Right at the very start of July 2021, Indonesian President Joko Widodo announced ‘emergency measures’ (in Indonesian called Pemberlakukan Pembatasan Kegiatan Masyarakat Darurat, or PPKM Darurat, which roughly translates to the Enforcement of Restrictions on Activities in Society) in a renewed effort to combat the COVID-19 pandemic in Indonesia.
And one can argue that tougher action is indeed justified considering the number of new confirmed COVID-19 cases in Indonesia has been soaring since the first week of June 2021, thus giving rise to speculation whether the national Idul Fitri holiday in mid-May 2021 is the source of this sudden giant wave of new infections.
Others point to COVID-19 mutations (most notably the ‘delta strain’) that are more contagious and seem more resistant to vaccines. And so, also in our circles there are several people who fell ill with high fever and tested positive for COVID-19 in the past two weeks, even though some of them had completed the two vaccine shots.
New Confirmed COVID-19 Cases in Indonesia:
Possibly it is the combination of having people gathering or traveling in the context of Idul Fitri festivities while at the same time a more contagious COVID-19 mutation was spreading is what’s at the root of the growing problem in Indonesia. In late-June 2021, Jakarta Governor Anies Baswedan said the delta strain accounts for around 87 percent of the total new variant cases that have been identified in Jakarta.
As a consequence, pressures on hospitals are growing. According to CNBC Indonesia, the country’s national bed occupancy ratio (BOR) stood at 74 percent at the end of June 2021. However, in some provinces the BOR has risen above 90 percent.
Besides the health risk for those with weak immune systems amid this pandemic (mainly elderly and/or those with underlying medical conditions or illnesses), these new emergency measures (that will be in place on Java and Bali from 3-20 July 2021, and which could be extended) will have consequences for economic activity in (at least) the month of July 2021 as these measures (similar to the semi-lockdowns we saw in urban centers in April 2020) undermine consumption, production, trade and investment.
In fact, it is realistic to assume that Indonesia’s Q3-2021 economic activity will be lower than activity in the same quarter one year earlier, and so, perhaps, we will see the return of red gross domestic product numbers for Indonesia in Q3-2021 (while we still expect Indonesia to exit the ongoing economic recession in Q2-2021).
In this June 2021 edition of our monthly report, we – again – zoom in on the COVID-19 pandemic as well as the new emergency measures, while assessing their impact on Indonesian society and the economy. But, we also zoom in on other interesting topics, such as Indonesia’s difficulty to tap its huge geothermal power potential, a new tax bill that is being prepared, Garuda Indonesia’s financial trouble, and alleged data manipulation by the Investment Coordinating Board – also known as BKPM – which was recently promoted into the Investment Ministry.
In conclusion, there is ample room for concern about the Indonesian economy and society. Since last year we have been emphasizing that immunization programs may not provide the relief that is looked for because (1) there is yet to emerge positive data/evidence on the efficacy and safety of existing COVID-19 vaccines (in fact there are signs that the existing vaccines don’t fully protect against COVID-19 mutations; moreover there are medical experts warning that vaccination programs right in the middle of a pandemic – when there remain many people who have not developed resistance to the virus – can actually trigger the development of strong mutations), and (2) Indonesia has a massive population, implying that it takes a lot of time before enough people are vaccinated to achieve herd immunity.
Per 1 July 2021, only 13.7 million people had completed the two shots in Indonesia’s immunization program that started in mid-January 2021, implying an average of 2.5 million people completing the two doses per month. And so, if not sped up, it may take 6 years before the government’s immunization program is completed. Are we going to see social and business restrictions throughout that period? If yes, it would be an economic disaster. Moreover, seeing a growing number of reports or articles arguing that vaccines don’t fully protect, Indonesia’s costly and lengthy vaccination program could even be in vain to a certain extent.
The June 2021 report can be ordered by sending an email to firstname.lastname@example.org or a message to +62.882.9875.1125 (including WhatsApp).
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