The Jakarta Post
Economists and researchers are calling on the government to swiftly and accurately disburse its social aid for the underprivileged to prevent a sharp increase in the poverty rate as the COVID-19 pandemic is expected to hit the economy hard.
Center of Reform on Economics (CORE) director Mohammad Faisal estimated on Monday that the poverty rate could jump beyond 10 percent, perhaps even to 15 percent, of the population from the current 9.22 percent if the government was late in rolling out aid for the poor. He compared the situation with the 1998 financial crisis when the poverty rate leaped to around 24 percent.
“We worry that if unemployment and poverty increase, it could cause social unrest because of people's anxiety and hunger,” Faisal told The Jakarta Post. “If we’re not careful in handling this, it could lead to unrest and crime.”
The estimated poverty rate is based on CORE's projection in its quarterly economic review that the country’s economy could grow by anywhere from minus 2 percent to 2 percent under an “optimistic scenario”. Current quarantine efforts could also tighten the pinch being felt by low-income workers who depend on daily wages for a living, Faisal said, making such aid crucial.
Some 1,528 people in the country had contracted the pneumonia-like disease with fatalities numbering 136 as of Tuesday afternoon. The Institute for Demographic and Poverty Studies (IDEAS) projected on Friday that COVID-19 cases would reach a total of 10,000 by April 20 and 50,000 cases by May 1 without any significant policy changes.
Indonesia’s GDP growth is expected to significantly weaken this year as the spread of the novel coronavirus disease has disrupted business activity and slowed demand. The government has prepared for the worst-case scenarios, including zero growth this year, while the World Bank in its latest report projected Indonesia’s economic growth could slow to 2.8 percent.
Initially, the government targeted achieving 5.3 percent growth this year after recording sluggish expansion of 5.02 percent last year.
The World Bank projected that slowdowns in the tourism, hotel, catering and manufacturing sectors in Indonesia could temporarily increase poverty during the first half of 2020.
Broadly speaking, it estimated that more than 11 million people could fall into poverty in the East Asia-Pacific region, a stark contrast to its earlier forecast that growth would be sufficient to lift 35 million people out of poverty this year. The Washington, DC-based institution expects the region’s economic growth to plunge to a baseline scenario of 2.1 percent or in the worst instance a 0.5 percent contraction this year from 5.8 percent in 2019.
The government has prepared a total of Rp 158.2 trillion (US$9.77 billion) in funds so far to finance the healthcare sector and safeguard individuals, workers and businesses affected by the COVID-19 pandemic. This includes two stimulus packages worth Rp 10.3 trillion and Rp 22.9 trillion, respectively.
The government has also previously determined that underprivileged citizens would receive cash transfers (BLT). However, Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan said on Tuesday it was still deliberating whether the assistance would be given to 20 or 40 percent of the overall low-income families across the country.
The SMERU Research Institute wrote on Monday on its Twitter account that the government needed to diversify its data collection and distribution methods to ensure ease of access to the cash transfer given that poverty characteristics between regions vary.
It said the government could source its data from the Social Affairs Ministry and ride-hailing platforms in addition to independently registered beneficiaries. The government could verify its applicants through their citizenship identity number (NIK) on identity cards and family cards.
The government then could work with major telecommunications providers to spread text messages detailing the program’s criteria and registration process for those who have independently registered for the program, it added.
Another way to distribute the aid is to work with digital wallet financial technology (fintech) firms and minimarkets for urban residents while using conventional methods for rural ones, given the digital literacy and infrastructure gap between the two. Authorities could also disburse the aid through the government-backed branchless banking program Laku Pandai.
“The COVID-19 pandemic can be a starting point for the central government and local authorities to become more serious in updating data, especially data on recipients of social protection,” the institute wrote. “Quoting President Jokowi’s statement, ‘data is a new form of wealth’."