Jakarta Seeks ‘Cure’ for Economy
Jakarta\'s monthly exports declined in April 2020 compared to exports in March, due to severe economic impacts from the implementation of the large social restrictions (PSBB) to stop the spread of COVID-19.
A worker sews washable cotton masks at the Center for Small Industries in Penggilingan, East Jakarta, on Tuesday (24/3/2020).
Jakarta\'s monthly exports declined in April 2020 compared to exports in March, due to severe economic impacts from the implementation of the large social restrictions (PSBB) to stop the spread of COVID-19. In contrast, the capital city’s imports increased in April from the previous month.
A number of business associations have thus asked the government to reopen the economy gradually. In turn, they have promised to implement strict health protocols in their business operations during the “new normal” phase to avoid further financial losses.
According to the latest data from the Jakarta branch of Statistics Indonesia (BPS), published on Tuesday, the capital’s exports dropped 26.76 percent month-on-month (MOM) to US$605 million in April. In contrast, imports rose 1.59 percent during the same period.
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The COVID-19 outbreak has affected almost all business activities, with Jakarta recording 0.02 percent deflation in May, and seeing a significant drop in the number of foreign tourist arrivals in the first quarter.
Hamid Ponco Wibowo, the chief representative at the Jakarta provincial office of Bank Indonesia, said that May’s 0.02 percent deflation was caused by a decline in the price of food, beverages, tobacco and a number of commodities including chilies, eggs, onion, and garlic.
Demand for the country’s goods in other countries dropped. There was a slight increase in imports due to increased imports of certain products.
"It’s normal for exports to decline, because there was a sharp decline in economic growth due to COVID-19. Demand for the country’s goods in other countries dropped. There was a slight increase in imports due to increased imports of certain products,” said Sarman Simanjorang, the advisory board chair of the Jakarta chapter of the Indonesian Chamber of Commerce and Industry (Kadin).
According to the BPS, imports of raw and supporting materials, capital goods, and consumer goods increased in May despite the decline in economic growth. According to Sarman, the imported raw materials were mostly procured by the health industry for the production of liquid antiseptics and personal protective equipment.
A beef seller displays meat at a stall in Kebayoran Lama Market, South Jakarta, on Friday (22/5/2020).
The increased imports of consumer goods in May was a seasonal phenomenon, as it was normal for consumer goods imports to increase ahead of Idul Fitri, Sarman said, and that meat and fruit imports always increased ahead of the Muslim holiday.
"The performances of both imports and exports have yet to contribute positively to the Jakarta economy. Tourism and trade still remain the main drivers of the Jakarta economy,” he said.
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Tourism covers tourist attractions, hotels, restaurants, and cafes, while trade primarily concerns retail. Almost all related business activities in the two sectors have been severely affected by the PSBB localized lockdown, which has caused a sharp decline in the movement of people.
Restaurants and cafes had seen a significant drop in business due to the Covid-19 social restrictions.
According to Sarman, the performances of tourism and retail businesses in Jakarta depended on the movement of people. For example when shoppers visit a mall, they typically purchased goods, ate at restaurants, and watched movies while browsing stores. Restaurants and cafes had seen a significant drop in business due to the Covid-19 social restrictions.
Transition phase
In addition to deflation, the BPS also reported a significant decline in the number of foreign tourist arrivals at Jakarta’s two international gateways, Soekarno-Hatta International Airport and Halim Perdanakusuma International Airport.
Foreign tourist arrivals plunged 99.78 percent to just 424 arrivals in April, from 52,721 arrivals in March.
Fatahillah Museum in the Old City area of West Jakarta was quiet on Sunday (24/5/2020)
Cucu Ahmad Kurnia, who heads the Jakarta Tourism and Creative Economy Office, foreign tourist arrivals had seen a dramatic fall all over the world, and not just in Jakarta. "We are not alone. Globally, tourism has declined significantly. It is even expected that global tourism will recover only in 2022," he said.
According to Cucu, the dramatic fall in foreign tourist arrivals had in turn caused a severe decline in hotel occupancy rates and tourism spending. If economic growth remained sluggish, the tourism sector would not be able to recover as quickly as expected. Moreover, the health protocols implemented in the transportation sector would also affect the tourism industry.
In an effort to boost tourism, Cucu said, the Jakarta administration would try to encourage domestic tourism. "We will take the advantage of domestic tourists to recover the tourism sector," he said.
He said that to support the tourism recovery program, however, the Jakarta administration needed to introduce more tourism activities and strengthen its promotion strategies in adherence with the protocols of the “new normal” phase.
In addition to the implementation of the COVID-19 protocol, the tourism industry needed to intensify its campaigns and sell more attractive tour packages.
In this regard, continued Cucu, the Tourism and Creative Economy Office would work closely with businesses in the tourism industry. In addition to the implementation of the COVID-19 protocol, the tourism industry needed to intensify its campaigns and sell more attractive tour packages.
“With attractive tour packages, we hope Jakarta will become the main gateway for tourists before they go on to visit other regions, “ Cucu said.
Meanwhile, Sarman said that the business community had asked the government to gradually begin easing the social restrictions and reopen the economy. The temporary halt on business activities had dried up their capital and savings. Businesses needed to resume activities and operations, not to earn a large profit, but to survive.
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Passengers wait to have their flight documents verified at Terminal 2 of Soekarno-Hatta Airport in Tangerang, Banten, on Friday (15/5/2020).
"We understand that the public are concerned that reopening the economy might create new clusters of COVID-19 transmission. However, employers are certain to adhere to the health protocols because they know if the PSBB is imposed again, it will worsen the situation further. Companies are responsible for the welfare and safety of their workers," he said.
Sarman added that the government should issue a regulation that required every company to form its own COVID-19 task force to ensure that it adhered to the health protocols. The protocols’ implementation should be evaluated regularly, and those companies that did not comply should not be allowed to resume operations, he said.
Separately, social anthropologist Fadjar Thufail at the Indonesian Institute of Sciences (LIPI) reminded the government to calculate the full risks if it decided to reopen the Jakarta economy.
The risks were different for each region, tourist attraction, and workplace. Large shopping malls like Grand Indonesia had different security and safety needs compared to smaller malls that catered to a different consumer segment.
Fish exports increase
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Fishermen unload their catch to be weighed at Muara Angke Fish Port in Jakarta on Thursday (18/10/2018).
Although exports declined in general, exports of fish and shrimp increased 12.36 percent MOM in April. Elizabeth Ratu Rante Allom the acting head of the Jakarta Industry, Trade, Cooperatives and MSMEs Agency, said that the increase was partly due to the export promotional program of the Maritime Affairs and Fisheries Ministry.
"Fish and shrimp have high economic value, such as in the US, China, and Japan. These countries have also allowed more imports of marine products," she said.
This was good news for the fishing industry, as it could open new export opportunities for tapping further to help revive the Jakarta economy.
