COVID-19 Crisis In Indonesia: How Will The Poor Recover? | Insight | Poverty In Asia

it's been described as the worst economic downturn since the 1998 asian financial crisis covert 19 has brought the indonesian economy to its knees it has also reversed decades of progress in southeast asia's largest economy more than 6 million jobs have been lost and 5 million more indonesians have fallen into poverty we're talking about the poor that they will take the heaviest burden from the crisis will cover 19 outbreak trigger another asian financial crisis and push millions of indonesians into extreme poverty can indonesia survive the challenge and recover from the devastating impact of the pandemic it's 10 a.m in jakarta indonesia's bustling capital of more than 10 million people 30 year old food seller hissam masruri is busy cleaning raw chickens in this crowded neighborhood in the western part of the city helping his wife titin has become part of his daily routine now especially since the pandemic began five months ago it's one way of earning an extra income for the family the couple is selling ayam geprek it's a popular grilled chicken dish eaten with rice and spicy condiments made of red chilies despite working for 18 hours a day hissam barely makes enough money to support his small family especially during the pandemic can't afford to give up his old job as an app-based motorcycle taxi driver popularly known as ojek in indonesia that's because the family cannot live off on just one source of income since covert 19 wreaked havoc on the economy he doesn't get enough passengers to ferry them around the city center the bulk of his regular customers have either been laid off or told to work from home foreign hissam lives with his wife and their six-year-old boy in a rented room measuring 2.5 by 3 meters his parents occupy a room next door debt collectors often come knocking at his door demanding money that he still owes a bank after his garment business collapsed two years ago he was recently forced to sell his television set to help repay the debt on top of his monthly expenses running his grilled chicken business he still has to pay his rent electricity bills as well as his son's education he now has run out of things to sell to help cover his debts hello foreign according to the indonesian government the national poverty line is set around 31 us dollars per capita per month or about a dollar a day the restrictions on movements and other social distancing measures have killed businesses indonesia's gdp plunged 5.32 in the second quarter its first contraction in more than 20 years the figure is worse than the government's initial estimate of 4.3 percent and despite the allocation of about 700 trillion rupiah or 48 billion u.s dollars worth of stimulus measures they're barely enough to cover the needs of the people at least 5 million more people have now fallen below the poverty line as a result of the pandemic the poverty incidence may increase from currently 9.34 to 11.3 to 12.8 depending on the covet scenario so that would that would mean at least an additional five million uh people may go below the poverty line and another concern is the large number of informal workers in indonesia that a lot of people may be pushed from formal employment into informal employment and and again that will make them increasingly vulnerable only two years ago indonesia made history when it successfully reduced poverty rate to a single digit for the first time since independence in 1945 it cut the poverty rate by half since 1999 to 9.4 percent in 2019 but now the indonesian economy is creaking again under the weight of covet 19. the country's impressive poverty eradication effort has been pushed back by at least a decade the government has forecast full year growth of 1 at best this year or a full year contraction of 0.4 percent at worse this compares with 5.02 growth last year less people are working and for quite some times all of the object driver motorcycle taxi drivers disappearing from jakarta but now they are coming back especially after ideal victory there's a lot of people right now just hanging out on the street side uh have no job i think that in the last 20 years the growing number of middle class and especially the people who are living the poverty and then go into the lower middle class status which is around 55 million uh people but these are the segments of society the most vulnerable i think the risk for them to just go back to poverty is very high the world bank has warned that cobit 19 could push up to a 100 million people around the world into extreme poverty in indonesia if the poverty rate rises to as high as 13 as forecast an additional 5 million people will fall into poverty there's a lot of uncertainty there's a lot of uncertainty about how long this pandemic is going to last there's a lot of uncertainty about the impact on on the economy to what extent there will be new social distancing measures imposed to what extent there will be an impact on tourism revenues on you know commodity prices so yeah there is a lot of uncertainty and there are risks on lombarda a dry island around 2600 kilometers east of jakarta there are some 14 000 people who eke out a living as farmers and fishermen but life has become much harder for them since the outbreak began five months ago the covert 19 pandemic has restricted movements of people from nearby islands making it difficult for them to sell fresh