Purchasing Power Needs Greater Support

KOMPAS/RONY ARIYANTO NUGROHO

A number of vehicles headed for the Puncak area at the exit of the Jagorawi Toll Road, Gadog, Bogor Regency, West Java, during the Islamic New Year national holiday, on Wednesday (11/8/2021). The enthusiasm of residents of Jakarta and surrounding areas to travel on holidays remains high even though the government has imposed restrictions on community activities to reduce Covid-19 cases.

Consumer optimism in July 2021 is ebbing away in response to the implementation of public activity restrictions (PPKM) level 4. Purchasing power should be supported.

JAKARTA, KOMPAS — The coverage of social protection programs and allocations needs to be expanded in order to maintain the prospect of economic recovery that remains dependent on the purchasing power of society. If consumer pessimism is allowed to linger, the extension of PPKM will continue to press down household spending this year.

A consumer survey by Bank Indonesia (BI) shows that in July 2021 consumer optimism about the economy plummeted along with the implementation of PPKM level 4.

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This is reflected in the Consumer Confidence Index (CCI), which slumped from 107.4 in June 2021 to 80.2 in July 2021. The CCI indicates that the confidence of consumers is in the optimistic area when it is above the level of 100 and in the pessimistic area when below the level of 100.

Throughout the Covid-19 pandemic prevalence in Indonesia, the CCI has been more in the pessimistic area. Only during April-June did the CCI rise above 100 and reflect consumers’ strengthening confidence.

Center of Law and Economic Studies director Bhima Yudhistira said the decline in consumer confidence was caused by middle and upper-class people’s limited spending. Meanwhile, the purchasing power of the lower class is reduced due to decreasing income during the enforcement of PPKM.

“The CCI development in August 2021 will highly depend on the progress of PPKM imposition and Covid-19 pandemic control. The PPKM lessens the lower middle group’s purchasing power, which is even more the case as not all lower-class people receive government aid,” said Bhima on Wednesday (11/8/2021).

In early July, the Finance Ministry already prepared a budget worth Rp 6.1 trillion for the extension of cash social aid to 10 million beneficiary families during July-August 2021. The amount granted is Rp 300,000 per month per beneficiary family (KPM).

Kompas/Wawan H Prabowo

Supermarket cashiers serve payments for residents who shop for various basic needs on Jalan Ceger Raya, Pondok Aren, South Tangerang, Banten, on Sunday (4/7/2021). During the implementation of the emergency community activity restrictions (PPKM), traditional markets, supermarkets and grocery stores are limited to operating hours until 08.00 pm.

Previously, cash social aid was provided for four months, from January to April 2021, with its realization reaching Rp 11.94 trillion for 9.6 million KPM, thus bringing the total of cash social aid allocations to Rp 18.04 trillion.

To prevent the CCI from dropping again in August 2021, added Bhima, the government should increase the social aid for the lower middle class. The amount of cash social aid should also be raised from Rp 300,000 per month per KPM to Rp 1 million per KPM.

“The number of cash social aid beneficiaries should also be increased from 10 million KPM to 15 million-25 million KPM so as to boost the public’s optimism and purchasing power,” he pointed out.

PT Bank Permata chief economist Josua Pardede also agreed that CCI decline data reflected the magnitude of the impact of PPKM on the purchasing power and income of all segments of society.

To maintain the level of public consumption, he deemed it necessary for the government to expand the coverage of social aid to include the middle group as well as formal workers, especially those indirectly impacted by the pandemic.

The CCI slump also affected all age groups, especially respondents aged 41-50.

Based on BI’s data, the CCI drop involved all groups of expenditure, particularly respondents spending Rp1 million-Rp 2 million per month. The CCI slump also affected all age groups, especially respondents aged 41-50.

Spatially, the consumer confidence plunge in July 2021 occurred in 17 cities being surveyed. The deepest dive was recorded in Surabaya at negative 36 points, followed by Bandung at negative 35 points and Bandar Lampung at negative 32.7 points.

KOMPAS/HERU SRI KUMORO

The Bank Indonesia Building Complex, Jakarta.

Head of BI Communication Department, Erwin Haryono, said the CCI’s deadlock was due to the limited expansion of the economic condition for the next 6 months, in both business activity and employment availability. Consumers also perceive the present economic condition as falling short of expectations.

Head of the Finance Ministry’s Fiscal Policy Agency, Febrio Kacaribu, said in spite of the activity restrictions, the government kept striving to guarantee the purchasing power of society by extending various social protection programs under the national economic recovery scheme.

“Various policy combinations are also expected to speedily control the pandemic while protecting the public in the process of adapting toward the restoration of socioeconomic activity,” said Febrio.

Death toll data

With regard to Covid-19 control, the government for the moment excludes death toll data as pandemic curb indicators in Indonesia. It’s because some data reports are considered inaccurate.

“Improvement measures to ascertain accurate data are carried on. A data clean-up is now underway and a special team has been assigned. We hope it will be completed in the next two weeks,” said spokesman for the Coordinating Maritime Affairs and Investment Minister, Jodi Mahardi, when contacted.

This is seen as creating deviation or distortion in the assessment of Covid-19 control.

According to Jodi, death toll data are temporarily excluded because some data reports are accumulations of death figures of several weeks earlier. This is seen as creating deviation or distortion in the assessment of Covid-19 control.

“These death indicators will be included when data are already well compiled. For the moment we still use five other indicators for assessment, like the BOR (hospital bed occupancy rate), confirmed cases, hospital treatments, tracing, testing and the socioeconomic condition of society,” said Jodi.

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Indonesian Medical Association Central Board general chairman Daeng M. Faqih said death tally indicators should not be excluded in assessing Covid-19 control. Death indicators are important to evaluate severity, handling achievement and the rate of patient recovery.

KOMPAS/DEONISIA ARLINTA

Indonesian Medical Association Central Board general chairman Daeng M. Faqih

The accuracy of pandemic data in Indonesia, including the mortality rate, has in fact been repeatedly questioned by experts from the beginning of the pandemic. Indonesian epidemiologist at Griffith University, Dicky Budiman, said it was not only the death tally data that experience an input delay, but also daily cases and active cases in Indonesia.

Daily cases and active cases in Indonesia do not represent today’s situation, they can be delayed for several days to a week, depending on those lining up for examination and their reporting. (DIM/ BKY/AIK/ TAN)

(This article was translated by Aris Prawira)