August is always a cause for celebrations in Indonesia as the country commemorates its independence from the colonial Dutch regime every 17 August. This year, it was the 76th year Indonesians celebrated their Independence Day. Obviously, Indonesia Investments sends the warmest wishes for the country's continued prosperity and success to all Indonesians!
However, quite paradoxically, celebrations come at a time when the people are not free. Social and business restrictions in the context of the COVID-19 pandemic, force people to refrain from the typical Independence Day celebrations. Via Home Affairs Minister Circular letter regarding Technical Guidelines for Commemorating the 76th Anniversary of the Republic of Indonesia in 2021, which was issued on 10 August 2021 and addressed to the governors, regents and mayors across Indonesia, it was prohibited to organize competitions that can cause crowds. This includes the various traditional (and very popular) competitions, such as ‘tree climbing’ (panjat pinang) and dangling crackers (kerupuk)-eating contests. Instead, people were urged to hold virtual celebrations.
So, celebrations had to be quite sober this year unfortunately. And one of the million-dollar questions is whether the 77th anniversary of Indonesian Independence will be free from social and business restrictions, next year. In our view the outlook is a bit grim – for the whole world – as national immunization campaigns across the world, so far, fail to constrain the COVID-19 virus, most likely due to mutations. And so, some eight months after national vaccination programs started, we now see growing evidence that vaccinated people can still become ill, and can still spread the virus to others. In a country like Israel, which was the first country to achieve herd immunity (well, on paper) through an aggressive national vaccination program, the majority of hospitalizations in now consists of fully vaccinated people. And, while one can claim that this makes sense considering most Israeli people are now vaccinated, it does also indicate that vaccines, alone, cannot pull the world out of this crisis. In fact, in Israel new COVID-19 cases are now hitting new record high levels, causing the government to roll out the booster shot program as antibodies (created by vaccines) wane after around six months.
It is essentially a vicious circle. And one can wonder whether these vaccines actually encourage the COVID-19 virus to mutate, rendering current vaccines ineffective. At the time of writing this introduction, the World Health Organization (WHO) said it has added yet another (relatively new) COVID-19 mutation – labelled B.1.621 or Mu – to its list of “currently designated variants of interest”. This category is considered (by the WHO) to, potentially, “cause significant community transmission or multiple COVID-19 clusters, in multiple countries with growing relative prevalence alongside increasing number of cases over time, or other apparent epidemiological impacts to suggest an emerging risk to global public health”. In Indonesian media, this new Mu variant instantly became a hot topic, especially after Japan confirmed its first cases, causing Indonesia’s Health Ministry to state that this variant has not been detected in Indonesia (yet).
And so, it sometimes feels as if, some 18 months after the start of the COVID-19 crisis, there has not been any real progress in the world’s battle against COVID-19, with the number of official COVID-19 cases and deaths – around the world – being higher now than a year ago, despite the presence of national vaccination programs since January 2021.
But, in the case of Indonesia, there is something positive. In this August 2021 edition of our monthly report we take a closer look at the significant decline in new COVID-19 cases across the Archipelago (a trend that started in the second half of July 2021 and continued into August 2021), although – considering the developments in other countries, such as Israel – we do doubt whether this significant drop in new COVID-19 cases in Indonesia constitutes the prelude to the end of the crisis for Indonesia. But, hopefully, we are wrong.
Other important subjects that are discussed in this month’s report are Indonesia’s better-than-expected economic growth in Q2-2021 with an impressive 7.07 percent year-on-year (y/y) rebound in GDP, new regulations issued by Indonesia’s Financial Services Authority (OJK) that shape the ecosystem for the country’s digital banks, and the launch of Indonesia’s upgraded web-based business licensing system (also known as the Online Single Submission, or OSS, system).
We also discuss various important economic indicators, such as the consumer price index (CPI), trade data, manufacturing activity and rupiah performance, which shed light on the state of the Indonesian economy and society.
CV Indonesia Investments
01 September 2021
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