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Why doesn't Jokowi order a lockdown?

On Friday 20 March, Indonesia recorded 369 infections and the death of 32 patients due to the new coronavirus. While the government seems to be mostly concerned about economic growth and the Indonesia Rupiah depreciating to the lowest levels since the crisis of 1998, many Indonesians have other things on their mind. Concern about the spread of the virus and the government's inaction is rapidly growing and some are wondering why Indonesia doesn't have a lockdown like other Southeast Asian countries. Indonesians have started to express their frustrations online with the hashtag #indonesia_lockdownplease while some media openly wonder how long President Jokowi can maintain his approach.

by: Erwin Adistiana & Tjeerd S. Ritmeester
This article is an Emerging Market Experts (EMEx) production. For more information about Indonesia's healthcare sector and business solutions, please take a look at our services or contact us.
20-03-2020

Jokowi

Why not?

First, we have to emphasize that Indonesia's government did implement some measures including severe travel restrictions. It has become virtually impossible for particularly foreign passengers to enter the country. The virus, however, has already settled in Indonesia. Domestic travel is still possible and local governments can only take limited actions, mostly of advisory nature. Full lockdowns can have to be approved by the national government but President Jokowi has repeatedly said to not want to go that far.

So why not? Despite the pressure on the government, there are several reasons why a full lockdown in Indonesia is difficult to realize. Indonesia is a country of 264 million people spread over thousands of islands making it difficult to enforce nationwide policies. Southeast Asian neighbours, like Malaysia and Singapore, are not only smaller in terms of size but their geography makes it easier to enforce such orders. While enforcing a lockdown in Indonesia’s bigger cities and islands would be doable, that is not the case for Indonesia’s remote regions where millions live as well.

Another important reason for the Indonesian government to not initiate a lockdown is the fear for mass panic. This will only benefit the middle and upper classes while the lower classes won’t get anything. The unavailability of essential food products and medicines would create a social disaster resulting in an environment for looting and robbing. Although there are no shortages in Indonesia yet, there are many questions around logistics and the long-term availability of essential products. The first stimilus packages have been received with mixed responses and many Indonesia's don't believe the government is able to help all Indonesians.

The Indonesian government is aware of its shortcomings and fears a repeat of the monetary crisis of 1997-1998. Panic buying caused prices to skyrocket and many left-out started to loot stores in order to get what they needed. The tense period also resulted in a lot of violence against the Chinese minority in Indonesia, something that is already starting to come up during the current COVID-19 crisis. President Jokowi, usually very aware of the social tensions in his country, believes that repeating the 1998 events would only lead to chaos and could sink the nation into an even deeper crisis.

Jokowi

There is also an economic reason to why the government didn't act yet. President Jokowi's election campaign in 2019 had a clear economic message. Jokowi wants to be seen as a business friendly president who can bring Indonesia's development to the next level. However, closed shops, quarantine measures and restricted movement would have a significant impact on the country’s economy with half of GDP growth depending on consumer spending. The fact such measures were not taken yet, is also the reason why the impact on Indonesia’s economy has been relatively small. Indonesia is far less dependend on exports like its Southeast Asian neighbours. While the Indonesian stock exchange plunged over 7% on March 9th, property markets remained largely unaffected.

The current lack of domestic impact doesn’t mean the external impact on Indonesia is neglectable. A 1% drop in China's GDP growth can result in a 0.3% to 0.6% drop in Indonesia's GDP growth, Finance Minister Sri Mulyani said. President Jokowi and his ministers took some important measures to protect consumer spending by announcing a stimulus package worth 742m USD. This underscores the impression that the government believes that as long consumer confidence can be stimulated, the impact of corona will be managable and long term economic damage can be prevented. The announced package is focused on staple goods programs, housing loans and payment subsidies for the bottom 30% incomes. Tax discounts must stimulate consumer confidence as well. In other words, President Jokowi believes as long as the domestic market functions the economy can be saved.

Strategy

Although Indonesia has good reasons to not take lockdowns lightly, it should not result in inaction. Indonesia is one of the most vulnerable countries in Southeast Asia when it comes to a health crisis. The coronavirus seems to affect densely populated areas making islands like Java particularly vulnerable. Furthermore, many inhabitants of Jakarta have bad respiratory systems due to high levels of air pollutions. Research on the COVID-19 virus seems to suggest there is a correlation between more severe cases in areas with high air pollution.

Another important reason to act as soon as possible is the country’s lacking healthcare infrastructure. Indonesia has a shortage of hospitals and quality services especially in remote areas. Wealthy Indonesians often look abroad when in need for a hospital. In 2015, around 600,000 Indonesians sought medical treatment abroad up from 350,000 in 2006. Furthermore, millions of Indonesians remain uncovered or simply cant afford the costs. They rely on their direct environment for medical advise limiting the government's ability to track the spread of the virus.

The growing pressure on the government, other Southeast Asian countries taking heavy measures, and the worsening healthcare situation will force President Jokowi’s administration to act. However, a turnaround can take weeks. Although this scenario gives the government time to prepare economic packages for the most vulnerable, it will also give space to the coronavirus to spread.

This article is an Emerging Market Experts (EMEx) production. For more information about Indonesia's healthcare sector and business solutions, please take a look at our services or contact us.

 

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