JAKARTA (BLOOMBERG) – When Indonesian President Joko Widodo spoke with influential business groups on June 30 to discuss imposing a large-scale lockdown as cases of Covid-19 increased, he ‘has encountered widespread resistance.
Earlier today, senior ministers, including Indonesia’s top health official, visited the presidential palace in Jakarta with a clear message: The number of cases – and the death toll – would rise dramatically if the government did not ‘did not immediately impose radical measures. They called on the president, known as Jokowi, to restrict movement of all people in the hardest-hit areas, according to a person familiar with the meetings who asked not to be identified.
At the time, it was obvious that things were bad: some 24 hours earlier, the Indonesian Red Cross had appealed for emergency care, claiming that one of its hospitals was “overflowing” and that the variant Delta brought Southeast Asia’s largest economy closer together. on the brink of a Covid-19 disaster “.
But in a Zoom call with the president later on June 30, professional associations objected to recommendations from health experts, the person said. Under the leadership of Mr. Rosan Roeslani, who until a few weeks ago was chairman of the Indonesian Chamber of Commerce and Industry, known as Kadin, several speakers said the measures would stifle the country’s economic recovery. countries and would lead to massive layoffs.
The next day, Mr Jokowi’s administration announced restrictions that avoided the full lockdown proposed by health officials.
Three presidential palace spokespersons did not respond to calls or texts during the June 30 meeting. Mr. Roeslani, whom Mr. Jokowi’s administration selects to become Indonesia’s next ambassador to the United States, did not respond to multiple calls and texts.
After this July 1 announcement, Indonesia has become the new epicenter of the virus in Asia. Daily infections more than doubled to exceed the number of Covid-19 cases in India before peaking over the weekend, and data from the World Health Organization shows Indonesia now reports more deaths every day than any country in the world.
With hospitals overwhelmed, patients turned away and only 6% of its 270 million population fully vaccinated, Indonesia is bracing for the worst.
Mr Jokowi is now faced with a choice: to stick to the limited measures announced or to ease restrictions in a bid to protect the livelihoods of millions of people even as the virus rages on. This week, one of his ministers said the current restrictions would be extended until July 25, with the president saying the restrictions would be relaxed afterwards if cases continued to decline.
“There is a reluctance to take the bitter pill of restricting business,” said Achmad Sukarsono, associate director and senior analyst for Indonesia at Control Risks. “Indonesia does not use specific health considerations as the main reasoning behind its policies. It is more economic survival, and it comes from a great demand from those around the president, many of whom have companies or are related to companies. “
On Wednesday, Mr. Arsjad Rasjid, the new chairman of Kadin who succeeded Mr. Roeslani, issued recommendations to the government of 11 business groups, including calls for the full operation of essential industries, for the opening of non-essential sectors at half capacity and assistance for both workers. and businesses. He also confirmed that he attended the June 30 meeting with Mr. Jokowi.
“Please don’t take decisions that kill business or the economy as it will be very costly and dangerous for our social life,” Rasjid, CEO of listed company PT Indika, told reporters. Energy, during a briefing in Jakarta.
“We understand that health is very important, but we cannot completely stop the economy.”
The push-and-pull between the president and industry groups shows the influence of business interests on politicians in Jakarta – especially when they warn of job losses that could backfire during elections.
In a previous wave of Covid-19 in January, Mr Jokowi also resisted strict restrictions adopted by other countries in favor of so-called micro-restrictions that prevented local governments from imposing broader measures.
Indonesia is home to more than 70 million informal workers, many in the services most affected by the tightening restrictions. The pandemic had already dragged up to 2.75 million Indonesians below the poverty line last September and cost 1.6 million people their jobs, according to government data.
Earlier this month, Indonesia lost its valuable upper middle income ranking by the World Bank after just one year.
Other developing countries like Brazil, Malaysia and Thailand have also faced the impossible choice between keeping the economy open enough to protect livelihoods and strict containment measures to keep the pandemic from spiraling out of control.
Few can afford the kind of tax support to cushion the blow to businesses from strict social distancing rules, unlike smaller, richer jurisdictions like neighboring Singapore.
Although the government in January increased its economic stimulus budget for 2021 by 49% from previous estimates, growth could slow to around 4% this quarter if Mr Jokowi fails to halt the surge in Covid cases -19. This risks delaying major reform proposals, including a package of financial and fiscal reforms intended to revise the central bank’s charter.
“Of course, the impact could be huge,” said Dr Marcus Mietzner, associate professor at Australian National University, who has written extensively on Indonesian politics.
“The country has now experienced four successive quarters of economic contraction, and the current spike in the number of cases will prolong the crisis.”
The increasingly desperate situation is starting to affect Mr. Jokowi’s popularity, which overall still remains relatively high. A poll released Monday by Lembaga Survei Indonesia shows its approval rating fell to 59.6% on June 21 from 68.9% in December. The hashtag calling for his resignation, #BapakPresidenMenyerahlah or “just give up, Mr. President” is trending on social media.
A former cabinetmaker of humble origins, the president rose to power as an outsider in a political system dominated by the business elite. From the start, he built his legacy on an ambitious economic reform agenda backed by a US $ 412 billion (S $ 563 billion) infrastructure plan and built a powerful coalition in parliament to implement it. He also brought in the descendants of billionaires as special staff members while appointing former electoral rivals and the biggest shareholders of local tech unicorns to his cabinet.
Until recently, Mr. Jokowi’s broad and business-friendly approach had proven popular with the public and enabled him to push through difficult reforms, including a landmark labor law that relaxed restrictions on businesses. in October when Covid-19 infections started sweeping the country. But it’s starting to look more of a liability with the latest wave of Covid-19, especially with former company executives in key positions.
In December, the Minister of Health was replaced by Mr. Budi Gunadi Sadikin, former managing director of state lender PT Bank Mandiri and state mining company PT Indonesia Asahan Aluminum. The government’s Covid-19 Mitigation Task Force has also been placed under the tutelage of Coordinating Minister of Economic Affairs Airlangga Hartarto, a former member of the board of directors of industrial manufacturing companies, and the Minister of Enterprise of ‘State Erick Thohir, another businessman and former co-owner of Football Club Internazionale Milano, or Inter Milan.
A public backlash last week prompted Jokowi to reverse a plan by a state-owned pharmaceutical company to profit off the vaccines left over from a campaign by Kadin to get employees at major companies vaccinated earlier. . Since Indonesia has offered free Covid-19 vaccines through a public program, anger has grown that wealthier citizens can skip the line for an injection.
It is surprising that Mr Jokowi’s approval ratings were not hit harder given the country’s “slow and haphazard” pandemic “made worse by the premature opening of a” new normal “that gave the priority to economic recovery and has led to difficulties in mitigating the health crisis, ”said Ms. Deasy Simandjuntak, Associate Researcher at ISEAS – Yusof Ishak Institute in Singapore.
“Yet, with the current upsurge in business, it is likely that the president’s popularity will be affected,” she said. “Especially if the current measures fail to improve the situation.”
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