fish meat produce and other perishable goods to their customers 48 year old fajaria jari is able to sell around one us dollar worth of fish on a good day but that's no longer the case today since the pandemic scares away many people from her store with the closure restaurants and shopping malls as a result of the social distancing measures the demand for fish has also plunged drastically and that has caused concerns among fishermen due to the southern dip in their incomes so to supplement her meager income she and dozens of other women on the island continue the tradition of weaving lambata's famous e-card textiles the women also grow cotton a raw material for weaving for future investment but selling the textiles to collectors outside the remote island is challenging because of the high transport costs back in jakarta hisam and his wife are getting ready to sell their grilled chicken hoping that today will be a lot better than the day before with so many indonesians struggling to overcome the crisis at the moment what will their future look like will the situation become a lot worse before it gets better and is the country that survived the asian financial crisis in 1998 better prepared to tackle the challenge this time round may 1998 it's regarded as one of the worst time periods in indonesian history indonesia was then caught up in a male strum of the asian financial crisis its currency the rupiah lost 80 percent of its value growth contracted by 14 inflation soared to over 65 percent public anger soon boiled over and jakarta descended into chaos and turmoil as indonesians vented their rage over soaring prices of basic essentials and rampant corruption more than 1 000 people were killed in the unrest it also forced the resignation of president suharto after more than three decades in power 20 years on indonesians still remember how the crisis plunged the nation into one of its darkest days in history turrican was a bajaj driver during indonesia's dark days in 1998. at 56 he still drives a three-wheel taxi to earn a living ironically in spite of the violence and turmoil in the days leading to the fall of president suharto he still feels that the current crisis is far worse than what he had experienced back in 1998. knows the streets of jakarta like the back of his hand he's been driving bajaj since 1994 taking passengers through the back streets to avoid the city's notorious traffic jams to support his wife son and grandson torikim has no choice but to continue transporting commuters in his old motorized rickshaw even though he's constantly in pain his right index finger was punctured by a wood splinter while he was making a small wooden table at his house the infected area has now become sore and stolen but to him the physical pain is nothing compared to what he's mentally going through now thorikim considers himself lucky if he can get 350 000 rupiah or around 24 u.s dollars a week it's nowhere near his weekly income of up to 1.8 million rupiah which he used to get before the pandemic foreign the social and economic upheaval in 1998 is a painful chapter in indonesia's history the crisis plunged more than 15 million people into poverty indonesia once the darling of investors went bankrupt large-scale riots also broke out in other cities such as medan and solo but today the current government is determined to ensure that history will not repeat itself ever again the country's also financially more stable compared to 20 years ago the economy is not collapsing right now while in 1998 it was the asian financial crisis was much more severe um especially due to the collapse of the rupiah exchange rate which yeah which caused a lot of trouble back in 1998 and a major difference between now and then is the way indonesia went into the crisis so the buffers currently are stronger economic policies are more focused on macro stability and on financial stability the exchange rate is more flexible and there's more transparency so the authorities have come quite a long way over the past decades in making the economy more resilient learning from the asian financial crisis president jocobi dodo has expanded social safety nets to protect indonesians from the economic shocks it includes cash transfers to the poor under the family hope program and health insurance system the beneficiaries of the staple food program has also been expanded to cover 20 million poor indonesians during the pandemic social protection financial support as well as credit assistance have also been extended to state-owned firms and small private enterprises but are the measures sufficient to deal with the impact of the major public health catastrophe indonesia's finance minister sri muliani indrawati says that the government has been doing what it can to alleviate the sufferings of ordinary indonesians first this year because of this pocket situation which is affecting both the revenue as well as the spending we are widening our deficit which is traditionally or legally we are only allowed to have a maximum 30 percent of gdp with the special law which is passed as lead by the parliament we are allowed to have more than three percent of gpp and this year we are expecting to have 6.3 deficit and that is to cover almost 700 trillion additional spending for the coffee related including for the economic recovery as i explained earlier now for this because of the very steep increase on the deficit we have to discuss on how we are going