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Jakarta Post

Major businesses split over lockdown, support social distancing

  • Riska Rahman and Made Anthony Iswara

    The Jakarta Post

Jakarta   /   Wed, March 18, 2020   /   08:49 am
Major businesses split over lockdown, support social distancing People are seen panic buying because of the COVID-19 outbreak at Carrefour ITC Permata Hijau in South Jakarta on March 2. Major business players are split over the idea of a lockdown to slow the spread of the highly contagious coronavirus disease. (JP/Donny Fernando)

Major business players are split over the idea of a lockdown to slow the spread of the highly contagious coronavirus disease (COVID-19). However, they seem to support President Joko “Jokowi” Widodo’s push to limit face-to-face interactions by having people work, study and worship from home.

Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan Roeslani said Tuesday that businesses would support the government’s recommendation for social distancing to contain the COVID-19 global pandemic, but cautioned that, if a lockdown was in place, businesses and low-income workers would need a cushion.

The cushion, Rosan said, could come in the form of more and wider tax relaxations from the government’s first and second stimulus packages, which waived manufacturing workers’ income tax payments and deferred corporate income and import duty taxes for the tourism and manufacturing industries. The Financial Services Authority (OJK) also needed to relax rules on debt restructuring at times of crisis, especially for small and medium enterprises (SMEs), he added.

Read also: Indonesia deploys second stimulus amid market, rupiah routs

“We let the government decide [whether to impose a lockdown] so long as it conducts a thorough assessment. But the point is to prepare for [change]. For the business world to keep on running, [tax and debt-restructuring] relaxations need to be widened,” Rosan told reporters.

“Every single industry is affected, be it imports, exports, consumer goods, tourism. Everything was hit.”

The President said he would not impose a lockdown even though two of Indonesia’s neighbors – Malaysia and the Philippines – and several European countries have decided to take the drastic measure to slow the transmission of the disease.

As officials scrambled to contain COVID-19, which has spread to at least eight provinces, infecting more than 130 and killing five, Jokowi stressed the government was "not leaning toward issuing a lockdown policy".

Indonesian Employers Association (Apindo) executive director Danang Girindrawardana, who opposed a lockdown scenario, said the measure would require a thorough assessment as around 70 percent of the country’s economic activities needed to be done outside the home. He cited the supermarket, manufacturing, hotel and restaurant businesses as those that would be greatly affected.

Read also: COVID-19: Government calls for limits to all tourist activities

Aside from causing an economic shutdown, he also feared that a lockdown could impact businesses’ ability to repay their debts to banks.

“Lockdowns could affect debt repayments, so the government really needs to think about the impact on financial industries as well,” he told The Jakarta Post on Tuesday. Slower repayments from the real sector could lead to bad loan ratios, which could lead to a financial crisis, he warned.

Should the government decide to impose a lockdown, Danang suggested the introduction of incentives or relaxation measures to counter its likely adverse effects on businesses and the banking industry.

Meanwhile, Indonesian Shopping Center Tenants Association (Hippindo) advisory board member Tutum Rahanta said on Monday a lockdown appeal would not only impact shopping mall tenants, but also online transportation services and informal workers who operate near shopping malls.

“For now I think a lockdown needs to be an option, although the impact will be negative, especially on the mid- to low-earners, particularly those in the informal sector. Therefore, the government needs to thoroughly think about it,” Center of Reform on Economics (CORE) Indonesia executive director Piter Abdullah.

“The government should prepare for a worst-case scenario, plan ahead for the day when a lockdown is no longer an option but a necessity, so when the time comes the government is ready with a detailed plan.”

The government announced last Friday that it would allocate Rp 120 trillion (US$8.1 billion) from the state budget to stimulate the economy by providing tax incentives and subsidies for workers, businesses and families affected by the pandemic. It also deployed two stimulus packages worth Rp 22.9 trillion and Rp 10.3 trillion each, with individual and corporate tax breaks and the relaxation of loan disbursements and restructuring requirements.

The executive director of the British Chamber of Commerce (Britcham) in Indonesia, Chris Wren, said that while it was good to campaign for social distancing, there was only so much the government could do given that policing individual behavior was an impossible task.

Therefore, it was critically important to educate the public about honest and relevant information so that people would discipline themselves and keep their loved ones safe, he said.

Read also: COVID-19: Well-prepared emergency status, lockdown keys to protecting economy, economists say

“We are in extraordinary times and these require extraordinary measures and will result in impacts.”

Some members of the public have been calling for President Joko “Jokowi” Widodo to issue a lockdown as the country braces for its worst pandemic in recent memory.

The World Health Organization urged Jokowi to scale up the country’s emergency response mechanisms in containing the COVID-19 outbreak by declaring a national state of emergency.

Jokowi has yet to do so, having only recommended that people distance themselves from others in order to slow the spread of the disease.

Banten and Tangerang in West Java and Surakarta in Central Java did not wait for an order from the top. The three regions have all declared an extraordinary occurrence status, while Jakarta and Surakarta have closed schools temporarily.