranda, Merdeka Palace, Jakarta, Monday (2/3/2020).

The economy can only be reopened if health problems are under control. Do not let the reopening of the economic sector be carried out too soon, while the handling of health problems is delayed.

Monday, 2 March 2020, President Joko Widodo, accompanied by Health Minister Terawan Agus Putranto, casually announced the first case of the new coronavirus in Indonesia. After six months of dealing with the Covid-19 pandemic, we have to accept it and live with it.

The efforts to flatten the curve of the number of Covid-19 cases are still far from expectation. As of Monday (31/8/2020), as many as 7,417 people died from 174,796 confirmed cases. Meanwhile, the daily addition keeps increasing, even more than 3,300 cases a day.

Also read : Recession and New Civilization

From the health point of view, the peak of the curve has not been reached yet. Under such a situation, we are shocked to hear the government’s plan to reopen movie theaters and fitness centers. The opening of the sector, which is risky, could help accelerate economy recovery to levels seen before the pandemic. The dilemma of curbing the pandemic and improving the economy cannot be avoided.

Today, we even do not know whether the pandemic will end; not when it will end. Bringing the economy to the level before the pandemic may be not the answer. Perhaps, when we rush to reopen some economic sectors, such as shopping malls, movie theaters and fitness centers, we will see that the needs of the public have shifted. Several sectors only need to adapt by implementing the health protocols. However, perhaps, some other sectors have to change their business model in order to survive, like totally migrating online.

Living with the pandemic, people will be divided in three categories, namely the group that is ready to live with the pandemic; the group that struggles to adapt and the group that negates and wants to return to the era before the pandemic. The first group sees the pandemic as an opportunity for change, the second group sees it as a must and the third group sees it as an obstacle. This category is similar to the situation in facing Industry 4.0, there the generation that is ready (digital natives), the one that tries to follow (digital migrants) and the one that wants to escape reality.

Also read : Industry 4.0 and Health Services

KOMPAS/PRIYOMBODO

People visit the Start Up Indonesia booth in the NextDev Summit 2019 at the Jakarta Convention Center in Central Jakarta in December (7/12/2019). The NexDev Summit 2019 was a technology conference that focused on generating positive social impacts to inspire and produce new ideas for the progress of the Indonesian nation.

Transition and transformation

The government is fully aware of the fact that health and economic issues cannot be separated. At the end of July 2020, Presidential Regulation (Perpres) No. 82/2020 on the establishment of the Covid-19 and National Economic Recovery Committee was issued. The committee headed by State-Owned Enterprises Minister Erick Thohir combines the Covid-19 task force and the National Economic Recovery and Transformation task force. The curves related to health and economic recovery are handled under a single coordination.

Under the design of the committee, only in the sixth month of 2021 will the economy enter the transformation phase. Before it, the economy will still deal with health issues and its impacts. This phase will be very crucial because it deals with two big challenges at the same time, namely pandemic and recession. A policy on one side can cause negative implications on the other side.

Also read : Recession and Economic Sustainability

Regarding the recession, if it cannot be avoided, what we will experience is relatively easy. The economic growth in the second quarter of 2020 contracted 5.32 percent compared to the second quarter of 2019 or year on year. If the performance in the second quarter of 2020 is compared to the previous quarter, the contraction was 4.9.

It seems the economic growth in the third quarter will be positive, compared to the second quarter. It means the recession cycle has hit the bottom and starts to enter the recovery phase. Of course, if it is compared to the performance of last year, it is still negative.

More severe recession was experienced by many other countries. Singapore contracted 42.9 percent in the second quarter of 2020 compared to the first quarter of 2020. Malaysia contracted 17.1 percent, Thailand 12.2 percent, the United States contracted 32.9 percent, United Kingdom contracted 20.5 percent and Japan 27.8 percent.

Kompas

Office workers wearing face masks enter a building during lunch time in the financial business district in Singapore on August 11, 2020. - Singapore\'s virus-hammered economy shrank almost 43 percent in the second quarter, in a sign that the country\'s first recession in more than a decade was deeper than initially estimated, official data showed on August 11.

The economy can only run if the health situation has been under control.

Organization for Economic Cooperation and Development (OECD) secretary-general Jose Angel Gurria warned of a complicated situation during the pandemic. According to OECD estimation, the global economy will only recover within two year at the soonest. The economy of the world’s richest countries, which consist of 37 countries, contracted 9.8 percent in the second quarter of 2020. Their recovery faces uncertainty and, most possibly, will also face the second wave of infection, making the recession deeper and longer.

Responding to the difficult situation, Gurria offers three big strategies. First, ensuring the fiscal policy to be continued to support the economy, especially by providing subsidies for spending. Learning from the 2007-2008 crisis, many countries withdrew the fiscal stimulus too early, so the economy entered the declining phase again. Regarding the fiscal stimulus, the health issue and its economic impact is not a dilemma. The economy can only run if the health situation has been under control.

Also read : New Normal of the Economy

Second, providing training for the most prone group of workers so that they can adapt with new skill during the pandemic. On the one side, it is needed to reduce unemployment and on the other side it provides skilled workers with new competency that is relevant. Third, maintaining the global value chain by avoiding the protective policies. The global value chain must be diversified by increasing global trade, not otherwise.

Our government faces the same dilemma. On one side it wants to reopen the economy immediately. On the other side, the curve of the Covid-19 case keeps increasing. The dilemma can be overcome by combining them. Furthermore, the healthcare sector must be accelerated optimally because the realization of the health budget of Rp 87.55 trillion was still about 7 percent as of the middle of August. In fact, the need of 3T (testing, tracing and treatment) remains high. The World Health Organization (WHO) sets the standard one test per 1,000 people per week. Under the standard, there should be 267,000 tests per week. The fact is the number far lower than that.

KOMPAS/TOTOK WIJAYANTO

A Prasetyantoko

If health care is maximal, the reopening of the economy can be carried out optimally. The reopening of the economy must not be made too soon while the healthcare is too slow. If we are unable to provide health care properly, reopening places such as movie theaters and fitness centers, must be avoided.

A Prasetyantoko, Rector of Atma Jaya Catholic University.