Entering the third week of work from home (WFH) policies being in force around the world, takeaways are evolving into a counterfactual analysis: What would have happened if the economists could have sent a strong signal?

The first logical consideration should be that Indonesia is by no means immune to the pandemic. The country shares connections with countries already hit by the COVID-19 outbreak. Jakarta’s Soekarno-Hatta International Airport is well connected with cities in China: Beijing, Shanghai, Guangzhou, Shenzhen, Fuzhou and Xiamen. Denpasar, not long ago, even had a direct flight to Wuhan. There are also numerous flights from Jakarta to neighboring countries in ASEAN including more than 40 flights daily between Jakarta and Singapore alone.

As of April 18, the pandemic had spread to all the provinces of Indonesia, with more than 6,200 positive cases and over 530 deaths.

On Feb. 25, after the majority of ASEAN countries had reported cases, Indonesia introduced a very uncommon policy. Instead of strengthening the capacity of the health sector, President Joko “Jokowi” Widodo announced policies to promote tourism by giving discounts to travelers for visiting tourist destinations in Indonesia.

We might open up our rooms to travelers, but in the absence of the demand side and as a result of the fact that some countries had introduced travel warnings and bans, the stimulus was just like pouring a spoon of salt into the ocean. Updates from real sector data might better indicate that the world economy was stagnant even during the last quarter of 2019.

For instance, the DHL barometer measures the current state and future development of global trade based on large amounts of logistical data. It showed that the global economy had been experiencing a rather stagnant condition from the third to fourth quarter of 2019, except for in Japan.

By February 2020, while Indonesia was still enjoying the stability of economic performance seen from the Purchasers Managers Index (PMI), other neighboring countries had suffered from the downturn in the economy. The data showed that two of the strongest economies in the region reported the drop in PMI. Notably, China’s PMI decreased by 20 percent and Vietnam’s by 5 percent.

Another real sector indicator is the Baltic Dry Index (BDI), which measures the healthiness of the overall economy from the point of view of dry-bulk commodities distribution. We can see that all indicators had been massively declining since the second week of January 2020. The overall BDI dropped 60 percent, from 1090 at the end of 2019 to 465 in the third week of February.

Dry-bulk commodities are taken as a leading economic indicator because they are used in core industrial sectors like steelmaking and power generation. As the BDI is slumping, it is a strong indication in the real sector, especially in manufacturing and construction at the global level.

In short, in the case of Indonesia, the demand side approach was totally ignored when formulating the policy of tourism in February 2020.

Now, in the midst of the pandemic, how should the government proceed?

Like in other developing countries, Indonesia may face challenges regarding policies such as social distancing, staying home and lockdowns. According to the International Labor Organization, about 68 percent of the employed population is in the informal sector. Thus, many have lost their income as a result of the outbreaks in the Asia-Pacific region.

In the Philippines, people are being locked down in slums. In Mumbai, India, women are giving up their jewelry for food. The crowded slums of Pakistan make social distancing a nearly impossible ideal, and in Bangladesh, thousands of garment workers walked hundreds of kilometers to work only to find their factories closed. Indonesia is no exception; having access to handwashing is a relative luxury due to a lack of access to clean water for 70 million people.

Therefore, even before COVID-19, of the four main causes of mortality for children under the age of 5 in Indonesia, two—diarrhea and typhoid—were fecal-borne illnesses linked to inadequate water supply and sanitation issues.

There are at least two aspects we should realize as soon as possible.

The first is ensuring the trust of people. All measured policies – social distancing, lockdowns or staying at home – necessitate transparent and consistent policies. The government should avoid the inconsistencies they espoused before the pandemic went into today’s spiral.

In addition, whichever health indicators the government prefers to show, Shidiq found in a 2020 study that Indonesian health infrastructure was significantly behind other countries in Asia with regard to the number of beds, the number of physicians and the number of doctors and nurses. Indonesia has only four doctors per 10,000 people, compared with Korea with 24 and Singapore with 23. Therefore, the severity of the pandemic might shift from bad to worse if it reaches smaller cities in Indonesia. In cities like Blitar in East Java, they only have five ventilators at one state hospital supported by only one pulmonologist.

The second measure is to make sure those at the bottom of pyramid have access to government subsidies (cash transfers or in-kind transfers) to allow them to live at least at the subsistence level. The government could set a specific key performance indicator to be fulfilled. Countries like Bangladesh for instance, have a clear target that at least staple foods should be available at an affordable level. Hence, the government decided to sell rice at one third of open market prices during the pandemic.

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Ibrahim Kholilul Rohman is a lecturer at the School of Economics and Business, University of Indonesia (FEBUI). Moinul Zaber is an associate professor at Department of Computer Science, University of Dhaka. The views expressed are those of the authors.

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