GENERAL NEWS AND HEADLINES

COVID-19 testing has yet to reach 10,000 a day
Koran Tempo, Berita Utama

Epidemiologist Pandu Riono of the University of Indonesia (UI) said it would require a long time for Indonesia to adapt to the “new normal” phase, fearing that the government’s ongoing campaign for a new normal would instead increase the number of COVID-19 cases in the country.

Instead of easing large-scale social restrictions (PSBB) and transitioning to the new normal phase, Pandu urged the government to strengthen the implementation of health protocols and increase the capacity of laboratories across the country so that they are able to test 10,000 swam samples per day as targeted by President Joko “Jokowi” Widodo earlier last month. With a total population of approximately 260 million, Indonesia still has a relatively low COVID-19 testing rate. By the end of May, Indonesia had only tested 88,924 people for the novel coronavirus.

Meanwhile, the COVID-19 task force expert’s expert staff chief Wiku Adisasmito explained that the government’s failure to conduct more testing had been originally caused by the limited capacities of the country’s main laboratories in Jakarta. The government then attempted to step up its efforts to increase the quantity and quality of the country’s laboratories as well as to procure more polymerase chain reaction (PCR) reagents from other countries, such as China and South Korea.

“However, there not enough samples are being tested,” Wiku added.

 

Family-friendly policies vital in outbreak response: Experts
The Jakarta Post, p.2

President Joko “Jokowi” Widodo first urged the public to work and study from home in mid-March, which was officially backed by a regulation allowing the Health Ministry to authorize certain regional administrations to impose large-scale social restrictions (PSBB).

Now, the government is looking to gradually reopen the economy with heightened health protocols under so-called new-normal measures. The government has mulled over some scenarios, including allowing workers under 45 years old to return to the workplace to prevent more people from being laid off.

As the global community will celebrate the Global Day of Parents on Monday, experts in Indonesia are calling on companies and the government to enact family-friendly policies to support working families and minimize any negative consequences for children.

University of Indonesia (UI) family sociologist Rosa Diniari disagreed with the planned age-based policy and said work-from-home policies should still be put in place to allow parents and children to have time to nurture their kids.

 

Uncertainty looms over haj trips
Republika, headline

Religious Affairs Minister Fachrul Razi said his ministry would announce its final decision regarding the annual haj on Tuesday. It has been reported that the haj in this year would be put on hold due to the COVID-19 pandemic. The Saudi Arabian government previously suspended umrah (minor pilgrimage) in March over fears of spreading COVID-19.

The government is still waiting for an official announcement regarding this year’s haj from Saudi authorities, who initially planned to make the announcement by the end of April. Until now, however, they have yet to announce their final decision.

Meanwhile, Endang Jumali, the haj consul of the Indonesian Consulate General in Jeddah, said while Saudi authorities had yet to make any decisions regarding haj, they had started relaxing its regional quarantine measures.

 

Restricted freedom of speech undermines democracy
Kompas, p.2

The Gadjah Mada University (UGM) in Yogyakarta has canceled a planned online discussion about the constitutional mechanism for removing a president from office after students and a professor received death threats and other forms of intimidation.

Student community Constitutional Law Society (CLS), which organized the discussion, said the event, initially scheduled for Friday, was intended to respond to recent public discussions on the possibility of dismissing the President for his alleged inadequate responses to the COVID-19 pandemic.

National Commission on Human Rights (Komnas HAM) commissioner Beka Ulung Hapsara said the country’s commitment to upholding democracy would be continually questioned should terror, intimidation and threats of violence remained. Apart from the recent case in UGM, Komnas HAM also recorded a similar case in Bekasi, West Java, where a journalist was intimidated because of his report on President Joko “Jokowi” Widodo’s plan to monitor preparations for “new normal” measures in malls in the city

 

Govt reneges on relaxing timber export rules
The Jakarta Post, p.2

Indonesia has backtracked on a decision to relax export requirements for timber products, months after issuing a deregulation policy that environmental groups criticized for threatening to put sustainable timber trade at risk.

The Trade Ministry issued on May 11 a regulation annulling a previous regulation announced in February that scrapped the requirement for Indonesian companies to secure V-legal documents, which attest that the timber products being shipped came from legal sources. V-legal licensing has represented an important tool of the timber legality verification system (SVLK) managed by the Environment and Forestry Ministry, which has helped improve Indonesia’s reputation in global sustainable timber trade.

Indonesian Independent Forest Monitoring Network (JPIK) activist Muhamad Kosar said the brouhaha over timber deregulation showed that the government should improve its internal coordination before issuing a policy.

Forest Watch Indonesia campaigner Agung Ady said another issue might arise regarding wood product exports as the Environment and Forestry Ministry sought ways to relax policies on forestry as part of efforts to reduce the impacts of COVID-19 on the economy.

 

BUSINESS AND ECONOMICS NEWS AND HEADLINES

Economy in critical phase
Bisnis Indonesia, headline

Several economic sectors have taken a huge hit from the COVID-19 pandemic. Companies in transportation, manufacturing and retail are among the most affected due their limited operations amid large-scale social restrictions (PSBB).

In transportation, the number of train passengers fell 31 percent from 34.13 million in January to 23.43 million in March, ferry passengers fell 54 percent to 1.02 million, domestic flight passengers fell 27 percent to 4.58 million, while the number of international flight passengers saw the steepest decline, falling 67 percent from 1.68 million to only half a million passengers in March.

Meanwhile, IHS Markit Indonesia’s Purchasing Managers Index (PMI), a gauge of the nation’s manufacturing activities, fell from 45.3 recorded in January to 27.5 in March, the worst decline in the survey's nine-year history.

Furthermore, department stores and specialty stores have lost up to 90 percent of their revenue, while the groceries segment has lost almost 50 percent during the PSBB phase.

