Economic activities in the real sector should be maintained while coping with the health crisis caused by Covid-19.
By
kompas team
·5 minutes read
JAKARTA, KOMPAS — Economic activities in the real sector should be maintained while coping with the health crisis caused by Covid-19. This emphasis is needed in order to ensure that the economy will emerge from a recession more quickly and then recover gradually.
A recession occurs when the economy contracts for two consecutive quarters. The government is projecting that the economy will grow between minus 1 and 2.9 percent in the third quarter of the year. Although the projected growth is much slower than the second-quarter contraction of 5.32 percent, there are no indications that the economy will soon rise above a negative percentile.
Jahja Setiaatmadja, the president director of PT Bank Central Asia (BCA), said that the bank was committed to supporting the real sector through loan disbursements. BCA does not focus on certain economic sectors, although it maintains strict assessments on its debtors and potential debtors.
"In driving the real economy, Indonesia is expected to overcome recession and recover quickly," he said in Jakarta on Wednesday (23/9/2020).
Jahja stressed that if the country was able to pass the critical period for economic performance in the third quarter and suppress the spread of Covid-19, business activities could gradually return to normal.
President director Stefanus Ridwan of PT Pakuwon Jati . said that the publicly listed property developer was still relying on its own funds to develop new projects. It expected the recession to have ended by the time the projects were completed.
Stefanus was optimistic that once Pakuwon Jati had completed its latest property projects, the economy would have returned to normal to revive market demand.
"Every crisis always holds an opportunity for us to move forward. The important thing is that we take advantage of [those opportunities]," he said.
Adhi S. Lukman, the chairman of the Indonesian Food and Beverage Association (Gapmmi), also expressed confidence that the economic condition would improve in the third quarter. The food and beverage (F&B) industry recorded its lowest performance in the second quarter of the year.
"At that time, with economic growth of minus 5.32 percent, the food and beverage industry still recorded positive growth of 0.22 percent," said Adhi.
When the Covid-19 health crisis emerged in Indonesia, the F&B industry had commenced its digital transformation to boost efficiency as part of its effort to adapt to the fourth industrial revolution,
Industry 4.0. F&B companies also began looking to innovate alternative products and marketing strategies that were more cost-effective and affordable.
Tokopedia vice president for fintech and payments, Vira Widiyasari, believed that as long as micro, small and medium enterprises (MSMEs) continued to grow, the wheels of the economy would continue to turn.
This has prompted a surge in sales transactions for MSME products on the e-commerce platform.
Since the start of the pandemic, Tokopedia has been trying to attract more MSMEs to sell their products through its online marketplace. This has prompted a surge in sales transactions for MSME products on the e-commerce platform.
PT Unilever Indonesia president director Hemant Bakshi said in a written statement that the company\'s MSME partners had contributed in part to its success was. Therefore, mutual cooperation between various parties, including MSMEs, was important to strengthening the business sector in helping to lift the Indonesian economy out of recession and reviving it.
Data at the Cooperatives and Small and Medium Enterprises (SMEs) Ministry show that Indonesia had a total of 64.19 million MSMEs in 2018, accounting for 99.99 percent of all Indonesian businesses and contributing 61.07 percent to GDP that year.
Resilience
It is believed that the Indonesian public has the resilience to face the economic recession caused by the Covid-19 crisis, as long as the stability of the domestic economy is maintained. Household consumption can thus drive the wheels of the economy, albeit with limited contributions.
This was the insight senior researcher Enny Sri Hartati of the Institute for Development of Economics and Finance (Indef) shared on Wednesday.
According to Enny, the impact of the recession would be more pronounced for the top 20 percent of households by income and some in the middle 40 percent, as the weaker economic performance would drag down their incomes. As a result, household consumption had fallen to even deeper levels.
In contrast, the bottom 40 percent households possessed relatively high resilience. Based on previous crises, this group had a high capacity for survival.
"Lower-class people will be able to survive, although with difficulty, as long as the government does not make policy blunders," said Enny.
Raden Pardede, first executive secretary of the Covid-19 Handling and National Economic Recovery (PEN) Committee, said that the government had introduced programs to minimize the impact of the recession in Indonesia, including social, health and financial assistance programs for the real sector. These programs were necessary to prevent a domino effect from the health crisis.