to finance so the government responded swiftly with a number of measures with their relief measures which includes direct cash transfers food supplies guarantees tax incentives and the total amount of all this is 4.4 of gdp which is quite a lot that will help mitigate the impact of the shock but it won't offset fully uh the impact of of this shock so but i don't think that's possible in in any country in the world nor here the government's response for the recovery has been quite strong the design of the recovery program we have looked at it very carefully is is really in line with international good practice what the trick will be however is to implement these measures uh in a speedy manner the pass for the poor direct cassidy poor which is uh around 600 thousand thousands a month it's equal to 60 singaporean dollars a month for the people who live below the property line i mean who earn less than two dollars a day and by doing this government hope that it will inject the cash into the economy so far many indonesians have displayed enough resilience to weather the economic impact in surabaya indonesia's second largest city a traditional mass dance troupe called ryok has stopped performing for months due to the pandemic they are now running out of money social distancing measures coupled with public fear of coronavirus infection have led to the cancellation of many events monitoring foreign a riot troupe usually performs in public cultural and private events they rely solely on the money from the organizers in normal times they can receive up to 1 350 us dollars a month before the pandemic the money will then be divided among members of the troop sujiyanto has been with the same troop since he was six he's now 57 unlike before he's now really struggling to make ends meet in order to survive and support his family sergianto has had to sell his tv set and pawn the family's jewelry to help cover his daily expenses his savings have dwindled to almost nothing nowadays you know there's always been this debate on you know how much longer should we lock down you know you're also killing people by killing the economy and so on um my take on it is actually first first and foremost uh the economy itself is actually supposed to be for the people right economy in itself is kind of a process so that a society can function if there seems to be a contradiction between curing the economy and curing the people then this contradiction actually indicates a problem in the ways in which the economy is designed in the first place the government says it is trying its best to ensure the country survives the pandemic but has it done enough to help the poor from falling deeper into the abyss surabaya the provincial capital of east java is also one of the nation's major cities hardest hit by the pandemic is java now has the second highest number of infections after jakarta with more than 37 000 cases and over 2 700 deaths the grim scenario has forced the government to implement a large-scale social restriction policy to help stem the spread of their disease it was only a couple of months ago that 39 year old beautician lilik ismawati lost her job as a cosmetic sales assistant in one of surabaya's glitzy shopping malls without customers regularly patronizing the shop it's simply impossible for employer to sustain the business in the end he was forced to reduce the number of staff to the barest minimum in order to contain costs lilik who lives in surabaya with her husband and their two young sons were among those who had to go despite the loss of her income of around 230 us dollars a month lilik has not lost hope has learned how to make it chirang from her sister the snack is very popular among indonesians it's made of a mixture of tapioca flour garlic chopped spring onions and a pinch of pepper her husband mohammed muniev helps her promote the snack online and deliver them directly to their customers munit himself has had to take a massive pay cut from his regular job as an employee of a private company he's now required to come to the office only once a week on a busy day the couple can earn up to 14 us dollars it's a tough business to begin with but they're grateful for it as it helps to put food on the table but the reality is the government has set aside trillions of rupiah to help the poor during the pandemic less than half of the money has been used so far analysts have put the blame on bureaucratic red tape inadequate data of applicants and the country's sheer size for the slow distribution of aid the the government rightly is and must be very worried as we all are in fact all governments around the world are very much worried right now and are struggling to to come up with responses the indonesian government has very rapidly responded as you know they uh the government has set up a response and economic mitigation and recovery uh package which focuses on health uh focuses on people and it focuses on businesses so um this was a came very quickly it was um well done it's difficult for us to track how much expect exactly has been spent so far but we do expect deficits fiscal deficit of close to six percent of gdp um but we we see the challenges of the government to yeah to reach all the people who need relief and to spend all the money that has been allocated so far indonesia has allocated around 200 trillion rupiah or around 14 billion us dollars similar package for social assistance it is part of nearly 700 