Stay Productive during PSBB

Kompas/AGUS SUSANTO

Kampung Melayu Terminal on the first day of re-enactment of Large-Scale Social Restrictions (PSBB) in the DKI Jakarta area, Monday (14/9/2020).

Jakarta has reinstated the large-scale social restrictions (PSBB), which has been in force since Monday. At the same time, the economy must be protected.

The reinstatement of the PSBB poses a new dilemma for employees who cannot work from home and companies that cannot implement work from home (WFH). Concerns over the possibility of mass layoffs have resurfaced. Companies must reduce their activities, and may thus lay off their employees. Business activities are being suspended.

The government has argued that the PSBB was being reinstated to address the public health issues that have emerged as a result of the COVID-19 health emergency. The daily tally of new cases is continuing to rise, as is the number of COVID-19 deaths.

The Indonesian economy contracted 5.3 percent in the second quarter of 2020

The loss of jobs has caused a decline in individual incomes and purchasing power, in turn effecting a decline in economic growth. The Indonesian economy contracted 5.3 percent in the second quarter of 2020. Although the PSBB has been reimposed only in Jakarta and surrounding areas, the capital city is the center of government and the nation’s business hub, where more than 50 percent of the country’s economic activities take place.

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With the majority of businesses unable to operate under the current situation, government spending becomes the primary engine for growth. The government will allocate spending on social assistance, including direct and indirect subsidy programs. Government spending is expected to stimulate public consumption, which has been on the decline, and spur business activities.

KOMPAS/SATRIO PANGARSO WISANGGENI

Some officers supervise the implementation of the health protocol in the Kalibata area, South Jakarta, on the first day of the re-enforcement of the Large-Scale Social Restrictions (PSBB) in the DKI Jakarta area, Monday (14/9/2020).

To ensure the success of government spending in mitigating the economic impacts of the reinstated PSBB, the fund allocations must be distributed to the people and business sectors that the renewed policy will most affect.

We all concur that the cause of the nationwide epidemic, the spread of SARS-CoV-2, must be brought under control before the economy can pick up steam. At the same time, the livelihoods of 60 percent of the low- and middle-income population must be protected.

The government has allocated Rp 695.20 trillion to the COVID-19 response, including funding for the health sector, social protection programs, micro, small and medium enterprises (MSME) stimulus, businesses and regional administrations. To early September, the government had spent Rp 237 trillion, or 34.1 percent of the allocated funding. Considering its importance in stimulating the economy, it is hoped that state budget spending will cause a ripple effect. The state budget could boost public consumption while influencing other aspects of the economy, both directly and indirectly.

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Direct distribution of social assistance, for instance, should target labor-intensive activities in urban areas or at public facilities where the health protocol is being enforced. The planned MSME capital assistance programs should also be increased. The MSME interest subsidy scheme should also be realized and expanded in the near future.

The government should continue to provide social assistance programs and stimulus packages.

The role of regional leaders is very important in ensuring that social assistance and relief programs are implemented effectively to reach their goal of reducing the negative impacts of the reinstated PSBB. The government should continue to provide social assistance programs and stimulus packages. All stimulus schemes must be monitored and evaluated so that the government bases its decisions on accurate data, and that the schemes are effective in achieving their objectives.

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