The government is getting ready to implement the “new normal” protocol by gradually reopening economic activities. The PSBB relaxation is expected to revive the weakened sectors despite the health risks imposed.

 

Corporate’s lending limits need to be relaxed
Investor Daily, headline

The business sector hopes that the Financial Services Authority (OJK) will the relax corporate lending limit (BMPK) to help corporations facing liquidity problems due to the Covid-19. A BMPK relaxation would allow corporations that have got their debt restructuring approved to receive additional top-up from banks, so that their operations can continue.

Under the existing 2019 OJK regulation on the BMPK, a bank may extend loans to a corporation affiliated with the bank at a maximum of 10 percent of the bank’s core capital and to a nonaffiliated corporation at a 20 percent maximum.

Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani suggested that the OJK relax the BMPK regulation, so that banks could give additional credit lines to corporations without breaking any regulation.

However, this strategy needs to be supported by lowering Bank Indonesia’s 7-day Reverse Repo Rate (BI7DRRR), which currently stands at 4.5 percent. Otherwise, it would still burden the borrowers, as most corporate loans now carry double-digit interest rates.

“The point is that all instruments should be activated, including BMPK relaxation, working capital provision, additional funds for the anchored banks, and interest rates lowering to help the real sector, so that the national economy can rebound from Covid-19", Hariyadi said.

Meanwhile, Bank Indonesia Governor Perry Warjiyo said the central bank would continue to support the government’s efforts to revive the economy by supplying more liquidity into the market. To date, BI has injected Rp 583.5 trillion in liquidity through quantitative easing (QE) – or through money printing or money creation.

Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira noted that BI was not like the US Federal Resreve that could print dollars at will, as the dollar was used widely by most countries and accounted for 85% of global export-import transactions. Thus, if the rupiah in circulation rose too fast, the currency would depreciate against major currencies and the market would respond with distrust.

 

Businesses doubtful about entering new normal
Kontan, headline

Covid-19 isn’t over yet. However, the government has prepared a “new normal” scenario to reopen the national economy. Businesses are responding by preparing themselves for the new scenario, although some of them have doubts demand will pick up quickly.

The government has developed protocols, such as on operational hours, employees' health checks, and operational capacity. This reopening will be done gradually in five phases, starting with industry and services (June 1) and followed by stores, malls and markets (June 8); schools (June 15); restaurants, cafes and bars (July 6) and finally a full economic reopening (July 20-27).

In preparation for this, businesses have devised new strategies, but some of them remain doubtful about reopening, as demand may not pick up quickly. "If the businesses start, then there's no market, it can affect our weak capital,” said Diana Dewi, head of the Indonesian Chamber of Commerce and Industry (Kadin).

Companies in logistics and transportation are struck the hardest in this situation.

Indonesian Trucking Business Association (Aptrindo) chairman Zaldy Ilham Masita displayed a more positive attitude. He said the trucking business had slumped by 60 percent, and if the reopening would increase the trucking business by 10 to 20 percent, that would already be good.

Among the regions that have enforced large-scale social restrictions (PSBB), West Java is the most prepared province to shift to the new normal. Some industries have implemented the new normal scenario since March by following the government's health protocols. For instance, PT Teodore Pan Garmindo, Tasikmalaya's garment factory, has switched its production and has been producing masks and hazmat protective coveralls since March.

 

Rupiah strengthens amid risks
The Jakarta Post, headline 

Bank Indonesia’s (BI) policy measures and a narrowing current account deficit (CAD) will likely support the rupiah amid unfavorable financial market conditions, but risks remain as Indonesia continues to record new COVID-19 cases while facing limited healthcare capacity, experts have warned.

Fitch Solutions has revised its outlook for the rupiah for 2020 to 15,500 per US dollar from its earlier projection of 16,750 after the recent gains the currency booked. The rupiah appreciated 13 percent from a recent low of 16,575 per dollar, a level unseen since the 1998 financial crisis, to 14,610 on Monday, Bloomberg data show.

“We believe that BI’s policy measures will continue to cushion the rupiah in the short-term,” the researcher said. “Moreover, a forecast narrowing in CAD in 2020 due to slightly cheaper imports will also add to investor’s confidence in Indonesia’s fundamentals.”

The central bank has taken several measures to stabilize the rupiah, including direct intervention in foreign exchange markets, purchasing of government bonds in the secondary market worth Rp 166.2 trillion (US$11.34 billion) and striking currency swap lines with the major central banks including a $60 billion repurchase agreement with the US Federal Reserve.

Meanwhile, the country recorded a CAD of $3.9 billion, 1.4 percent of gross domestic product (GDP), in this year’s first three months, down from 2.8 percent of GDP in the previous quarter.

 

Illegal fintech companies take advantage of COVID-19 pandemic
Koran Tempo, economic headline 

The Financial Services Authority's (OJK) investment alert task force chairman Tongam L. Tobing said illegal financial technology (fintech) lending operations had intensified during the COVID-19 pandemic, taking advantage of people’s need for cash.

The task force found 81 fintech entities operating without license and having the potential to harm customers by charging exorbitant interest rates and penalties. Of the 2,500 entities that the task force has handled in the last 3 years, only 161 entities are registered with the OJK.

According to Ombudsman member Alamsyah Saragih, the worsening economic condition left people vulnerable to illegal fintech lending risks. He urged the OJK’s task force to be more aggressive in handling the illegal entities, because the current situation called for more protection for the people.

Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira said the vulnerable group currently consists of laid-off workers and pensioners with low financial literacy. He suggested the government improve interinstitutional coordination, such as by working with the Communications and Information Ministry and the police to block SIM card numbers that have been offering lending illegally.

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