trillion rupiah or 48 billion us dollars which have been set aside to safeguard the economy during the pandemic the social assistant package includes direct cash transfers of around 40 us dollars a month as well as direct handouts in the form of basic food items to the poor the government has begun paying 13-month salaries amounting to nearly 2 billion us dollars to civil servants and state pensioners the main objective is to revive consumer spending boost sluggish demand and prevent the country from sliding into recession emil dadak is the vice governor of east java he said the government is pulling out all the stops to make sure the assistance reached the poor of course the fact is we need to quickly ensure that they they have enough uh you know means to sustain their life and by that i'm saying as simple as ensuring that we support them with cash support or even food support for those that are most affected and most vulnerable those 40 of the population in indonesia are then included in this dataset we are really maximizing all the resources coming from within that is government-owned resources for example our sovereign wealth fund for education or any other fund which is managed by the government they have become one of the source uh which is uh provided for this deficit financing in addition to that we also use our bilateral and multilateral support which is also they are providing more room for us to borrow for example world bank adb aig and also from some bilateral government and we issue bonds both globally and domestically while east java is predominantly urban with the manufacturing sector contributing to around 30 percent of the local economy has proven to be resilient during the crisis it's growing at around two percent in the second quarter while other sectors suffered steep declines in the remote toraja highlands on the island of sulawesi the death of the tourism industry has encouraged some locals to return to agriculture and rebuild their lives all over again yourself pali limbaugh is one of them before the pandemic the 57 year old ran a guest house and managed local tours in the city center but he decided to return to his hometown and tend to the family's rice fields soon after he lost his job he wants to make sure the family has enough food to eat during the lockdown tobacco yourself's monthly income has dropped by more than 70 percent to 2 million rupiah or around 137 us dollars since the pandemic began he's selling basic essentials such as rice sugar and cooking oil to make ends meet but the harsh reality is there are other people who are less fortunate than him they might have lost their incomes from the uh tourism but if if we look at whether they are able to fulfill their basic needs it seems that they they can still fulfill their basic needs they might not get the money but they managed to fulfill their needs the economic impact of kobe 19 is not just on indonesia it's actually worldwide so in southeast asia indonesia malaysia the philippines and thailand are already predicted to have negative economic growth this prediction means there will be many jobs lost if they are not lost already for many indonesians who have lost their jobs and main source of income because of the crisis their main and perhaps only hope for survival is cash assistance from the government whether in urban or rural areas the situation that the poor are in are equally dire just like snack maker lilik ismawati in surabaya or three-wheeled taxi driver torikim they have yet to receive any help from the government foreign for indonesia is a big country with 200 million people even our social safety net program which is covering 20 million poorest family in indonesia they are not always capturing all the real poor people there is always an exclusion inclusion error those the exclusion is mean those who are supposed to be in this database they are not yet in that database our challenge is that since 2015 the updating of the full family data has been delegated to the local government and unfortunately not all local government updating those data until this topic then hit in 2020 indonesia is running against time to save millions of citizens who depend on the government to survive the pandemic but what more can the government do to help cushion the economic impact of the pandemic especially on the poor and the vulnerable segments of the population since the pandemic began early this year more than six million indonesians have lost their jobs tens of millions of people are also facing the risk of losing their main source of livelihoods as a result of the strict social distancing measures many of the poor who work mostly in the informal sectors are worried and have strong doubts over the future what happens if they fall ill what if they're evicted from their houses for not paying their rent and will they face the prospect of hunger and starvation when their incomes dry up leader of the traditional javanese dance troupe ryok mr sujiyanto has had to sell off almost all of his personal belongings so that his family has something to eat after the pandemic killed off his main source of income foreign stories of hunger poverty and joblessness have now become a common thread that link many of the more vulnerable segments of the population in indonesia these days bajaj driver turikim for example has been in physical pain for more than a month now the injury to his index finger has become worse but until today