The Jakarta Post
Investors are questioning the government’s response to the COVID-19 pandemic in Indonesia amid a selling spree on the domestic stock market as the country records rapid increases in the number of confirmed cases and death toll.
They expect the government to take swift action in containing the novel coronavirus spread while demanding more data transparency.
“The lack of a swift response from the government to the situation is what is causing investor confidence to decline right now,” Sucor Sekuritas head of business development Bernadus Wijaya told The Jakarta Post on Thursday.
The government, he went on to say, should act faster in preventing the infection spreading by testing more people for the virus to help restore investor confidence in Indonesian assets.
Indonesia reported 82 new confirmed cases in a day, bringing the total infected number to 309 people as of Thursday afternoon. The fatality number, meanwhile, increased to 25.
President Joko “Jokowi” Widodo ordered his subordinates on Thursday to perform rapid tests for COVID-19 across the country in a bid to accelerate detection of the disease.
The government appeared to have changed gear following widespread criticism of its first response to the pneumonia-like illness. Jokowi had previously allowed his trusted Health Minister Terawan Agus Putranto and several other high-ranking officials to confidently declare that the country was “immune” to the virus, disregarding the 2 million Chinese tourists who visited Indonesia annually and the lack of testing in the country.
Market players, however, seemed to take the statements with a grain of salt as they steadily abandoned the domestic stock market from late February, even before the first COVID-19 case in Indonesian soil was discovered.
The Jakarta Composite Index (JCI) has lost almost 35 percent of its value so far this year as it closed Thursday’s session 5.2 percent lower at 4,105.42, the lowest level since September 2013. Foreign investors have recorded a net sell of around Rp 9.46 trillion (US$597.22 million) so far this year.
Anugerah Mega Investama director Hans Kwee said the lack of confidence among investors was also caused by the government’s opaque COVID-19 data revealed to the public.
“Some investors, like the public, are questioning the accuracy of the government’s data on the illness’ development in the country,” he told the Post over the phone.
Even though the government updated the COVID-19 cases daily, not all analysts are entirely confident about the data. Moreover, the government is still reluctant to release detailed history of the places that patients have visited in the days before they contracted the virus, further complicating the public’s efforts to take precautionary measures to protect their health.
The lack of transparency, Hans said, was worsening the already bad situation in the capital markets. Global investors have expressed concerns that the virus spread could trigger a global recession as it disrupts business activity worldwide, including in Indonesia.
Finance Minister Sri Mulyani Indrawati said the country’s economic growth might drop to just 4.5 percent in the first quarter, further slowing from the 4.97 percent recorded in last year’s fourth quarter.
Bank Indonesia (BI) also revised down on Thursday its economic growth projection to between 4.2 and 4.6 percent this year, which would be the lowest levels since 2005. The figure is far lower than last month’s projection of between 5 and 5.4 percent.
Faisal Nugraha, a 26-year old bank employee who has invested in the stock market for six years, admitted that the government’s lack of detailed information on the COVID-19 cases was what caused him to be reluctant to invest more money in the capital market.
“It feels as if the government is only publishing data that will advantage them in some way, like increasing the number of cases to make the virus mortality rate decline,” he said.
Faisal said he was pessimistic that the government would be able to handle the situation well and restore his confidence in the capital market.
“I won’t invest my money in the capital market until the coronavirus is contained because looking at the external sentiment and the way the government is handling the issue, I’m not so sure that the capital market will recover anytime soon,” he said.