The government and business sector need to jointly overcome the impact of the economic slowdown caused by the Covid-19 outbreak and the United States-China trade war.
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The government and business sector need to jointly overcome the impact of the economic slowdown caused by the Covid-19 outbreak and the United States-China trade war.
Indonesia\'s economic growth target as stated in the 2020 state budget is predicted to be difficult to achieve.
Bank Indonesia has revised economic growth from 5.1-5.5 percent to 5-5.4 percent. Two days ago, the Indonesian Institute of Sciences\' (LIPI) Economic Research Center also revised its economic growth forecast from 5.04 percent to 4.74-4.84 percent. This significant decline originated, among other things, from the tourist sector, which was estimated to lose US$2 billion due to the decline in foreign tourist arrivals.
Predicting the impact of the Covid-19 outbreak and the US-China trade war, the government on Tuesday (25/2/2020), prepared a reserve fund of Rp 10.3 trillion. The funds will be used to increase the benefits of Kartu Sembako (a cash assistance for the poor) from Rp 150,000 to Rp 200,000 as a safety net for low-income groups, subsidies for bank interests and housing down payments, tax-free incentives for hotel and restaurants in 10 priority tourist destinations as well as incentives for airlines and travel agents that can bring in foreign and local tourists.
The impact of the Covid-19 outbreak can last long into the second half of this year. To this day no drug or vaccine has been found to overcome this virus. When the number of new cases and deaths in China decreased, there was a surge in the number of people infected and dying outside China.
Although Indonesia has not yet reported cases of Covid-19 infection, the impact on the economy has already been felt. Some reports said the number of foreign tourist visits to major tourist areas had fallen by 50 percent.
To overcome the fear of people traveling to tourist areas, the central government and regional administrations should continue to communicate the readiness of health workers and health facilities to handle Covid-19. The airlines and the hotel and restaurant associations need to campaign for their readiness to prevent the spread of the virus, for example, by maintaining environmental cleanliness.
Some manufacturers are worried about the supply of raw materials from China. Some garment entrepreneurs claim their textile reserves will only last until March. It is not easy to find other suppliers in a short time, especially for goods with special specifications, such as vehicle parts.
Employers began to prepare themselves to gradually lay off employees if the Covid-19 outbreak continued. They predict the impact on people\'s purchasing power and rising inflation.
In such situation, the government and the business sector need to work together to keep the wheels of the economy turning fast. There is no harm for the central government and regional administrations to provide incentives for other industries outside the tourist sector, especially the labor-intensive industry, while awaiting the completion of the deliberation of the bill on job creation and and the bill on taxation.