Officials fret over inflation, severe business impact of flood crisis
Hans David Tampubolon
The Jakarta Post
The flood emergency in Jakarta has severely hurt businesses and might slow the growth of the national economy, experts and officials agree.
Finance Minister Agus Martowardojo said here on Thursday that flood mitigation infrastructure needed to be built immediately in Jakarta and throughout Indonesia to avoid inflationary pressure from flood damage.
“This recent flood might boost the [January] inflation rate to around 1 percent at the very least,” he said.
The average inflation rate for January over the last five years has been 0.83 percent, according to the Central Statistics Agency (BPS). The government has predicted that inflation would top 4.5 percent in 2012, more than the 4.3 percent inflation rate recorded last year.
An economist from the University of Indonesia (UI), Nina Sapti, said that the effect of flooding on the annual inflation rate could be mitigated if the government could provide concrete solutions to reduce the occurrence of floods during rainy seasons.
“Floods have disrupted the distribution cycle within the economy. If the flooding only takes place for a week, then the economy will return to normal and the inflation rate will still be manageable,” Nina said.
“According to the weather forecast, heavy rainfall will continue until mid-February. Therefore, it is important for flood prevention measures to be conducted as soon as possible,” she added.
Meanwhile, Indonesian Employers Association (Apindo) deputy chairman Anton Supit said that businesses were still determining the extent of damage from the floods.
“We have not made any official calculations yet, but our losses will definitely be very large,” Anton told The Jakarta Post over the telephone on Thursday.
Separately, Indonesian Logistics and Forwarders Association (ALFI) chairman Arman Yahya said that the floods had effectively stopped logistics companies from operating.
“Our main business is transporting goods. If massive floods take place, then most of our members cannot conduct their business,” he said.
Arman said that the association had only initial estimates of the losses suffered by its members.
“For a rough estimate, a logistics company can get at least between Rp 800,000 and Rp 1.3 million from one trip by truck,” he said. “There are around 3,000 logistics trucks operating on a daily basis in Jakarta under normal conditions.
Meanwhile, the deputy chairman of the Jakarta office of the Indonesian Chamber of Commerce and Industry (Kadin), Sarman Simanjorang, estimated that the losses suffered by Kadin members during the flood emergency might top Rp 1.5 billion an hour.
“We hope that the Jakarta administration, with the support of the central government, has developed a clear and concrete formula to resolve flood issues within a fixed time frame,” he said. “This issue has severely damaged the business climate and Jakarta’s economic growth potential.”
Indonesian Transportation Society (MTI) chairman Danang Parikesit agreed with Sarman, estimating that losses might run into the billions of rupiah an hour during the flood emergency.
“Our previous calculations estimated that flooding might cause at least Rp 1.4 billion in losses an hour,” he said. “These recent floods, however, have been so massive in scale and magnitude. We believe the potential losses could be higher. We need to do some more calculations to be sure.”
Several days of prolonged rain have inundated the capital this week, leading officials to declare a state of emergency until Jan. 27.
A total of 52 subdistricts in Jakarta have been flooded since the heavy rains began on Tuesday. More than 6,000 residents have been evacuated from their homes, according to the National Disaster Mitigation Agency (BNPB).
According to the BNPB, the Ciliwung River and several other major rivers in the city have overflowed or were close to overflowing.
West Jakarta has been the most affected area, with 19 subdistricts drenched in the flooding, some to a depth of 1.5 meters, followed by 15 subdistricts in South Jakarta, 11 in North Jakarta, four in East Jakarta and three in Central Jakarta.
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