Disruptions in Various Sectors

KOMPAS/LASTI KURNIA

Workers carry out loading and unloading activities at Operational Terminal 3, Tanjung Priok Port, North Jakarta, on Thursday (20/2/2020). Statistics Indonesia (BPS) data shows that the value of non-oil exports and imports to and from China decreased in January. The agency added that the decline was not entirely due to COVID-19.

JAKARTA, KOMPAS — The COVID-19 outbreak has deeply impacted global affairs, including the economies of China, Asia and the world in general. Disruptions include plummeting public consumption, investment, tourism and business travel as well as declines in production and trade.

An Asian Development Bank (ADB) report released on Friday predicts that the economic impact of COVID-19 will be between US$77 billion and US$347 billion, equal to 0.1 to 0.4 percent of the global gross domestic product (GDP).

The ADB’s moderate scenario estimates that the economic impact will be about US$156 billion, 0.2 percent of global GDP.

The ADB report cites tourism as an important source of income for Asian developing countries. The outbreak is expected to lead to plummeting international tourism spending. China’s foreign travel ban for its citizens is expected to exacerbate this.

Other countries have also closed their doors to Chinese tourists for now.

The ADB compares the current condition with that during the severe acute respiratory syndrome (SARS) outbreak in 2003. At the time, tourist visits to several countries in Southeast Asia and East Asia, including Indonesia, Thailand and South Korea, plummeted.

“This is despite the extremely low number of SARS cases in these countries,” the ADB report says.

ADB data shows that Indonesian tourism income may drop moderately, by 0.207 percent of GDP or about US$2.15 billion.

KOMPAS/RIZA FATHONI

Foreign tourists walk in the Kota Tua area of West Jakarta on Thursday (5/3/2020). Tourism operators hope that the COVID-19 outbreak will not significantly affect foreign tourist visits to visit Jakarta.

Indonesian tourism is beginning to feel the impact of the COVID-19 outbreak. Statistics Indonesia (BPS) data shows that room occupancy rates at starred hotels across the country in January 2020 dropped 10.22 points to 49.17 percent when compared to data from December 2019. Room occupancy rates in four-star hotels dropped the most, a decline of 12.19 points to 51.15 percent.

Indonesian Hotels and Restaurants Association (PHRI) chairman Hariyadi Sukamdani said in Jakarta on Friday that the room occupancy rate had been declining in recent months. Separately, Indonesian Travel Agents Association (ASITA) secretary general Pauline Suharno said that purchases of tour packages had also fallen.

In Trade Ministry working meetings on Wednesday and Thursday, Foreign Minister Retno Marsudi said the COVID-19 outbreak had created a disruption in the global supply chain and had affected various important sectors, such as tourism, trade and investment.

Previously, Indonesian Institute of Sciences (LIPI) economic research center head Agus Eko Nugroho said that potential losses to Indonesian tourism might reach US$2 billion.

Filling market needs

Cooperatives and Small and Medium Enterprises Minister Teten Masduki said in Jakarta on Friday that, while affected by the outbreak, micro, small and medium enterprises (MSME) had the opportunity to fill domestic market needs.

“Currently, imported goods, such as food, fruits, livestock and other goods, can be substituted by MSME products,” Teten said.

However, Teten continued, a collective commitment is required to prioritize buying MSME products, especially by ministries and government agencies.

These opportunities were related to filling market needs for raw materials that had previously been filled by imports.

In a public discussion at the National Awakening Party (PKB) headquarters in Jakarta on Friday, Trade Minister Agus Suparmanto said that there were economic opportunities to be had in the current situation. These opportunities were related to filling market needs for raw materials that had previously been filled by imports.

Nevertheless, Agus said, Indonesia must also find new export destinations. According to him, China has one of the world’s three largest supply chains, alongside Germany and the United States. The COVID-19 outbreak in China has led to disrupted production in Chinese multinational companies. Industrial activities and supply chains have been interrupted.

“We also need to think about alternative countries to supply raw materials for industries in Indonesia. We have worked together with other ministries and agencies to ease regulations on exports and imports,” Agus said.

Trade Ministry data shows that China-Indonesia trade was worth US$72.82 billion in 2019. However, the trade balance led to a deficit of US$16.98 billion for Indonesia.

Indonesian Chamber of Commerce (Kadin) deputy chairman of trade, Benny Soetrisno, said that the government should be involved in resolving supply chain disruptions due to the COVID-19 outbreak. (CAS/APO/AGE)