he has not seen a doctor to tend to his wound he can't even afford to pay for his daily needs let alone seek we foreign indonesia has raised a record of 18 trillion rupiah or around 1.2 billion us dollars from retail bond sales it has also secured some 9.9 billion dollars from global bonds since the beginning of this year to help mitigate the impact of the coronavirus outbreak the move is also part of its continuous efforts to pluck millions of indonesians from poverty and reverse the impact of the health crisis so the sort of prudent fiscal policies of past years basically uh allows for the room to spend on relief measures uh in the current situation in 2020 um so and and that's what the government is doing so the government spends uh i think close to 4.4.4 of gdp uh in terms of relief measures um and it so and and the the prudence fiscal policies of the past basically uh provide room to do so now in august this year president joko widodo unveiled a budget worth 185 billion us dollars for the year 2021 to put the economy back on track through increased spending the government has also set aside some 420 trillion rupiah or 28 billion u.s dollars as a form of a social safety net for the poor about 170 trillion rupiah or 11 billion us dollars have also been allocated to meet the growing demands for healthcare services these kinds of ad hoc interventions to the health systems right it actually indicates that there is a problem in designing the economy that the the the healthcare has always been has not been a priority yeah we can see how many uh how many hospitals are there outside java and what is the quality there and so how much has it been uh this is basically just basic needs right provision of basic needs if we go back to the definition of poverty again how would we expect that uh the areas uh that with high incidences of poverty uh would be able to get the opportunity to fulfill this healthcare needs if the facilities are not sufficient bajaj driver torikim can only hope that help will come sooner rather than later he also would like to see a sense of normality returning to the streets of jakarta to help ease his financial burdens for foreign such as fried chicken seller and grab driver his son masruri he can't wait for the return of the good old days covet 19 and the subsequent lockdowns have exacted a heavy toll on the lives of many people including his family they believe that reopening the economy will help relief their financial burden and allow them to get back on their feet again foreign foreign with the economy expected to contract this year it remains uncertain if growth will bounce back in the short term jokobi dodo says covet 19 cases will peak in september and that will have a negative impact on growth for the rest of the year the economy is expected to pick up again next year but only if the pandemic is over i think they are still within 0 into minus 0.5 but it could be deeper into minus 1 to 0 but this is really depend on the fourth quarter that we are aiming to have a better recovery and then for next year we've already discussed with the parliament and the growth estimation is between 4.5 to 5.5 until today many indonesians are hoping that the various social restriction measures will be lifted soon but the stark reality is many of them are now left disappointed just last week the government announced that the capital city jakarta will have to endure another round of strict restrictions due to the rising covet 19 cases the impact of such measures on the livelihoods of ordinary indonesians will be hard to imagine food seller and grab driver hissam masruri feels that he has little choice now but to go along with the new tough measures and persevere for as long as he can however tough it may be for him and his family says foreign 19 pandemic has deepened the social and economic divisions within the society the poor were already struggling to eke out a living before the start of the outbreak but now they're finding it a lot harder to break their poverty cycle due to the sudden loss of income and livelihoods in the wake of the pandemic many of them are hoping and praying that brighter days will return and that difficult times will soon pass preferably a lot sooner rather than later this is really a very hard situation for all i think regardless where is your social physician or economic decision because hobbit is indiscriminate i think you can always like you are affected in many different way it could be your family it could be your job it could be many things so it's really a very hard situation for all the government will do their best in order for us to be able to continue to support the people life the strength and the resiliency of the indonesian people is actually on their ability to adapt and adjust of course maybe on the one side we don't have a social protection which is formal and legalized but that's also creating a strength in the form of people solidarity is actually appear and can be seen in many different ways you

Channel: CNA Insider

Views: 594,785

Keywords: Insight, COVID-19, pandemic, Indonesia, Asia, Southeast Asia, poverty, economy, unemployment, financial crisis, private hire, driver, stimulus, Lembata, weaving, textile, lockdown, quarantine, Joko Widodo, economic aid, Java, Surabaya, social distancing, agriculture, Sulawesi, CNA, CNA Insider, CNA documentary, jokowi

Id: HirsHt-PLCA

Length: 48min 57sec (2937 seconds)

Published: Wed Sep 23 2020