Indonesia Corona Virus Update #27 August 31, 2020
Cumulative number of reported cases: 174,796 (as of August 31)
Rupiah to US$14,554
Jakarta Stock Exchange Index: 5,238
Overview-Highest # Daily New Cases/Active Cases Decline
Over the last 5 days the daily number of new COVID-19 cases have been the highest since the outbreak. They are: 2719 (8/27), 3003 (8/28), 3308 (8/29), 2858 (8/30), 2743 (8/31). The numbers are due in part to more testing (which grew 55% over the last week).
However, because recoveries are outpacing the new cases and deaths, active cases fell 7% week-on-week, the sharpest drop since the pandemic began. This may be a sign that treatments have improved, although this is not yet conclusive. If testing numbers go up that could unveil more new cases, enough to reverse the decline in active case numbers.
Indonesia has now recorded more cases than China.
Due to a continued rise in new cases in Jakarta its governor, Anies Baswedan, has extended large scale social restrictions (no bars, nightclubs and commercial operations at 50% of capacity).
Nationwide, positive test rates continue about 10%. “Red Zone” regions include various districts in: Malaku; Gorontalo; East, Central, and South Kalimantan; East, Central and West Java; Jakarta; South, West, and North Sumatra; and Aceh.
Advanced trials of a potential COVID-19 vaccine developed in China are currently under way in Indonesia and more than 2000 Indonesians have signed up for the trial of the vaccine developed by Chinese pharmaceutical manufacturer Sinovac.
Local tourism Not Yet Helping Bali: The decision to postpone a plan to reopen Bali to foreign tourists was not an easy one, a spokesperson of the Bali Hotel General Managers Association (IHGMA) has said. “We’re not sure how the Bali tourism industry can survive until early 2021 with the addition of four to five months [of closure],” said. “The reopening of tourism to local residents on July 9 and domestic tourists on July 31 has not had a significant effect on increasing hotel occupancy in Bali,” Made said.
- Financial Sector Reform: Indonesia’s finance minister, Sri Mulyani, said the government is considering altering the stabilizing landscape for financial institutions amidst a growing concern of the viability of Indonesian financial institutions. In address to Parliament she argued for a need to better define the functions of Bank Indonesia (BI), Financial Services authority (OJK) and Savings Guarantee Agency (LPS). Gaps have arisen regarding the authority of each and who would intervene when. Sri Mulyani wants to better establish the legal authority of each so they can better coordinate their efforts to prevent events such as the case of the state insurer Jiwasraya creating a billion dollar Ponzi scheme with thousands of policy holders left holding worthless paper. Among the possible outcomes could be a downgrading of the OJK supervisory function or ending the independence of the three agencies. Clearly, very worrisome systemic issues in Indonesia’s financial services industry is provoking leaders to do something they would not a few years ago.
- Don’t Use Dollars: Indonesia’s central bank and Japan’s finance ministry have named a number of banks as cross currency dealers to encourage the use of the rupiah and yen for bilateral trade and investment, Bank Indonesia said on Monday. Mizuho Bank, MUFG Bank, and Bank Negara Indonesia were appointed as dealers to handle direct quotations of rupiah and yen in both countries.
- Import Curbs: Indonesia is tightening import rules for some consumer products including sport footwear, bicycles and air conditioning electronics, its trade ministry said, after a surge in imports in May and June. Import permits will be required and tighter document controls put in place over the importation of 11 types of products, after overseas purchases rose significantly in those months.
- Cement Business Contracts: State-owned cement producer PT Semen Indonesia expects domestic cement demand to contract by 13 to 15 percent this year.
- Worker Subsidies: The Indonesian government is providing subsidies to workers whose salaries are under five million rupiahs (US$341.99) to raise their purchasing power. In the first phase, each worker will receive 1.2 million rupiahs (US$81.90) for two months or 600,000 rupiahs (US$41.04) monthly and the rest will be distributed within the next two months.
- UNGA: After years of skipping the United Nations General Assembly, President Joko “Jokowi” Widodo is set to finally attend the(75th Session of the UN General Assembly to deliver a speech next month – albeit not in person – at the general debate session for the first time during his tenure.
- Omnibus Bill Compromise: The working committee composed of labor groups and Parliamentarians working on a groundbreaking Omnibus Bill on Job Creation announced a compromise that may allow the legislation to pass. The agreement lacks clarity on labor issues (in particular severance). Parliamentarians apparently agreed that the bill will comply with past Court decisions on labor regulations (which could be interpreted as watering down the impetus for the bill) and labor leaders agreed that certain industries (tech sector) could be exempt from the Labor Law. The leader of the largest labor union group, Said Iqbal, reported stated that he hopes everything from the 2003 Labor Law would be retained “with no changes whatsoever”. President Jokowi’s signature attempt to fundamentally restructure the relationship of labor and capital to ease foreign investment in labor-intensive manufacturing may not make it into the bill’s final version but other important deregulations may.